Why our loose networks of entrepreneurs need to find a collective voice

Philip Salter
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A CHASM has opened up, with entrepreneurs on one side and politicians and the public on the other. It may not be an obvious division, but it is damaging nonetheless. And it is why I’m launching a new think tank today, The Entrepreneurs Network, with support from the Adam Smith Institute. It’s time to amplify the voice of UK entrepreneurs. After all, an entrepreneurial society is in the best interests of us all.

The image of the entrepreneur comes with any number of stereotypes. But encouraged by TV programmes like The Apprentice and Dragons’ Den, particularly popular is that of the aggressive wheeler-dealer, looking to turn a fast buck. Entrepreneurs are seen as lone wolves, pitting their wits against society. But nothing could be further from the truth.

Starting a business – rooted in the desire to give others what they want while hopefully turning a tidy profit – is an intensely social and public act. The Anatomy of an Entrepreneur, a fascinating project from the Kauffman Foundation, found that the average entrepreneur is less idiosyncratic than many assume. On average, most founders of US companies tend to be middle-aged 40 year olds, with nearly 70 per cent already married and close to 60 per cent with at least one child.

The study also found that 73 per cent of US entrepreneurs thought professional networks were important to the success of their firms, while 62 per cent felt the same about personal networks. Interlocking personal and professional networks – fed by investors and nourished by incubators and accelerators – go into making an entrepreneurial ecosystem.

British entrepreneurs appear to be doing well enough. Ernst and Young’s G20 Entrepreneurship Barometer puts the UK in the top quartile of G20 countries, alongside Australia, Canada, South Korea and the US. But while performing comparatively well in most areas, the UK is ranked markedly low in coordinated support – seventeenth across the G20. We aim to help on this front by influencing policy makers with research, and updating the entrepreneurial community on changes that could impact business.

Politicians are happy to talk up entrepreneurs, but don’t always work in their best interest; loose networks lack the muscle of unions and large corporations looking to protect their interests at the expense of upstart startups.

Regulation and the rule of law have a huge impact on the entrepreneurial landscape. A 2011 study by Jonathan Levie and Erkko Autio found that, in economies where regulation of entry was light, a greater proportion of new entrepreneurs expected to hire at least 20 employees within five years’ time. The study also found that government must enforce the rule of law, otherwise the quality of entrepreneurial entries into the market will be diminished.

StartUp Britain suggests that we are on track to see more than 500,000 new businesses formed in 2013 (up from 484,224 in 2012 and 440,600 in 2011). This is encouraging, but what we really need are clusters of high-growth gazelles. For that tax, regulation, the rule of law, and therefore politicians, matter. We must ensure that the voice of entrepreneurs is no longer ignored.

Philip Salter is director of The Entrepreneurs Network