'Who's an entrepreneur?' UKTECH.com interviews the Minister for Small Business

UKTECH recently interviewed Nigel Griffiths, the Government's Minister for Small Business, about enterprise and contractors' businesses in his office at the Department of Trade and Industry.

Over the next five days we will run a series of interview pieces offering an exclusive insight into the Minister's views on:

• entrepreneurs, and what help is available to them;
  
• the handicaps of growing a small business, including IR35 and red tape;
  
• overseas issues, including fast track visas and EU legislation;
  
• changes in the way small businesses work in the 21st century; and
  
• the Minister's own background, experiences and interests.

"Many of the people affected by IR35 were working as employees one day and the company said to them: "It would be good if you kept working for us, but by the way, go self-employed" - Nigel Griffiths

In the first part of our series, UKTECH asked Mr Griffiths: 'What is the definition of an entrepreneur?'

Mr Griffiths replied: "An entrepreneur is somebody who wants to make money and grow a business, whether it's their business or not is another matter. Sir Geoff Mulcahy of Kingfisher is a good example of an entrepreneur who went from being an industrial chemist at GlaxoSmithKline, to almost starting Kingfisher Plc. single-handedly after his management skills were recognised: a classic case of someone who knew what they wanted to do at an early age.

"Other good examples are Richard Branson, founder of the Virgin Group, and Julian Richer, founder of Richer Sounds hi-fi stores, who both left school to sell records and stereos with a motive to be their own boss and make their own money, drive nice cars and pull nice birds.

"I can even see people who have done paper rounds and milk rounds as entrepreneurs. Often that's the first start, so I've got a wide-ranging view of entrepreneurs. If we could predict which of them is going to be successful or unsuccessful then clearly we wouldn't have the situation of young companies dying as they do here in the UK, though I'm very pleased that we currently have the best survival rates for a decade and start-ups are at high levels too."

UKTECH: What advice would you give them?

Mr Griffiths: "My strongest advice to budding entrepreneurs is: 'Get good advice,' because it's quite clear if you get good advice, and that can be from an accountant who is supporting business links and can give you sectorised and sophisticated advice, your chances of survival in the first three years double."

UKTECH: How are you providing that advice to small businesses in the UK?

Mr Griffiths: "We're about to launch a new publicity campaign to reach people that we perhaps haven't reached before. We obviously already have a network of 45 business links, half of them are run by franchise Chambers of Commerce. We've set them pretty tough targets and I've just changed those targets from being a high jump to a pole vault, so we're saying to people: "This is the standard we want you to reach in terms of getting people to start up and giving them advice to start up and most importantly, getting them to grow.

"We also want to help our large number of micro-businesses to grow and have access to the right sort of advice to help them do that. In terms of financing this, we set up regional venture capital funds in January with input from Paul Myners, Chairman of the Guardian Media Group.

"Another initiative we have recently launched is to get successful entrepreneurs to go back to their secondary schools to tell kids: "I've got a nice house in a nice part of town, I've got a nice car and being in business is a good thing."

UKTECH: Are the people who own the small businesses affected by the Government's IR35 tax genuine entrepreneurs?

Mr Griffiths: "Some are. However, many of the people affected by IR35 were working as employees one day and the company said to them: "It would be good if you kept working for us, but by the way, go self-employed," though obviously it was slightly more sophisticated than that.

UKTECH: Do you think IR35 has gone too far wide of the 'perceived' mark and has damaged UK entrepreneurs?

Mr Griffiths: "No. I'm not sure the worker was saying the week before: "I'm going to set-up my own company." I think they said: "This looks like a good deal Management are offering to get out and write off my car and everything else I can write off in tax.

"Understandably, after that, the Chancellor was not willing to try and cope with the shortfall. He's just done the same thing in the creative industries. The television programme, Coronation Street, started making each episode almost as a stand-alone company and that allowed them to attract investment that was meant to bring American film companies over to the UK. The hit on the Treasury was £800 million from that sort of unintended loophole, whilst the actual cost the Treasury was willing to pay was about £200 million, so the Chancellor closed the door to the loophole as we and others warned the industry to do, same as IR35."

Mr Griffiths had much to say about IR35 and the representations industry bodies that publicly oppose the legislation have made to him.

Tomorrow's excerpt will look at the Minister's views, both on this issue and on the main regulatory barriers to growth for UK small business in general.