Is there an Insolvent Business Start Up In You?
Is there an Insolvent Business Start Up In You? Here at SHAPE Contractor we regularly get asked by individuals is there a career in plumbing and comments that we must be raking it in being self-employed……. We’re doing well, surviving in an extremely difficult economic climate and therefore certainly don’t mind blowing the trumpet on whatever success we achieve in business
If you are thinking of the self-employed route then read the following article from Enter-quest. It might just make you prepare a little harder on your initial business plan and save you a few tears.
As a result of careful observation of the changes to national business support availability over the last year EnterQuest is considering an approach to the Department for Business (BIS) with a proposal to launch a new business start up initiative…but with a twist.
We will base our proposal on the fact that the majority of new business start ups go bust or cease trading within three years – failure figures are widely reported to be somewhere in the order of 70-80%, with around half failing in the first 12 months, many of those within a matter of weeks. Our proposal is for BIS to launch a campaign that has a specific intention of increasing the business failure rate.
Basically, the common denominator behind business mortalities is that they run out of cash and hence are unable to pay their bills, so they tend to close down before the proprietor becomes personally liable, or to limit any existing personal liability. The technical term is that they become insolvent.
The current BIS initiative – The Business In You – and the associated campaign Start Up Britain – is attempting to encourage an increase in the number of start ups but, in effect, is also encouraging a potential increase in levels of enviable start ups, unsustainable debts, unpaid bills, insolvencies and misery.
Therefore rather than continue down its current path we are proposing to BIS that they should turn this approach on its head and launch a new campaign entitled There’s an Insolvency In Everyone – What’s the Insolvency In You?
The Insolvency In You will be a perfect way of supplementing the current BIS approach through encouraging more people to start up:
– in as short a period of time as possible, perhaps in a matter of hours without any preparation.
– without understanding your market or how you will do your marketing and sales.
– without any resources other than your Smartphone and Google.
– by going into debt, especially if you are young and inexperienced through a Government-backed young person’s loan.
– a business that is already being run by lots of others near to where you live, particularly hairdressers and coffee shops.
– as a freelance consultant, especially in the skills you gained in admin and pensions when you used to have a job in the public sector.
– without formal business training or experience as you can now get this through an unqualified/unaccredited Government-backed mentor.
– without any locally based face-to-face advice which would simply deter you from starting up as your business model is probably unviable.
– without sufficient working capital as anyone can now get started for £50 or less on the Internet.
– a shop in someone else’s empty shop on a high street where there is already a dearth of consumers.
Encouraging more people to start up and deliberately aim to become insolvent as quickly as possible will have an immediate benefit through helping them to realise, before they begin trading, that they are:
– more likely to fail than succeed.
– more likely to end up with higher levels of personal debt than they have now.
– at risk of breaking the law through trading illegally without appropriate licences and permits in place.
– too illiterate, innumerate and inept to be a business owner.
– unlikely ever to earn enough to make ends meet.
– likely to quickly get into difficulties.
– never going to grasp vital finance principles such as cash flow and breakeven.
– simply not entrepreneurial and enterprising enough to survive, never mind to succeed or grow.
– not going to be able to promote or sell their product/service especially on a face-to-face basis.
– likely to be more miserable and unhealthy than at any time in their life.
Assuming the pool of people out there who are intending, planning or just thinking about starting up is going to be the same size regardless of whether BIS carries on with running their Business In You initiative or decides to adopt our Insolvency In You campaign, which do you think will be of more benefit to the individuals starting up and the economy as a whole?
A hype-based ‘start-up for everyone’ campaign which ignores the risks, obstacles, misery and downside to business and the fact that the majority of prospective start ups are not cut out for enterprise?
Or a more common-sense based ‘doomed-to-failure’ initiative which encourages people to start up with failure and insolvency heavily in mind from the outset or even as their objective?
One of these initiatives will be more likely to encourage unchecked, unviable start ups among entrepreneurially inept individuals with a resulting high rate of insolvencies and failures. And the other will serve to deter those start ups who are unprepared, ignorant of business, ill-advised, under-capitalised, illegal and unviable, yet improve the rate of start ups who are destined to survive and remain solvent.
Which way round will it be? Which initiative and approach will deliver more?