1995 (Revised February, 2001)
Who actually benefits from your business? Obviously, your customers must take first place in order of importance because, without them, you wouldn't have a business. But what about the other people and organisations which make calls on your time and your pocket?
They probably include government, employees, partners, yourself, your dependants, and your friends. Do you think you could bear to rank them in order by the proportion of time consumed in dealing with them as compared with your customers? Or could you face up to comparing them in terms of the money (or money's worth) each of them receives from your business in a typical year? If you carried out such an exercise, how closely do you think the ranking would correspond to your own ideals?
It is common experience that the owner-director of the small business would like to have much more time and money to spend on improving the business for the benefit of customers and on relaxing with family and friends. But there are only twenty-four hours in a day. Is there any way in which you could spend less time, effort and money on dealing with the problems raised by one or more of the other groups?
Partners, i.e. honest suppliers of goods, services or capital, generally put as much into your business as they take out of it. After all, you are their customer, and the relationship is mutual. Employees would come into the same category as partners were it not for the fact that the real cause of most of your troubles government insists on imposing such unreasonable conditions on most forms of employment that every employee you take on significantly increases the risk that your business will fail. Most of what you might have to fear from a European 'Social Chapter' has already been implemented by a government drawn from the so-called party of business. Things have got much worse since this essay was first written.
So, having identified government as the villain of the piece, and assuming that it is unlikely to change for the better in your lifetime, what can you do to minimise the strain on yourself and the drain on your business finances?
For a start, it may help to realise that the government behaves as it does because politicians want votes. They, together with their civil service acolytes and regulation enforcers, act on the assumption that their best chance of achieving some semblance of power is to foster the dependency culture. They calculate, rightly or wrongly, that the number of lumpen, lazy, feckless, dis-spirited or honestly disabled people greatly outweighs the number of inventive, industrious, energetic people like yourself who have such independence of mind and strength of character that you will go on providing real goods and services no matter how exorbitant the taxes you are forced to pay or how unnatural the regulations that are imposed upon you in the name of 'employment protection' or some such shibboleth.
So the politicians somehow contrive a masterly conjuring trick whereby they can pose as the friends and saviours of the poor and downtrodden while walking roughshod over people like yourself who ultimately take all the risks and pay all the bills.
What, then, can you do to minimise the debilitating effects of government on your business? There seem to me to be four main strands to a business protection policy which might help you survive while keeping within the law.
Before you can strengthen your business and minimise the risk of failure, you must have a clear definition of what you are in business for and a realistic appraisal of the risks to which you are exposed so that you can defend yourself against them.
The vast majority of owner-directors run businesses which operate on too small a scale for statistical considerations to be generally applicable. Thus 'management studies' courses devised for, and usually run by, large organisations are unlikely to be of much use to you. The myriad quasi-governmental organisations set up supposedly to "help" you are merely Trojan Horses devised or encouraged by government to make you feel they care about you despite all the evidence to the contrary.
There is a clear need for private enterprises run by owner-directors with first-hand experience of small business to develop courses for other existing and would-be owner-directors to provide training tailored to your requirements and with your interests at heart.
There is never any shortage of government agents and others telling you about your liabilities. They are not always right and sometimes exaggerate for effect. To defend yourself, you must know your rights as well as your responsibilities. A training course focussed on your problems, delivered in a convenient flexible format, and backed up by specialist help and advice when you need it, would go a long way towards solving your most pressing problems. This would seem to offer a good opportunity for educational entrepreneurs to set up business education businesses.
Every business is unique in some way, so there are no magic formulae that will be equally effective in all cases. There is, however, one field of regulation that is more thickly sown with anti-owner-director mines than any other, and requires special attention.
The regulations governing employment in the UK run so counter to nature that taking on an employee is about the greatest risk you can now take in business, and virtually forces you to adopt a strategy of not taking on any direct employees at all if you can possibly avoid it. Such a strategy will not only minimise your exposure to Payroll, PAYE and National Insurance processing (from which your business gets no benefit): it will also avoid your becoming involved with Industrial Tribunals and save you from having to defend yourself against claims of unfair dismissal on a variety of frivolous grounds.
Whenever possible, use the services of sub-contractors, whether self-employed or employees of other firms. Pay their bills promptly and with a grateful smile: you will not only be saving yourself a headache but also helping others like yourself to combat the dependency culture which is ruining our country.
If you find you must employ someone, try to recruit men of any age, or women in their fifties or older, whose loyalty is unlikely to be undermined by the exigencies of raising a young family. Avoid pregnancy-prone women if at all possible. If you need an attractive young lady to grace your reception desk, hire one from an agency.
When you have developed your business processes to run smoothly and are aware of the regulations which, if infringed, might attract the attention of enforcement Rottweilers, enlist the aid of the computer to make sure that all your processes keep running as intended and that all the necessary reports, returns, and assurances are produced correctly and submitted on time to the multifarious authorities and quangos set up supposedly to 'protect the public interest'.
If your computer is itself properly 'trained' to carry out whatever business processes you require, its human operators will seldom need much training themsleves. This will enable you to rely more on agency temps and reduce your reliance on permanent staff.
The previous three strands should go a long way towards making your business secure against the threats presented by existing legislation and regulation. It would, however, be foolish to suppose that the never-ending ingenuity of government will not devise some new means of taxing you, fining you, or otherwise extracting more of the lifeblood from your business. So it is probably in your interests to join a body which can argue the case for enabling you to stay in business and continue to pay more than your fair share of the cost of government, rather than sending you to prison or otherwise joining the ranks of the beneficiaries of government largesse. For this purpose in the UK, The National Federation of the Self-Employed and Small Businesses gets my personal vote and those of over one hundred thousand other independent-minded British entrepreneurs.
When your business is fenced around with netting strongly woven from these four strands, you should be able to meet the agents of government on equal terms, minimise your liability to taxes and penalties, spend less time on putting out unnecessary fires, and spend more time (and money) doing what you want to do and enjoy doing. After all, is that not why you decided to become an owner-director in the first place?