So how do you start a business in a recession?

Start a business that helps people start businesses, that's how.

Setting up a business during a recession is difficult. So why not start a business during a recession that helps people establish their own businesses? This was the original thinking behind Yoodoo, a medium-sized business based in London's Soho that has grown to provide high-engagement e-learning for all sorts of clients, from banks to dentists.

"Yoodoo began as an idea for a kind of web home for new entrepreneurs", says Nick Saalfeld, head of content at Yoodoo. But like many new businesses, Yoodoo has morphed over the years, and now does things that are far afield from the original yoodoo.biz – a website that guides users through every stage of the process of starting a business, and making it succeed, with videos from leading business professionals, downloadable documents, quizzes and practical walkthroughs.

What happened, Saalfeld tells me, is that Yoodoo discovered their forte lay in making e-learning work, getting it to produce real outcomes. Where the original may have taught mobile hairdressers, for instance, the basics of business, Yoodoo now powers the way dentists learn about compliance, helps recruitment consultants practice more successfully and gives unemployed people the skills to find work. It’s in providing outcome-focused learning experiences for other established companies that their primary activities now lie, and business is good.

Starting up during a recession, however, has serious risks. But asking Nick why is something of a non-question – he's been an entrepreneur "since before the word ‘entrepreneur’ was cool", and starting companies is just what he does.

On the specifics he is resolute. "In a recession, there’s a depleted pot of finance, which is of course fundamental", Nick says. "But people ramble on about the availability of finance… yes, it’s hard to get hold of, but it’s not impossible. It demands greater fiscal probity and ideally a demonstrably skilled management team.

"The bigger issue now, I think, is that macro-economic issues are affecting the optimism, outlook and visible horizon for small businesses. All of a sudden people were (and are) thinking: what about Spain, what about Ireland? These huge macro-economic issues can affect me and my little company. That’s the real issue with starting up in difficult times."

But Nick insists that difficult conditions have hidden opportunities. "Change means opportunity in business – it just does. Evolutions in markets, disparities of income, location, access to raw materials, technologies… all these disruptive breaks represent new opportunities. Don’t get me wrong, times are tough, but there is still room for ventures that can absolutely pay off. Don’t expect an easy ride – you’ll need to get used to living on fresh air – but fortune still favours the entrepreneur’s key skills: resilience, doggedness, and sheer hard graft."

What can government do to help small and medium sized-businesses to succeed? "The problem for the government", Nick says "is that it only has two tools - money and laws, and they’re both pretty blunt instruments.

"There’s a big hoo-ha about red tape. Frankly that’s immaterial, absolutely meaningless. For small businesses – and 95% of British businesses have fewer than 5 employees – none of that is a concern and for the massive majority, red tape isn’t the problem."

In Nick’s experience, the major problem for small businesses that government ought to concern itself with is education. "Modern education has brought us a generation that is ill-equipped to conduct business, and that makes me very, very sad indeed.

"Problem-solving, ambition, the ability to comprehend long term strategy and construct an argument - these skills are not being taught, and it is crippling SMEs who are still finding it easier to recruit abroad, for example."

If you look at the figures, he says, Britain has dropped several places down the world education rankings, and it shows. "If the government really wants to help small and medium sized businesses," Nick says, "the best thing they can do in the long term is put their effort into education."

What currently hinders entrepreneurs? From Yoodoo’s experience, the problems entrepreneurs face are universal – finding the right idea and sticking with it. "There are entrepreneurs who are eternally glass half-full. That’s fine. But the real trick to being an entrepreneur is doggedness. Not doggedness to the point of stupidity, not re-mortgaging your house for something that’s never going to happen, but a determination to find new solutions to problems. Keeping that up is the main engine of entrepreneurship, and always will be. It’s a great British tradition – from Brunel to Dyson – to ask, 'Well, that’s not very good, so why can’t we do things differently?’"

Despite the economic uncertainties, Nick is full of encouragement for self starters. "I would never say to someone: don’t start your own business," he says. "Look, if I lose a client I might lose 10% or 20% of my income. If I’m employed and I lose my client, I lose 100% of my income. It’s madness to say that running your own business is so much riskier."

That seems to be Yoodoo’s message: if you’re self-employed it’s all up to you. But at least it’s not up to someone else.

This article originally appeared in Economia.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.