The extraordinary growth in the number of companies founded in the UK since the financial crisis has been one of the standout economic success stories of the past decade.
In a world of increasing competition for “enterprise hub” status, the UK is now one of the top global magnets for entrepreneurs. This is a hard won prize, and one we must protect.
Startups in the Institute of Directors’ IoD99 group are very positive about the UK’s attractiveness as a place to launch a venture. In a new survey 85 per cent said they would still pick the UK as their base if they were allowed to go back in time and choose from anywhere in Europe. The current situation for startups in the UK seems largely benign. Only a minority, albeit a third, say they have felt a negative impact in the months since the referendum.
That said, there are jitters around what will happen as Britain negotiates its way out of the EU. Over half of respondents believe that the Brexit vote will hinder growth in their businesses over the next five years, and the challenge for the government will be to convince startups that they can thrive in spite of an uncertain political environment.
The biggest Brexit requirement for entrepreneurs is continuing to be able to sell their goods and services into the EU. We have to accept we won’t know the final shape of the Brexit deal for some time, but there are things the government can do in the meantime to boost young British companies.
Improving the UK’s digital infrastructure comes out near the top of the policy priority list, with nine in 10 firms saying it’s important to their business. Many will have been pleased to see the chancellor set aside £1bn to update the UK’s fibre and mobile networks last month. With UK consumers among the most digitally savvy in the world, the home market is a ripe one for startups, and internet speeds and coverage must keep pace with demand.
World-class digital infrastructure is not much use, though, without individuals who can help firms take advantage of it, and it’s noteworthy that concerns over future access to skilled workers from abroad come out as the top priority in the survey.
We know that Brexit means changes to immigration policy, but if the government wants to maintain an enterprise-friendly environment, it must recognise that startups need skills that they can’t always find in the UK. Innovative new companies move fast, and we should aim for minimum difficulty in placing foreign talent where it’s missing.
In the end, entrepreneurs will always be at the coalface of economic uncertainty. They are among the first to feel the effects of waning investor confidence and seldom have the resources available to ride out difficult periods. This reality is priced into the risk of founding a business, and we are lucky in the UK that so many people are willing to put themselves on the line to start something new.
It seems that the appeal of being an entrepreneur is about much more than just money. The desire to build a successful business, be your own boss and make a positive social impact all scored much more strongly in the survey than pure financial reward. Now that’s something to be positive about.