FRANCHISECOMMENT S
elf-employment is increasingly becoming the engine-house of growth for the British economy and has provided increasing employment choice and opportunity for people displaced
from traditional paid employment throughout the period of recession since 2008. This trend appears set to continue as the paid-employment model adapts to the structural changes in the workplace. In the post-recession society, with the demand for more flexible working, the opportunities for self-employment increase. A report published in August 2014 by Office for National Statistics, entitled ‘self- employed workers in the UK – 2014’, shows that self-employment is higher than at any point over past 40 years and that the rise in total employment since 2008 has been predominantly among the self-employed. This trend has helped sustain the economic recovery, demonstrated the tenacity of individuals experiencing potential depravation through unemployment and, most importantly, created a growing social culture that celebrates the virtues of self- actualisation and a lifestyle choice that underpins self-employment.
“significantly more robust, and with the potential for longevity, franchising draws interest from many seeking an option with a low failure rate”
The official figures show that over 4.5 million people are self-employed, the number of people working for themselves has increased by 404,000 since September 2013. UK unemployment rate fell to 6.5 per cent in August. The heroes of this occupational revolution have not been government ministers or the opposition. Nor has it been big businesses or the financiers that support them. The real heroes have been the self-employed entrepreneurs taking risks and investing their financial resources to start businesses and create jobs.
Indeed, the self-employed are starting
more businesses than ever before. Since 2010, two million private sector jobs have been created through entrepreneurship and self-employment. Far from benefitting London and the southeast alone, high-growth entrepreneurial firms are spread across the UK – in a variety of sectors that help diversify and ‘rebalance’ our economy. Indeed, in May 2014, the north east, on the back of this entrepreneurial evolution, experienced the fastest growth of any UK region. Esther McVey MP, the Minister of State for Employment said in August 2014 that the government should be championing those who have the “spark” to create their own businesses and become “little engines” of wealth creation in their communities, liberating everyone’s potential. She said that, for many people, setting up their own firm is “better” than working for an employer. One key issue that the government statistics do not reflect is the longevity of new businesses created through self-employment. The UK is a cheap place to start up according to online business portal GrowthBusiness, with 0.7 being the percentage of gross national income start-up cost for UK businesses, (compared with a global average of 20 per cent). Alongside the relative ease of establishing a self-employment start-up, however, there is risk. In the UK it is risky, with one in three businesses failing within the first three years. 20 per cent of businesses fail within the first year, and in the next three years 50 per cent of those fail. According to insolvency practitioners, some common reasons for business failure include: the business was started and run for the wrong reasons; the principal does not have the required combination of entrepreneurial, managerial and technical competence; inadequate working capital; weak financial skills; wrong location; lack of planning; poor marketing and a lack of strategic direction – to name but a few.
An opportunity to mitigate these high-
failure risk features of a new business start-up is available through the practice of supported- self-employment. This simple approach merges the personal vision and commitment of the self-employed business owner with the proven business model of an established brand to create a new, but far less risky, business start-up. Significantly more robust, and with potential for longevity, this business type draws interest from many of those who are making life-stage decisions as well as seeking an option with a low commercial failure rate,
which remain at just 2.3 per cent according to the NatWest bfa survey, 2013. The lack of suitably qualified candidates for supported-self-employment is a perennial theme. Can McVey help to change things with her proposals? These reliable business opportunities come through the franchising model, often the “Cinderella” sector of the British economy, and unjustly overlooked. The total number of people employed
through supported self-employment is 561,000. In 2013, the overall contribution to the UK economy from supported self-employment was £13.7billion; which equates to about 1 per cent of GDP. This contribution has grown by 20 per cent over the past five years, whilst the overall economy has shrunk by 2.5 per cent over the same period.
Come on ministers, help us to help you drive supported-self-employment and let’s get Britain’s nation of potential entrepreneurs to work! n
Author’s note
nigel toplis has been in franchising for over 20 years and is currently managing director of recognition express, ComputerXplorers, the ZipYard and Kall Kwik
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