New Enterprise Allowance or New Enterprise Alliance?

Another government, another push for another 10 000 small businesses to be created from the ranks of the long term unemployed.

To me it seems similar to what we already have under the Flexible New Deal, unless I am missing something: it may be a tad better resourced.  But, I am encouraged that Iain Duncan Smith appears to have a real commitment to social justice, at least, he chairs the cabinet committee on it.   Let’s hope that his commitment to social justice rather than newspaper headlines really shapes this New Enterprise Allowance.

So what are the chances of success for the New Enterprise Allowance, and what might be the pitfalls?

To begin with, although I am a big fan of mentoring, I am not convinced that it is the best way to support people with transitions from unemployment to self employment.  The best mentors (as opposed to coaches) have ‘been there, done that, seen the film and got the t-shirt’.  They can offer sage advice and guidance based on practical experience (usually gained over many years in a specific and relevant industry, and importantly should be chosen by the mentee and not assigned to them by a service provider); Mentors should know what it takes and be available to put in the time and commitment necessary.  Let’s also hope that they are properly trained, supported and supervised in the process of mentoring.  And mentoring should not be a mandatory component but an option, we have to recognise that folks learn in different ways and for some the thought of being mentored just does not cut it.

So, if we must have a mentoring programme let us run it well.  Lets take mentoring seriously.  Let’s make sure that we have enough well trained mentors.  Personally I doubt that we will.  More likely we will find an army of middle managers looking to do some CSR, or rebadge existing enterprise advisers as New Enterprise Allowance Mentors.  Plus ça change…probably

I think the enterprise coaching role is, in places where it has not been confused with enterprise evangelism, much more likely to be effective.  Non directive, facilitated conversations that give people space to develop their options and make their own choices provides a sustainable route to more enterprising communities.  Conversations that don’t use ‘benefits’ and ‘enterprise’ as carrots and sticks to manipulate people to meet government targets and trigger payments by ‘results’.  Our industry is riddled with such practice.  We need conversations that respect people and their right to choose.

I suspect that mentors will work with mentees primarily on ‘the business plan’.  I doubt they will have the coaching skills to really work on developing the person rather than their idea.

Will a decision not to start up be valued and rewarded as highly as a decision to start?  I hope so.

Will the New Enterprise Allowance engage ‘the community’ in supporting local people struggling to make the transition to self employment?  No sign of community panels and networks to support the formal delivery structures.  It is not so much a New Enterprise Allowance that we need in our communities as a New Enterprise Alliance….

Will the scheme be designed to encourage the formation of team based start-ups where complimentary skill sets and personalities ensure that all functions in the business are adequately covered?  I doubt it.  It will, if history is our guide, take the shortest, lowest cost, route from benefits to self-employment, not the route that is most likely to result in a sustainable business with the potential to grow.  While we should be looking to maximise return on investment I suspect we will look to minimise investment.  Cost per start-up will be the metric of choice.  And the sooner we get the better.

The New Enterprise Allowance will be for long term unemployed who ‘want’ to start a business.   Finding the people who really WANT to will be an enormous challenge.  Personally I don’t think it is anywhere near enough for someone to want to start a business.  It needs to be something that they HAVE to if they are to have a decent chance of success.

We have approaching 800 000 people who have been unemployed for more than 6 months.  The New Enterprise Allowance hopes to help 10 000 of them to start a business this year, that is just over 4 in every 500.

• But which 4?
• What percentage of the 800 000 will wish to engage with the programme?
• How many will the delivery mechanism engage with at the start of the process?
• How many of those will make it through to trading?
• What positive outcomes will be delivered to those that engage with the programme but decide not to start a business?

This represents a challenge.  To help find the few who really will do the groundwork required and learn what needs to be learned.  It is a challenge both for marketing the scheme and effective psychological contracting between service provider and service user..

And the whole scheme reeks of yet more ‘fast enterprise’.  A couple of mentoring sessions and three half days with a training company and you will be ready to roll.  Well maybe. And maybe not.  Where these sorts of schemes prevail they prioritise the most capable and even then have frightening business failure and loan default rates.  Good business start ups plan and prepare carefully.  They don’t rush it.  There is little point in starting 10 000 new businesses in a year if the survival rates are not good.  And please this time will someone show an interest in survival rates?

Then there is the cash element.  In the transcript of his speech on Conservative Home, IDS is reported as saying:

We will provide business mentoring and a financial package worth up to £2000 to get your business up and running.

Now quite what is meant by ‘a financial package worth up to £2000’ remains to be seen.  Cash grant?  Loan?  Benefits?  But clearly in this transcript it is £2000 in addition to the mentoring provided.

But can anyone explain to me the why the magical figure of £2000?  How about we teach them to access the finance that they need to give their business a well capitalised start?   Whether that is £5 or £5m?  If we are serious about teaching people how to run a small business let’s not cap ambition according to the size of our currently cash strapped treasury pockets.

So at first glance it looks to me like wrong pedagogy, wrong curriculum, wrong ‘financial’ package, wrong pace of change and a failure to embed enterprise culture in the community.  Apart from that all systems are go.  I can already hear the usual suspects sharpening their pencils in anticipation of the invitations to tender.

I hope it is me that is wrong….

What do you think?

Employment and Skills – 21st Century Stylee?

• How do we develop a workforce that is Fit for the Future?
• How do we tackle the problems of ‘worklessness’?

Important questions that we have sought solutions to for most of my working life.

Broadly speaking we have two possible approaches.  We can  set up a committee of the great and the good, employers, politicians, civil servants from Learning and Skills and Job Centre Plus and we can task them with collating evidence on labour markets, forecasting the future and identifying practical and affordable opportunities to intervene in the systems of education and worklessness that will make sure we develop the workforce that we need, when we need it.  This centralised approach puts power and resources in the hands of an Employment and Skills Board and sets them an impossible task.  It is the Soviet approach to planning tractor production.  It didn’t work for them.  And it hasn’t worked for us.

This approach results in a relatively small number of experiments (pilots) that are later rolled out.  It relies on a committee to accurately ‘read’ the future – to spot opportunities for job creation and then to exert an influence on the ‘production system’ quickly enough to make a positive difference.  This is usually done by setting targets, shifting resources and waiting to see how things unfold.  Strategies are typically set for perhaps half a decade and ‘refreshed’ annually – single-handedly tackling the worklessness agenda by employing a small army of civil servant and academics to collect data and produce reports.

Such boards end up being an ‘interesting’ balance between the voice of the private sector and democratic accountability.  In fact they usually become stylized ‘war zones’ from which the private sector often retreats beaten into submission by public sector and academic working practices.  Certainly the voice of the small business sector is rarely effectively heard.

Board strategies usually find a few ‘keys’ (NVQs, Diplomas, accredited in-house training, apprenticeships) to a few kingdoms (construction, health and beauty, tourism, call centres, and anything prefixed with ‘creative’, ‘digital’, ‘bio’, ‘high tech’ or ‘high growth’).  Aspirations and strengths of people are subordinated to the Board’s ideas about future skills needs and ‘opportunities’.  Conformity is valued over originality.  Learning ‘off piste’ becomes tricky.

Alternatively we could radically de-centralise and localise the process of thinking and planning about ‘fitness for the future’.  Instead of relying on an Employer Skills Boards to ‘make things right’ we could lay down a challenge to people to develop the skills and passions that they need to secure an economically viable future for themselves, to find what, for them, is ‘good work‘.  To  find their own contribution.   We could develop enterprising people supported in enterprising communities.  This would need schools and colleges to focus on the learner and their vision for their future rather than on the curriculum or qualification structures.

Such a decentralised, enterprising approach might:

• enable many more informed brains to be brought to bear on the problem of fitness for the future – academics, industrialists and civil servants do not have a great track record in ‘workforce development’
• enable people to explore ways of doing what they can do best – and not sub-optimising to conform with the ‘few keys to the few kingdoms’ identified by ‘The Board’
• encourage the local community to support people in acquiring the skills, experience and work opportunities that they need to flourish economically and socially
• support people to find learning experiences that help them to become the person that they want to be – rather than to conform with the ideal established by a fallible and distant Board
• significantly increase the volume of learning experiments in the labour market and enable word of mouth to make sure that we develop a dynamic, flexible, responsive and self-reliant workforce

Perhaps these are not alternatives.  Perhaps we need to develop both strategic and responsive approaches to employment, skills and worklessness in the 21st century.

One thing I am sure of… establishing yet another Employment and  Skills Board (this time for the Leeds City Region) is unlikely to give us a major step forward.

Chris Grayling ‘Army of Entrepreneurs’ Proposal

Every business start-up has a cost, and if you’re on the dole you can’t easily afford to buy basic equipment. At the moment the only start-up cash available from the “new deal” for unemployed people trying to start a business is £400. We don’t think that’s nearly enough, so we’ll give the business start-up specialists the ability to fund costs of up to £2,500, and then reclaim the money from the benefits saved once the business is up and running.

Chris Grayling – How to Lift the EconomyWith an Army of Entrepreneurs

On the face of it this looks like a great idea.  The logic is both simple and compelling.  Startups cost money.  People don’t have it.  Let’s give them it, funded out of future benefits savings.

Several reasons why I think this might not work in practice:

1. It will attract a lot of people to the £2500 who are not sufficiently committed to enterprise and self employment – enterprise professionals will spend hours of their time wading through the sharks to find the genuine latent entrepreneurs.
2. It will encourage some people into enterprise for whom it is almost certainly not the best option – business failure rates are likely to increase with this type of soft start-up provision – damaging the enterprise culture in the medium term.  Only if we use robust investment criteria will this be avoided.  This means turning a proportion of applicants down – leading to bad word of mouth.
3. If business ideas are viable they will find investment – the problem is still not lack of cash – it is lack of investment ready business plans.  Let’s spend our money here on providing inspirational coaching and good technical advice (NB there is already plenty of technical advice out there – labeit patchy in quality)
4. Sources of funding and sources of advice need to be kept separate.  It is too easy to tell the funder what they need to to hear if they are to release the money.   You MUST be able to speak the unvarnished truth with your advisers.

There maybe ways to overcome most of this stuff.

However IF the only reason a business gets started is because of a £2500 gift from the government – offset against future benfits savings – then I for one would worry.  Unless there is real commitment, passion, talent and skill to invest in I can see lot of cash going down the tubes.

Your thoughts?

The Creative Entrepreneur – WOW

Good networking event last night hosted by WYLLN, bmedia and nti.

Explored a couple of questions:

• In a fast-moving industry dominated by freelancers and SMEs, what does ‘Leadership & Management’ really mean?
• Why is it important?

More prosaically put – why are so many creative/digital businesses poor at establishing basic business processes, managing other creatives and getting paid?

My opinion?

It is because we (the business support industry) insist on training digitals and creatives (and every other entrepreneur) that they have to do all this stuff if they are going to be successful in business.

And this is, frankly, nonsense.

It damages people.

It distorts them from their true purpose.

The challenge is being comfortable with who you are, what you want to become and what you want to spend your time doing.  Enterprise is a long term process of becoming, of exploring and realising potential.  And then finding people you can work with to do the rest.  It is about negotiating your self interest and building the right team.  All really successful business are team starts.

Why don’t we teach this?

1. Find out what you love.  What you really love. Something that will keep you engaged for years while you strive for mastery and excellence.
2. Get really good at it and keep getting better.  Specialise.
3. Understand the importance of other things that you do not love.  Learn to respect and value them.  If you are a creative/digerati this is likely to be management, sales and marketing. (Most creatives and digitals have spent many hours over many years working alone honing their craft.  They tend to be introverted and uncomfortable with conflict.  Hence the aversion to management, sales and marketing.)
4. Find other people who love doing the bits you hate.  Form a team.  A strong team. Form it with care. Take your time.  Unpicking the wrong team can be very expensive.
5. Collaborate on developing a vision and an action plan for the business.
6. Act – act often.
7. Reflect and learn.

Simple.

DO NOT TRY TO DO IT ALL.  You will build a mediocre business.  You will find yourself falling out of love with large parts of it.

Dave Pannell from the Design Mechanics recognised that he would perhaps never have been a really great graphic artist (I think I heard you say that Dave).  And my guess is that this freed him up to run a great design business.  His job is to work on the business as it grows and to spend less time working in it.

Liz Cable from Reach Further is building an agile team of freelancers and employees covering all the main bases.  Balancing the demands of MD/entrepreneur working on the business, and passionate digerati working in the business is already a challenge.  Being  1.4 of an FTE is not sustainable.

I suspect that Liz will either have to spend more time in the MD role or find someone the team trusts to take this on, freeing her up to surf the wave of technology and its application to building better businesses.  Or she may find a way of balancing the two.  However if the growth plans she outlined are to be realised I suspect a decision one way or another will be required before too long.

You see the real job of the entrepreneur is to manage the art of becoming.  It is about the emergence of identity; building a life and a living – not the development of cash flow forecasts or the ticking of boxes on a competence framework.  And when we take this seriously we will develop much more powerful and engaging process for enterprise education and build more powerful, sustainable and great businesses.

We must remember that the Latin root of educate is ‘to lead out’.   Our job is to facilitate the emergence of identity – not to pour in the trivia of business skills.

15 second pitch for entrepreneurs

» link to 15SecondPitch.com: Market yourself effectively in 15 seconds for a great site to help you build a winning pitch in about 5 minutes.

Your pitch can also be critiqued by other entrepreneurs.

Getting the right enterprise clients

I recently received an e-mail from a friend and customer of mine who is managing a size-able enteprise project:

“Mike

I am using the training that me and the team have had from you to inform a business plan.

We are identifying an issue with people coming to us wanting funding for safety passports, fork lift truck licences etc. We are letting them apply straight away, but then they go away and we don’t hear from them again. 

To ensure we have more impact and build the relationship I’m going to look at solutions like using a minimum number of outreach sessions before unlocking other opportunities e.g. funding.  Where we have a relationship with the client we find out more about them, including often that they don’t really want what they are asking for in the first instance and rather something else, or that there are bigger issues holding them back. Also this process can weed out those people who can really afford to pay for training themselves – if we pay for them we are changing nothing about them or the world.

I don’t want to go down the Jobcentre route of the client having to be out of work and desperate for at least 6 months or 3 months to access any support but I think if word gets round you have funding then you get overrun with people, not all of whom have many barriers, which is what we’re finding.

I think this sends me back to thinking about who and how we really want to help and work with and to what end.  I think a lot of it is in the contracting that you describe in the Enterprise Coaching cycle.  Having the opportunity to build rapport with the client and really set out what you are both bringing to that relationship.

Yours…”

This outlines a number of challenges that are faced by enterprise support projects – which few have the courage to tackle head on – because it might make “the numbers” look worse.

As soon as you start to offer funding or direct opportunities to people, you start to attract a lot of the wrong kind of client.  Well, perhaps the right kind of client – but with the wrong motivation – and with a fundamental  misunderstanding of the power and potential of  your offer to them.  People motivated by a desire for handouts or quick fixes, rather than those that really want to work towards long term and sustainable progress.

You really want to ONLY attract people who come to you because you can help them by being kind, compassionate, caring, supportive and challenging.  ie the ONLY thing you offer is life changing transformational coaching. 

All the other transactional stuff (skills, money, training, premises etc) is available elsewhere in the system. Our job is to build the desire/commitment/hunger to help people to use it. 

I don’t think the answer is to delay helping people to access what they think they want.  Although we should know that most of our clients will initially present us with what I call ‘A BIG LIE’.  Very few clients will present us with their truths until we have earned their trust and repsect. 

They nearly all tell us a big, fat, safe lie to begin with. 

The answer is to help them to get some of that stuff (otherwise they will see us as useless and hard to work with) and challenge them as to what they REALLY want to do with it – and will it give them what they are looking for? 

This is all about being able to be acceptant and confrontational – which I also cover in the enterprise coaching training.

Building the Entrepreneurial Team

One of the most powerful and effective things we can do for our clients is to help them to think really hard about how they build the full range of skills and passion that their enterprise is going to need if it is to really work well.

It will need a managing director – someone to work on the business rather than in it.  Someone who can make objective decisions for the benefit of the organisation.

It will need someone who is passionate and knowledgeable about the product or service, someone who is passionate about marketing and sales and someone who loves doing the books and preparing financial projections and cases for investment.

• Can your client really fulfil all these demands?
• Will they?
• Or will they default to doing the stuff that they love most?

If they do then at least one vital part of their business will be stunted – and that will be enough to bring them down.

Even if we train the entrepreneur to do everything this problem will develop – because they will always be drawn towards the work that they love – and away from the work that they hate – no matter how important it is to the success of the business.

The biggest favour that we can do them is to help them to build a team that they trust, where other in the team love to do the bits that they hate.

If we don’t do this then it might be easy for us to diagnose the problem (your financial management is weak) and to make a recommendation (why don’t you spend more time on it?) but we will be wasting our breath.  If they don’t love financial management they are not going to do it well.

So why do so few advisers actively encourage entrepreneurs to build a team before they write their business plan?

Do you?

Tumbleweed Moments

We might be moaning about the leaves that blow into the garden – but at least we don’t have 6 ft of tumbleweed to clear away.

But here is what enterprising Idahoans get to do with their problem – sell it over the internet at $16 a pop plus postage!

Can you imagine the conversation with the business adviser?

“I’ve got this idea for a business…you know that tumbleweed that blows all over the prairie…well I am going to sell it to posh shops to use in window displays and as the perfect present for the person with no sense of humour.  I think I can make a killing….”

For more business ideas that ‘just won’t work’ (except that they do) – click here.

Minding the Assets

It is deeply ingrained in most enterprise professionals to try to fix things. Business plans, cash flows, products and people.

We listen to our clients for signs of weakness or difficulty and then we try and fix the problem, usually by referring them to a course or another expert.

Much of our work is biased towards exposing and managing deficiencies rather than uncovering and celebrating strengths. This has become a deeply embedded part of our work – an almost medical approach to helping.

Think ‘Inform, Diagnose, Broker’. Think ‘Best Practice Business Diagnostic’.

We become just another part of the system that has for years highlighted and exposed weaknesses.

How would our work be changed if instead of this focus on the weaknesses we spent our time helping our clients to recognise what they have done, what they can do and what they can do to use these strengths to make progress?

The Development Trust Association exists to help communities to take control of the physical assets in their community and use them for public good.

Is there a similar service that helps individuals to uncover their assets (skills, passion, energy, talent, anger) and reclaim them in pursuit of progress?

So why not spend some time trying to avoid highlighting the problems – and instead accentuate the positive.

Developing a healthy pre-occupation with what is right, rather than re-emphasising all of the things that are wrong is likely to hold the key to building really constructive relationships in support of more enterprising individuals and communities.

Enterprise Problems are Multi-Dimensional

There is a school of though that says that enterprise professionals just need to be experts on helping clients with the business planning process. However in my experience the enterprise dimension is just one several that need to be addressed if the client is to be helped to make real progress. If the enterprise professional is to work effectively it maybe necessary to help the client to acknowledge and work on some of these other dimensions. As Iain Scott says about one of his clients (and I paraphrase) – ‘she realised that she had to divorce the xxxx before she would be able to make progress on her business idea‘.

Work on ‘other dimensions’ is not always this radical but it is often present and necessary! Some of the possible dimensions that may have an effect on your ability to make progress with a client include:

• their lack of experience in enterprise and entrepreneurship
• low socio-economic status
• poor quality of relationships with significant others (persistent negativity from friends and family)
• history of educational failure
• poor mental health
• chronic illness
• history of anti-social behaviour
• intimate partner abuse
• substance misuse
• poor accommodation (poor quality, frequent moves, homelessness)
• lack of social capital
• ambivalence about the future
• ethnic, cultural and linguistic barriers
• refugees
• illegal immigrants
• asylum seekers

And I am sure there are more.

My point here is that unless we are able to help the client to recognise and address the multi-dimensional nature of their barriers to successful entrepreneurship then we should expect high levels of frustration and drop out.

So when we talk about ‘referring the client to specialist support’ we need to extend our referral network beyond the marketing and financial specialists to those who can provide a more holistic support service to real people with real multi-dimensional challenges.  Once we have accepted that our clients require this multi-dimensional type of support it provides us with a range of further challenges in managing the boundaries of our own professional competence and practice.