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What’s your brilliant business idea?

If you’ve always wanted to start your own business there has never been a better time to begin, writes Alison Rose, CEO of commercial and private banking at NatWest.

People in the UK have a much greater desire, now, to start up and run their own businesses, and this represents a massive untapped potential in our economy. It’s broader than just trends in business. There are societal trends and educational trends at play: the corporate-ladder job for life is much less of a priority. A faster pace of change in communication and technology makes it easier – and in some ways harder – to run businesses. But there’s no question that the small-business economy now works in a different way, and I see in that a greater ability to contribute to the economy.

Anyone can start a business now, because markets are much more accessible. Traditional corporates think in terms of geographical markets; entrepreneurs, particularly in the technology space, think less in terms of country borders and more in terms of one open market, because that’s how information flows.

It’s also much more accepted to start up a business, but there are still things that hold people back: a lack of local support, a fear of failure and not knowing where to go for advice are the main barriers. That’s why, as the UK’s best bank for business, we partnered with Entrepreneurial Spark to set up the world’s largest free business accelerator for growing ventures – with the idea that they would not be solely tech-focused, because there are a lot of tech hubs in different places. The mix of businesses we have in our accelerators is hugely varied, from food to lifestyle to engineering. But increasingly, if you look at most of those companies, they are all innovative; many start-ups are technology-led in terms of their supply chain or their needs. Through Entrepreneurial Spark the bank is also helping to create jobs across the UK, securing millions of pounds of investment for companies, and the businesses we support are generating employment and millions of pounds for local economies.

I’ve been to the launch of every Entrepreneurial Spark hub, and I never fail to be amazed. Some of the ideas seem obvious, but that’s the beauty of a successful business idea. There’s the guy who loved craft beer, for example, who went to craft breweries around the country and now has a mail-order business that brings them to people who wouldn’t otherwise have heard of them. It’s not an innovative fintech idea, but it’s a clever idea for a business. There’s the company in Milton Keynes that developed a bamboo bike frame – it’s one of the strongest and lightest materials. There’s the university professor and his wife who developed a transporting device for lobsters – this might sound niche, but it delivers a more than 10 per cent efficiency saving in an industry worth over £40bn.

But we shouldn’t pretend that there isn’t a high failure rate for start-ups. The global average is that 45 per cent fail in their first two years. A lot of them fail not because they don’t have a great idea, but because they can’t access the right markets, or they run out of funding, or cash flow. So if we can leverage our network and the support programme around them so that more survive, this means they have more potential to be a scale-up or even a unicorn. More than 85 per cent of businesses that have been through Entrepreneurial Spark are still trading today. The real danger for entrepreneurs happens when they leverage themselves up with debt early on.

The high failure rate of SMEs is largely down to the fact that they take on too much debt, and they don’t manage their cash flow – and then a great idea, and a great business, goes bust. So we look at bringing other sources of funding in. That’s a discussionI often have with policymakers: there’s a gap there for funding. The reason there is such a thriving entrepreneur programme in the US is that the Americans have lots of different sources of funding that help early on. We don’t; the default is to get a bank loan or use your life savings. As a nation, we’ve got to find a way to bridge the funding gap in a way that’s not destructive to businesses when they’re in their cash-absorbent phase.

The greatest thing that we at NatWest can do is to open up our network, because we bank far more businesses than anyone else in the UK. We can put small start-ups in touch with big corporates who can give them ideas or share experience and sector knowledge. So, for companies making products to sell, we’ll introduce them to Amazon or John Lewis or Sainsbury’s. We also have mentors, often successful entrepreneurs themselves, who come in and give practical advice on a one-to-one basis while our bankers also provide support and help.

Sometimes this advice is all it takes. Our research, which we do every quarter, shows that up to 60 per cent of people who want to start their own business hold back because they fear failure. For the rest, it’s because they don’t know how – or where to go for help.

So, what do we get out of it? We learn what our business customers want from us and we learn how we can serve them really well. With the hubs being based in our buildings, our staff are gaining unprecedented insights into how entrepreneurs operate and are becoming entrepreneurial themselves. Roughly 3,000 bank employees have voluntarily joined our Entrepreneurial Development Academy to learn from our customers.

If we can give people the confidence, the advice and the resources to start their own businesses, we can create a new generation of entrepreneurs.

Visit www.entrepreneurial-spark.com or follow @ESparkGlobal and @NatWestBusiness

Originally published in print on the 3rd March 2017

 

Here's my idea: Morag Pavich

“I set up Mo’s Cookie Dough to allow anyone to make great-tasting cookies. It combines the convenience of American-style, pre-packaged cookie dough with high-quality Scottish ingredients. Our cookie dough is now being stocked across 246 Waitrose stores.

“Being a part of Entrepreneurial Spark has given me the tools to create and act on a vision for a global retail brand. Self-belief and passion are incredibly important, but it is equally important to have a solid business plan to execute on.

“I have been lucky enough to have mentors who have challenged me to really understand how I will deliver my plan, margins, bottom line and so on. The Entrepreneurial Spark programme has made this possible by connecting me with mentors, and through its broader emphasis on thought leadership.

“A good banking relationship is also really important to the growth of a business, because the advice and support contained within that relationship can unlock opportunities that would otherwise be closed. You cannot be expected to know everything – especially in the world of finance. It has been a big advantage to have access to professionals to help me to understand my cash flow and how I can plan and finance my business. It makes people think: ‘Hang on, I could really make my dreams a reality.’”

Alison Rose is CEO of commercial and private banking at NatWest.

Photo: André Spicer
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“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.