A BOOST FOR KITCHEN TABLE START-UPS. REALLY?

Last week brought news that the Westminster government is giving home entrepreneurs an “unexpected boost”. It was billed as part of a drive to encourage more kitchen table start-ups.

Matthew Hancock, Westminster’s enterprise minister, launched a new “Home Business Initiative” in response to research undertaken by the Department of Business, Innovation and Skills (BIS) and entrepreneur organisation Enterprise Nation.

Timely you may think, given evidence of a slowdown in business start-ups.

Figures from Edinburgh Economy Watch show new business incorporations were recorded in the capital over the three months to July, a 4.5 per cent decline on the previous month’s figures and a 6.3 per cent decrease on the same period in 2013.  Comparator cities also saw a decrease, but of a small magnitude - 2.7 per cent.

And the number of business start-ups in the city supported by Business Gateway in July was 102 lower at 203 and 109 less than the same period in 2013.

So news of steps to encourage more start-ups is surely to be welcomed. Westminster says it will cut the cost and bureaucracy associated with running a business from home.

Good news? Up to a point.

Entrepreneurs will no longer be required to file for planning permission to run a home-based business. No business rates will be payable on the majority of these home-based firms. And the government will introduce a new tenancy agreement making it easier to run firms from rented accommodation.

That’s it, more or less. Many home entrepreneurs can be forgiven for thinking there’s not much new here.

Most operate from laptops on the kitchen table, do not operate noisy industrial machinery or have hordes of dispatch riders and customers running in and out.

You don’t require planning permission to operate a laptop. Most start-ups do not generate revenue to pay the gas bill, never mind meet business rates. And tenancy agreements will still and fairly) disallow excessive noise and heavy visitor traffic. One tenant’s happy business can be the neighbour’s business-crushing disturbance.

What micro businesses would more appreciate is help to move up from the initial start-up level – in particular with staff and premises. For start-ups to progress to surviving and growing business,  what’s really required is a low tax and regulatory environment and easy access to qualified professional advice from people who have had experience of building a business – not recycled pen-pushers from some other council department.

The new “initiative” is well intentioned. But it hardly amounts to a step change in help for home workers.

Home businesses are already a fast-growing sector of the economy.  According to research by the Department for Business, Innovation and Skills and Enterprise Nation, there are currently 2.9 million home-based companies in the UK, equivalent to 59 per cent of all UK small enterprises and contribute £300 billion to the UK economy each year.

The study, based on a poll of almost 6,000 small businesses, found that 70 per cent of new firms start off in the home. Since 2010, the number of home business in the UK has increased by 500,000. And around 1.1m home businesses have been trading for over 20 years.

But it’s not just the start-up stage that matters, but help further along the road to enable more micro firms to survive and expand into thriving businesses.

Will Butler-Adams, managing director of Brompton Bicycle, who was the star turn at the Scottish Manufacturing Advisory Service conference at Dunblane this summer recalls, “The first Brompton bike was designed in a flat overlooking the Brompton Oratory in Kensington. Today, we make more than 50,000 bikes a year and export to 44 territories worldwide.”

This is now a critical part of the economy. It’s good that the government recognises its importance. For that reason alone, it deserves something more than a PR-wrapped “gift” of benefits already enjoyed by most.