A COMPREHENSIVE STRATEGY FOR START-UPS
A consultation document issued by the Small Business Service
Comments from the Association of Chartered Certified Accountants
July 2002
Executive Summary
The Association of Chartered Certified Accountants (ACCA) is pleased to submit its comments on the Small Business Services' consultative document A comprehensive strategy for start-ups.
ACCA welcomes the move to provide greater support for start-up businesses, which, as the consultation document notes, contribute to the health and sustainable growth of the economy by creating jobs and increasing competition. We look forward to the detailed action plan which will be produced as a result of this consultation. We trust that the action plan will identify where small business organisations can contribute to the strategy for start-ups.
We are concerned that the objectives stated in the consultation document may be insufficiently specified. Consequently, it may be difficult to measure the success of the strategy. However, we support many of the proposed measures to help small businesses, including providing information on government support, giving electronic access to information and transactions and striving to achieve coherence of regional and local delivery. In particular, we welcome the proposal for a National Policy Forum for start-ups.
At a general level, ACCA believes that, to underpin the development of a strategy to support small firms, there needs to be a full understanding of the aspirations of those starting up in business. For example, the term 'Entrepreneur' as applied in the consultation document denotes an individual leading an innovative, high-growth business. This concept is, however, alien to the majority of start-ups which are businesses set up to fulfil 'lifestyle' choices, and have no intentions to grow. To ensure that support is targeted appropriately, start-up support for small businesses must recognise this difference in aspirations.
Specific Comments
1. In the following paragraphs, we address selected issues raised in the consultation document. Our approach has been to focus on the general direction being taken, making only a limited range of detailed suggestions. We shall be happy to review the strategy in greater depth as it takes firmer shape.
OBJECTIVES FOR THE STRATEGY (SECTION 4.1)
2. The objectives of the strategy are commendable in their aims. ACCA is concerned, however, that they may be too general and, therefore, not easily measurable. In addition, a number of them, such as "to increase the number of people seeking external help starting a business", make little practical sense unless a parallel objective, such as "to support those providing external help", is also included. We trust that the goals which will feature in the final action plan will be both specific and measurable.
MEASURING SUCCESS (SECTION 9.1-9.3)
3. For the reasons stated above, ACCA believes that it will be almost impossible to measure the success of the strategy. A good example of the difficulties likely to be faced is the fourth objective, which aims to identify and remove the barriers which discourage those in under-represented groups and disadvantaged areas from starting businesses. ACCA believes that this aim will be almost impossible to measure since neither HM Customs and Excise nor the Inland Revenue record if a start-up is from an 'under-represented group' or from a 'disadvantaged area'. Indeed, it may be difficult to identify whether a 'barrier' has even been removed.
4. The consultation document also states that the Small Business Service would like to encourage the development of 'lifestyle businesses'. Since it is unlikely that a large proportion of these firms will register for VAT, the VAT-registration based indicator proposed may not be appropriate to use as a measure of success. We believe that it would be more valuable to look to the Inland Revenue to measure the number of new businesses. In any event, ACCA believes that surveys and qualitative research should be conducted to back up any statistical information which is collected from the Inland Revenue and Customs and Excise.
5. Finally, the strategy states that the Performance Indicators listed in "Think Small First" will be adopted as performance indicators for the strategy for start-ups. It would have been helpful if these indicators had been listed in the consultation document itself.
RECOMMENDATIONS (SECTION 10)
10.1 Coherence in delivery
6. Accountants are the first choice advisers of small businesses and are at the hub of local commercial networks; they are, therefore, an excellent source of information on the needs of the sector. One ACCA member in practice has commented that "there is a significant amount of pre-start up help but then very little support when the start-up is actually operating. Start-ups need help and guidance with structuring their businesses, dealing with VAT returns and introducing PAYE systems. Start-up support goes further than producing business plans".
7. The proposal to establish a National Policy Forum for Start-Ups is sound. We agree that this will facilitate the development of policies to make the most efficient use of both public and private sector resources. We believe, however, that it is crucial that there are representatives on the Forum who have direct experience in SMEs. ACCA will be pleased to contribute directly to the Forum and we shall welcome the opportunity to discuss this in further detail.
10.2 Information on Government support and requirements
8. While agencies such as the Inland Revenue already provide start-up information, we support the introduction of a comprehensive start-up pack which will provide basic information on everything a start-up needs to know when commencing business. It is widely felt that there are contradictions and overlaps in the support provided by government to start-ups. A pack (either in CD Rom format or as a user-friendly website) which co-ordinates all the available information and provides contact details for all organisations which offer start-up support would be very helpful. It should include information on everything from stakeholder pensions to VAT and employment law.
10.3 Electronic access to information and transactions
9. ACCA welcomes the proposals outlined in the strategy on the use of Information and Communication Technologies (ICT) for information and transactions. In particular, ACCA is supportive of the use of ICT to make transactions easier. The government should promote the use of ICT to reduce the growing administrative burden on small business and the cost of regulation. Much business information is now stored electronically and this could be transferred to the relevant authorities through the Internet rather than by the manual completion of forms, thereby significantly reducing the administrative burden. Given the spread of broadband Internet connections, intermediaries such as ACCA, telecoms companies and software providers can work with the government to promote and facilitate the wider use of ICT.
10.4 Coherence of regional and local delivery
10. The strategy highlights the need to ensure that start-up support is coherent at the regional and local levels. It correctly identifies that bringing partners from the public and private sector together is a way to achieve this. As accountants are embedded in the local business community, we recommend that there should be sign-posting from all small business support agencies at a local level to the small accounting firm community. We note the National Register of Consultants, which has been established by the Business Link Network and we note also the existence of several accountants' registers which have been developed by a number of Business Links (such as Business Link Wessex). These registers act as a means to sign-post businesses to the support which is available. The development of this sort of facility can ensure that the public and private sectors are jointly involved in delivery. It is, therefore, an important step in the provision of coherent support.