Britain's "entrepreneurial spirit" struggles to build big businesses
I don’t consider start-ups to be real businesses. A start-up aspires to become a profitable organisation, and until that point they are merely a means for blowing lots of money. I would not refer to the self-employed as start-ups, for the simple reason that the self-employed actually look to make a profit by the end of the year, whereas start-ups will just look for sales, whatever the cost.
Therefore, when those in the public claim that Britain has an “entrepreneurial spirit”, they are wrong to use the number of start-ups registering as evidence for this. The ability to register a start-up is nothing to do with entrepreneurial spirit. All it shows is that Britons are very good at Googling Companies House and completing their forms. In fact, the Organisation for Economic Cooperation and Development (OECD) ranks Britain 3rd best in the world for doing this. At one point, we were creating 80 businesses an hour during 2016.
However, what Britain is not very good at is converting these start-ups into medium sized businesses. In fact, we drop down to 13th best in the OECD’s rankings for this. If anything, we should be looking to swap these two positions around; currently it only demonstrates Britons deluded outlook in setting up these businesses and our incompetence in growing them.
Those willing to offer a more considered opinion for this situation often cite the lack of access to finance and/or lack of skills as the primary reason for our poor conversion rate. In addition, we are said to be too short-term in our thinking and are overly focussed on a big windfall when getting bought out by a bigger company.
Either way though, the next time you hear someone say how great we are at business because we’ve started a lot of them, realise that they’re using the wrong criteria for success. Essentially, these people are celebrating those who throw their money at start-ups and not being able to convert them into real businesses.