Encouraging small and start-up businesses

 One of the problems faced by small and start-up businesses is that they face a body of regulations designed for businesses as a whole, despite the fact that the small ones find it difficult to cope with the cost of compliance. Start-ups find it particularly difficult because they do not usually have an income stream from which to fund regulatory compliance. Indeed, larger firms often benefit from regulations that they can cope with, but which prevent new market entrants starting up to compete with them.

One proposal might be to divide businesses by size, with different degrees of regulatory compliance required for each group. Many small businesses, including High Street ones, might be covered within an up-to-12 employees category. Medium ones would fit into an up-to-50 employees, and large ones into the above-50 category.

Those in the ‘small’ category could be exempted from some of the regulations more easily borne by large corporations. These would include those relating to employment, including maternity leave.

A poll should be commissioned to learn which regulations faced by medium-sizes businesses are found to be the most onerous and are difficult and costly to comply with. A joint task force with business participation could then decide which ones should be exempt for firms with fewer than 50 employees.

The Entrepreneurs Network has put forward several detailed policy proposals aimed at helping start-up businesses in the UK. In their ‘Unlocking Growth’ report, they highlight how bureaucratic hurdles and limited capital restrict entrepreneurs, particularly first-time and female founders, from accessing vital funding.

They suggest allowing pension funds into venture capital — reforming rules so defined-contribution schemes can invest more in VC, increasing long-term investment. They propose streamlining tax relief processes (EIS/SEIS), speeding up and simplifying schemes so startups can access reliefs faster and avoid cashflow bottlenecks.

They suggest introducing lottery-style grants, funding high-risk, innovative ventures via a randomized grants model inspired by New Zealand.

Their recommendations combine strategic financial vehicles (like convertible loans and pension involvement), regulatory reforms (simplifying relief and visas), and educational support aimed at both youth and international founders. As a result, startups would benefit from improved capital access, mentorship, and a more enabling environment from inception to scale.

Their recommendations can be visited on their website:

https://www.tenentrepreneurs.org/

 If government wants to promote employment and growth, it should note that this comes from start-ups and from small and medium businesses, which employ three-fifths of all employment and account for half the total turnover in the UK private sector. It should promote them by easing the burdens they face.

Madsen Pirie