Memo to the PM: the answer lies in the soil
Mark Goyder Founder, Tomorrow’s Company, Trustee of Tomorrow’s Enterprise Foundation, Author, with Ong Boon Hwee, of Entrusted: Stewardship for Responsible Wealth Creation. At its best, family business embodies the principles of stewardship through the responsible management of entrusted resources which can be passed on in better shape. Of course, there are other forms of ownership that enhance the potential of both a company and an economy to thrive. But there are a few, like the worst privatised utilities and the worst of private equity, that achieve the opposite. It is time to promote the first and call out the second. We need the combined voices of enlightened business to convince Government to focus its pursuit of growth on the birth, development and endurance of enterprising, well-led companies that generate wealth in ways that leave a better legacy for the next generation. If wealth creation grows out of the soil of a society – its education system, culture, financial institutions, science, research, creativity and imagination – then a policy for growth must be one that improves the quality of that soil with entrepreneurship and stewardship at its heart.
“We have one of the best start-up cultures and incentive frameworks in the world, but little incentive to remain involved once the business is successful.” He suggested that tax relief on dividends would encourage longer- term founder ownership. There are critical decision points as successful businesses grow beyond the span of a founder. What does the founder do? Sell to a big company? Merge with others? Go for private equity funding? Go public? Government must design tax policies with these transition moments in mind. It was shortsighted of former Chancellor Rachel Reeves to remove Business Relief for Inheritance Tax not just for farmers but for all business owners. The new rules incentivise short-termism and make it harder to pass on businesses to the next generation. The tax treatment of private equity should also be changed. Under Gordon Brown the Treasury introduced tax advantages for venture capital. These rules were exploited by private equity firms seeking to buy, fatten up and sell companies. Pubs, vet practices and children’s homes have all suffered from acquisition by investors seeking to
The conditions for entrepreneurship start in and around schools. In programmes initiated by Tomorrow’s Enterprise Foundation, and first piloted in partnership with Linney Group, a seventh-generation family business whose 175th anniversary you can read about in these pages, we have seen entrepreneurial flair among 13 - to 15-year-olds. Taken into workplaces, students rise to the challenge. Tasked with designing an app, making presentations and developing a business plan, they say the challenge of working in small teams is one of the best things they have done while at school. Local employers, partnering with schools, have identified individuals with potential and opened pathways to employment long before GCSEs. Programmes like these will significantly reduce the numbers not in education, employment or training (NEETS).
Stewardship throughout the company life cycle
Private businesses which have stayed with the families of founding entrepreneurs employ 13 million people in the UK and create most new jobs. One high-profile, serial UK entrepreneur and founder of several funds investing in early-stage enterprises told me:
Entrepreneurship
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