Britain’s creative micro-businesses – spanning fields as diverse as software, music and fashion – are the key to growth, according to a new study. Centre-left think tank Demos finds that these outfits, typically employing fewer than five people, are more resilient than other sectors, and recommends several measures to nurture …
Step aware from the keyboard
all your softwares are belong to us.
Sorry, that's patented. Software development that is. You're just going to have to learn to keep aware from the top 400's money pot.
Majority opinion seems not to be reflected by business journalists...
Many, perhaps most, of us in the creative industries - especially software - would abolish all IP and want tax regimes as simple as possible. I write this as a creator of IP and payer of corporation tax. Opinion one: IP acts to protect the status quo against competitors, not to promote innovation. Opinion two: tax breaks distort decision making in business. If the project was work doing it was worth doing without the subsidy.
Need reasonable protection, not cuddles
@Programmer and Publisher
I think you should come clean and let us know what you program and publish because as the ower of a micro software company I don't recognise your comments. Let's start with tax breaks: what tax breaks have there been? There is some capital allowance but this just allows a business to improve cashflow by not applying the normal accounting principles for capital purchases - but you pay the tax in the end. And, anyway, it doesn't really apply to micro businesses (because capital costs are negligible) and to software companies in particular because under UK GAAP you can't capitalise R+D (and much of want a small software company does it R+D).
So let me turn to IP. " IP acts to protect the status quo against competitors" So why (in principle, of course) would you as the author of the IP be against protection? Surely that's in the interest of you and your shareholders (wife, parents?).
It's almost impossible for a micro company in a "creative industry" to raise venture capital in the UK - if you've tried and been successful please let us know the source. That's because without any tangible assets there's no protection for investors.
I look across the Altantic (where that nasty IPO allows patent protection for business methods - not strictly software) and I'm envious. Their regime, as broken and twisted as it may be, allows investors to be involved. Not surprisingly, there is where the successful companies exist. There may be a few successful micro companies here but my guess is that almost all will really be making money selling time not product.
As a former micro-business...
... I wouldn't start one again.
They are more resilient, usually, as they depend on enthusiastic (stupid?) owners who will adjust their takings from the business, if necessary making them negative, in order to keep things going in hard times.
They're plagued by temporary "tax breaks" and special "promotion" that cause their business objectives to be continually twisted to adapt to short-term government policies and which constantly distort competition by unlevelling the playing field with monotonous regularity just so Joe Soap MP can have his photo taken with someone in a suit or a lab coat. They're constantly under the thumb of the VATman, the taxman, employment law and every sort of "compliance" scam from having the right-sized health and safety poster to portable appliance testing. The owners of small businesses that were previously encouraged by government policy to incorporate are now being hit with big captial gains tax bills when they come to retire and sell up as some idiot of a politician decided they'd just change the rules for a laugh.
Meanwhile, big business chooses when, where and if to pay tax, routinely gets to dictate favourable legislation and pays for its failures with other peoples' money.
Micro businesses don't want special rules, but they'd quite like different rules that actually apply to everyone. Since that's unlikely, my advice to anyone thinking of starting one is to forget it.
I gather there's a role going as Special Adviser to the Defence Minister with lots of international travel and sounds like a lot less effort.
We need less weird tax rules not more.
Agreed - why not just make things simpler by just not having to pay Employers NI on the first ten employees, or no corporation tax on the first £50k of profit.
Here's a wacky thought
How about not taxing the hell out of people and businesses so that they can compete?
Just get off my back
As one trying to run a "micro business" I say to government - JUST GET OFF MY BACK.
Leave me alone to get on with the job.
If I do something bad, then punish me. But don't force me all the time to fill in lots of paperwork to show that I'm not being bad.
Make laws against bad things & bad deeds - punish me if I break them - but don't make me my own policeman.
Whatever happened to the rubbish spouted by the tories before getting elected about "red tape bonfires" ???
Tax breaks ? Well you need to make a profit first before that even becomes a consideration. That's the hard part.
Helping small web developers
Government could help by
1) Provide a web page where you can upload a csv with your income and outgoings based on your business bank account and receive back a single amount to pay that covers Income tax, Self Assessment (if applicable), Corporation tax, VAT, and NI.
2) Web-developers have a problem with patents. See here: http://webshop.ffii.org/ Many software patents were simply not original enough when submitted, the bar needs to be raised.
3) Plough any enterprise investment into turning old buildings into workable offices. In many parts of the country you can not get an office at a decent price. In my home town of Sheffield the government ploughed millions into setting up the "Digital Campus" including the "Electric Works". I looked at getting an office there, the cheapest option that included a desk was a shared office for £170+VAT per month + Coms per desk. I have found somewhere that I pay £150 including coms per month for a 2/3 man office, I was lucky to have found it, but it proves it can be done. My new office is in the centre of Sheffield and no compromise has been required, it's perfectly good for customers to meet me here.
Startups need cheap rents. Not buildings with helter skelters (http://www.electric-works.net)
4) Provide support for growth. To grow I need to take time to train the new staff. I don't have the time to do that and to earn the money to pay them, and myself (and my mortgage etc) Hence no growth in staff numbers.
Going from one person to two is much harder than going from two to three, even more so when the people you employ are going to be well paid rather than minimum wage staff.
Time to make some tough decisions
@Richard Fletcher - I thought the helter skeler comment was sarcasm - but no there really is one! http://electric-works.net/about/helter-skelter
Anyway my take on the question: Any business with fewer than 10 employees and a turnover of less than £50k p.a per employee should be exempt from much of the useless legislation - and perhaps more than that.
In the present climate my business would not be able to sustain problems that the likes of Tesco take in their stride unnoticed like long term sick leave, pregnancy, a tax inspection, the difficulties of firing a useless employee.
Fact is the bureaucrats find it a lot easier to drop on a small business who have no option but to comply with whatever lunacy is flavour of the month than tackle a corporate who'll invoke lawyers, get influential politicians lobbying for their interests.
In fact that's my diagnosis of why much of the public sector is useless, they'd rather fulfil their quota by doing the easy jobs.
Social workers would rather spend days on endless meetings to find reasons why good decent couples shouldn't be allowed to adopt than to tackle an aggressive druggie/alcoholic violent parent abusing their kids and not letting the social workers get near. Result: it's near impossible to adopt and yet kids are dying at the hands of known abusive parents.
Police come to a break in, you admit that you assaulted the burglar so they take that more seriously than the break in, you've made it easy for them, you're cooperative, you've made an unsolicited confession of assault while the burglar's only offence is breaking a window which he claims was an accident or done by someone else and he only came in to see if he could help.
Planners obstructing minor changes to private houses but letting Tesco build a monstrosity across the road.
UK as a whole (and EC for that matter) just hasn't grasped the magnitude of our own financial situation or the global financial meltdown.
The media often use comparisons people can visualise like something is: the length of 5 london busses, the area of 10 football pitches, half the size of Wales. We've not got a visualisation for the budget deficit. Here are some: UK's annual deficit is more than it cost for the Apollo project to send a man to the moon. It's nearly as much as the cost of repairing Japan's recent earthquake/tsunami damage and it's not a one off like those events, it's every year.
We've just had news of UK unemployment reaching 2 million and yet when I phone my Bank it seems to be in somewhere like Bangalore with an unusual version of English and no sense of loyalty/custyomer care. Why? Because it's cheaper to employ staff over there. If it were possible to change the legislation such that we could bring all those Indian call centre jobs back home it would provide jobs and create taxpayers. Yes it might mean sacrificing loads of worker friendly practises which none of us really want to see but when times are hard the way out is to make the difficult decisions. I know, I've had to dismiss good loyal workers in a downturn because the alternative was to go bust.
I'll never forget the example Blunkett chose to demonstrate his department's "success" at finding and dealing with illegal overstaying immigrants. As far as I recall the example he used turned out to be a woman in her 50s, been in UK for over 50 years, brought up and educated here, worked and paid tax here, married to an English guy, their kids were born here. She'd been brought here by her parents as a baby and they didn't do the paperwork. The authorities picked up on her illegal status when she applied for a passport. She was reprieved by MP intervention 24 hours before a forced deportation. Not only was Blunkett a prat for using that example but the bureaucrats who, knowing the full story, continued to treat her as a case for deportation are simply not fit to do their job.