Why do people who should know better continue to give credence to the myth that it’s difficult to start a business?
A recent high-profile example of this came a few weeks ago on Sunday morning on the BBC’s Andrew Marr Show and it was uttered by no less a figure than would-be Prime Minister David Cameron.
Detailing measures he would take to aid small firms (and so the economy) if the Tories win the General Election, he said: “It takes something like 13 to 14 days to start a new [sic] business in this country. In America, it’s half as long. We have the ambition to make this [the UK] one of the fastest places in the world to start up a new business.” Later, this was reported on the BBC News website and others, but remained totally unchallenged.
It must be the party line. A few days later, shadow business minister Martin Prisk MP, in his ‘New year, new start, new business’ Blue Blog on the Conservative Party website, further fuelled the myth, saying: “We would cut the time it takes to start a new [sic] business in the UK. Currently, it takes twice as long as in the USA, Denmark or Hong Kong. Conservatives want to change that, so we would reduce the number of forms needed to register a new company and move towards a ‘one-click’ registration model.”
What type of business are they talking about? Have I missed something?
Setting up as a sole trader (AKA becoming ‘self-employed’) is likely to take 10 minutes tops. All you need do is call the HMRC Newly Self-employed Helpline on 0845 915 4515 to provide some key details (eg your name, DOB, NI number, address, telephone number, start date and type of business). You could even have been trading for up to three months previously (if you leave registration any later than three months, you’ll be fined £100). Should you prefer, you can register online. Where’s the problem?
And while forming a limited company (“incorporation”) takes slightly more effort (you need to fill out an IN01 form and complete a Memorandum of Association and Articles of Association), it can be done within a day if you pay £50 for the Companies House same-day service. Otherwise you’ll have to pay the standard registration fee of £20, which, granted, could take between eight and 10 days to process. Pay a professional to do it all for you and opt for the same-day service and your new company could become a legal entity in four hours or so.
So why spread the myth? Is it because our politicians are so out of touch with the reality of starting a business? Probably, yes. Few politicians of whatever persuasion have or will ever start or run their own small business. And that’s part of the problem, but one for another day.
And while it’s understandable that any party trying to gain power should seek to appeal to small firms and the wider electorate with the promise of a better new world, using untrue ‘facts’ (if you’ll forgive the deliberate oxymoron) merely increases the risk of putting people off, at a time when the economy needs them to start a business. We should encourage people to go into business – not discourage them.
Truth is, registering a business isn’t difficult and it doesn’t take a long time, the myth needs to be challenged (same as the ‘excessive red tape’ red herring). The real difficulty lies in surviving that all-important first 12-18 months and then moving the business onto the next stage. Any small-business owner would tell you that, Dave.
Mark Williams, Start Up Donut editor