Well, I got through yesterday. Gareth at HSBC got me sorted in an impressive 40 minutes. My list was two-thirds ticked by the end of the day - and I now have an impressive accounts-lady who I am to meet on Friday to hand over my pile of receipts.
The only frustration yesterday, and I nearly wept, such is my ineptitude, was getting my new printer to speak to my new MacBook Pro (of which more later). Having assiduously followed the steps, and even put my `No Interuptions' sign on my door - usually only put up during client-calls - could I make the damn thing work? `Print driver cannot be read - do you want to report anonymously to Apple?' it kept saying. No, I responded, my eyes pricking.
One of the things about new businesses is deciding where to locate yourself. At the moment I am in the spare room. I am consequently regularly regaled by rioting small children banging on my (locked) door, the music from Peppa Pig and Cbeebies for hours at a time and, on the bad days, visits from all of their friends from `Tadpoles'. Pretty intolerable.
My Big Idea is for a garden shed. Not one for the mower but a fancy one that I can have as a proper office. My father in law has made one of those Shepherd Huts you seen in upmarket mags. The Barbour jacket crowd love them apparently. Mine for three grand. While they retail at over ten, I am not sure I quite stretch to that. But Peppa Pig might change my mind.
Finally Apple Macs. These are without doubt genius machines, a pinnacle of achievement etc. But for a 41 year old who has been using Windows for 20 years, they are a bloody mystery. I just can't get on with mine. I can't find things, store things, even, to be honest, get the damn thing to do anything I want. Fortunately I can fit Windows to it, which I will, but that's not the point. I am wishing I had got a Dell Vostro for half the price.
Anyway, better get back to the joys of entrepreneuship.
Wednesday, September 29, 2010
Tuesday, September 28, 2010
Welcome to the Brave New World of the Naked Entrepreneur
Today looks like it will rain again. Sat at home, trying to get this business going, entrepreneurship doesn't look like the brochure. Trying to get a new printer to work. Two hours going through receipts. A fruitless trip to the bank where Gareth can't open an account today but he'd love me to meet their New Business Manager next week. Hardly Dragon's Den, more Soggy Hole. I will drop the kids, walk the dog then settle in for another day of this.
Today I have to contact an elusive book-keeper and track down a contract to use with Associates. Then call my web-guy, my IT guy and the woman who is doing my stationary. It feels like three jobs in one, half of which I am so poor at I should qualify for some kind of assistance (piles of receipts just baffle me, like dyslexia).
This would all be fine - leisurely even - without the knawing anxiety that Every Day Counts (I have about a year's finance). Every hour spent trying to decide which web-hoster to use is an hour of no pay and no sales. The pressure can feel, in a slightly comical way, quite intense, in these four spare-room walls. The noble cause for which I am fighting is, of course, that of freedom, of manning my own ship and possibly, just possibly, getting it all right by helping lots of new social businesses emerge blinking into the light after years entombed in the public sector.
To this end, I will today borrow enough money to buy me a new top of the range Audi A3 - except this money will go mainly on ensuring we stay afloat during year one while I am trying to make a profit. The Ford Focus has a long way to go yet.
Risks like this - on top of a similar amount of my own cash spent so far - are the essence of entrepreneurship. Risk is to entrepreneurship what passing and heading are to football. Not the whole story - there is tackling too - but absolutely central.
I am sometimes irritated by the over-liberal use of the term `entrepreneurial'. It has come to mean just about any work activity that is outside the box. `X is highly entrepreneurial' you will hear of some someone who hasn't put his financial life on the line but come up with an idea for a new product or service. It gets conflated with creativity. But it's really about blood-and-guts risk-taking.
My loan gets me to September next year, with a fair wind. I hope to be able to live off the proceeds of the business after that. In two years I will hopefully make a bit more than I did as a Cex. After that I hope to be in a much better place altogether financially.
Of course it could go the other way. I might end up eating humble and getting any job I can. Which is why the reward has to be worth it. This isn't a rehash of last week's piece, just an underlining of why it is perfectly OK for entrepreneurs to make money.
However, that all feels like a long way from today. I am looking forward to another long day on my own. The highlight will be Gareth from HSBC calling me back - if he does (that's another thing, being seen by people like Gareth as somehow a bit unfortunate - I think he has me down as a Redundancy). I will squeeze in a run later, between the showers, and possibly, come back feeling better than when I set out.
Welcome to the Brave New World of the Naked Entrepreneur!
Today I have to contact an elusive book-keeper and track down a contract to use with Associates. Then call my web-guy, my IT guy and the woman who is doing my stationary. It feels like three jobs in one, half of which I am so poor at I should qualify for some kind of assistance (piles of receipts just baffle me, like dyslexia).
This would all be fine - leisurely even - without the knawing anxiety that Every Day Counts (I have about a year's finance). Every hour spent trying to decide which web-hoster to use is an hour of no pay and no sales. The pressure can feel, in a slightly comical way, quite intense, in these four spare-room walls. The noble cause for which I am fighting is, of course, that of freedom, of manning my own ship and possibly, just possibly, getting it all right by helping lots of new social businesses emerge blinking into the light after years entombed in the public sector.
To this end, I will today borrow enough money to buy me a new top of the range Audi A3 - except this money will go mainly on ensuring we stay afloat during year one while I am trying to make a profit. The Ford Focus has a long way to go yet.
Risks like this - on top of a similar amount of my own cash spent so far - are the essence of entrepreneurship. Risk is to entrepreneurship what passing and heading are to football. Not the whole story - there is tackling too - but absolutely central.
I am sometimes irritated by the over-liberal use of the term `entrepreneurial'. It has come to mean just about any work activity that is outside the box. `X is highly entrepreneurial' you will hear of some someone who hasn't put his financial life on the line but come up with an idea for a new product or service. It gets conflated with creativity. But it's really about blood-and-guts risk-taking.
My loan gets me to September next year, with a fair wind. I hope to be able to live off the proceeds of the business after that. In two years I will hopefully make a bit more than I did as a Cex. After that I hope to be in a much better place altogether financially.
Of course it could go the other way. I might end up eating humble and getting any job I can. Which is why the reward has to be worth it. This isn't a rehash of last week's piece, just an underlining of why it is perfectly OK for entrepreneurs to make money.
However, that all feels like a long way from today. I am looking forward to another long day on my own. The highlight will be Gareth from HSBC calling me back - if he does (that's another thing, being seen by people like Gareth as somehow a bit unfortunate - I think he has me down as a Redundancy). I will squeeze in a run later, between the showers, and possibly, come back feeling better than when I set out.
Welcome to the Brave New World of the Naked Entrepreneur!
Sunday, September 26, 2010
Who will vote Lib Dem in 2015?
What an interesting 24 hours in national politics! I had the good fortune to be sat next to (Baroness) Ros Scott, President of the Liberal Democrats at our local fundraising back last night. We agreed that Ed was best for us as he inevitably will be constrained from moving to the centre, leaving more space for the Lib Dems. While I have a residual worry that Ed might lose so badly as to let the Tories back on their own, I am inclined to agree.
Ros was great company. While operating at the top of the tree, so to speak, she did her time as a councillor and activist. Indeed her credibility with members helped to sell the Coalition agreement to a dazed and confused membership whose support was critical in those vital four days following the General Election.
But where will our votes come from in 2015, I asked her? I am probably not the only Lib Dem who fear being taken on the left by Labour and on the right by a liberal Tory Party in a two-horse race. Ros was more sanguine. Yes, she says, we will lose voters and seats, particularly in northern cities. But we will gain votes too, she argues, in middle-England from Soft-Cons who now see as as a more serious party. In other words, we abandon the left and share the centre and centre-right with the Tories.
Is she right? Well, in numbers terms the centre and centre-right is the biggest space in UK politics. If Ed doesn't capture it, we should pick up votes there. But I am still struggling in my mind to work out who our own voter-coalition is made up of. In the past, it was ex-Labour people, the more affluent, liberal middle classes who didn't feel like Conservatives and the Celtic Fringe plus University towns and a few selected urban populations: Burnley, for example. This means Lib Dem seats in South-West London, Northern Scotland, Cornwall, the odd northern city.
I guess the future is about whether we can take some seats from the Tories in Southern England, given that it is highly unlikely we will hold on in the North. Predicting Election 2015 is almost impossible at this stage. But the following are I think givens: Labour will improve on its 257 seats and score at least 275 and possibly up to 300. For the other parties, it is much harder to predict due to the success or otherwise of the economy.
Whatever happens, the Lib Dems will fight as an independent party and will again seek to sell a distinctive set of policies which it will seek to embed into any future Coalition. The pitch will as a moderating force on the two extremes, using the 2010-15 Coaliton as proof of our ability and achievement as a party. Although it isn't often noticed, a big part of our argument is that multi-party politics are better than the tribal politics which have held this country back since 1945: North vs South. Rich vs poor. Capital versus labour. Big state versus small state, high tax versus low tax.
The reason I joined the Lib Dems was that the party seeks to go beyond these lose-lose conversations. Not a big or small state - but a reformed state. Not high or low tax but fair and effective taxes. Not unions or management but an economy in which we all hold a stake. Only once we move beyond class-war does this country stand a chance of moving forward.
Ros was great company. While operating at the top of the tree, so to speak, she did her time as a councillor and activist. Indeed her credibility with members helped to sell the Coalition agreement to a dazed and confused membership whose support was critical in those vital four days following the General Election.
But where will our votes come from in 2015, I asked her? I am probably not the only Lib Dem who fear being taken on the left by Labour and on the right by a liberal Tory Party in a two-horse race. Ros was more sanguine. Yes, she says, we will lose voters and seats, particularly in northern cities. But we will gain votes too, she argues, in middle-England from Soft-Cons who now see as as a more serious party. In other words, we abandon the left and share the centre and centre-right with the Tories.
Is she right? Well, in numbers terms the centre and centre-right is the biggest space in UK politics. If Ed doesn't capture it, we should pick up votes there. But I am still struggling in my mind to work out who our own voter-coalition is made up of. In the past, it was ex-Labour people, the more affluent, liberal middle classes who didn't feel like Conservatives and the Celtic Fringe plus University towns and a few selected urban populations: Burnley, for example. This means Lib Dem seats in South-West London, Northern Scotland, Cornwall, the odd northern city.
I guess the future is about whether we can take some seats from the Tories in Southern England, given that it is highly unlikely we will hold on in the North. Predicting Election 2015 is almost impossible at this stage. But the following are I think givens: Labour will improve on its 257 seats and score at least 275 and possibly up to 300. For the other parties, it is much harder to predict due to the success or otherwise of the economy.
Whatever happens, the Lib Dems will fight as an independent party and will again seek to sell a distinctive set of policies which it will seek to embed into any future Coalition. The pitch will as a moderating force on the two extremes, using the 2010-15 Coaliton as proof of our ability and achievement as a party. Although it isn't often noticed, a big part of our argument is that multi-party politics are better than the tribal politics which have held this country back since 1945: North vs South. Rich vs poor. Capital versus labour. Big state versus small state, high tax versus low tax.
The reason I joined the Lib Dems was that the party seeks to go beyond these lose-lose conversations. Not a big or small state - but a reformed state. Not high or low tax but fair and effective taxes. Not unions or management but an economy in which we all hold a stake. Only once we move beyond class-war does this country stand a chance of moving forward.
Saturday, September 25, 2010
It's Red Ed!
Ed Miliband wasn't the only winner today. I won 100 quid on my 4:1 bet after the election. And the Coalition won today. Because David Miliband was the only opponent we are really worried about. Members apparently went 54:46 for David, unions 60:40 for Ed. So he's already in their debt.
This is a seriously bad result for Labour. Ed didn't get the MPs or the Members. He's also too left-wing, not very good on telly and too geeky for the British electorate. I can't quite believe this has happened.
What will we see next? The battle-lines are now drawns. Ed and the Unions versus the rest of us. Ed is now the candidate of Unite, Unison and the RMT. He doesn't look ready. He is a lovely bloke, he has a real integity but I don't see him as a Prime Ministerial figure. Of course he will grow and he will move to the middle-ground - but he lacked the weight and political imagination of his older brother.
I really feared David Miliband. I could see him finding the pressure-points on the Coalition - and the chunks of its electorate that will waver. Ed won't be able to connect. Like all Labour leader of the past (before Blair) he thinks young voters and non-voters will come out for him. They won't. He has to win seats in the South and the South won't vote for Ed.
Overall, the Labour movement had a choice: a challenging new leader who would take them back to the middle-ground of UK politics. Or to do some comfort-eating and elect the candidate who makes them feel warm inside. To their credit, the Tories chose Cameron, we chose Clegg, both candidates who are not really `of' their parties - but who connect to voters. Ed is the opposite.
Interesting times ahead.
This is a seriously bad result for Labour. Ed didn't get the MPs or the Members. He's also too left-wing, not very good on telly and too geeky for the British electorate. I can't quite believe this has happened.
What will we see next? The battle-lines are now drawns. Ed and the Unions versus the rest of us. Ed is now the candidate of Unite, Unison and the RMT. He doesn't look ready. He is a lovely bloke, he has a real integity but I don't see him as a Prime Ministerial figure. Of course he will grow and he will move to the middle-ground - but he lacked the weight and political imagination of his older brother.
I really feared David Miliband. I could see him finding the pressure-points on the Coalition - and the chunks of its electorate that will waver. Ed won't be able to connect. Like all Labour leader of the past (before Blair) he thinks young voters and non-voters will come out for him. They won't. He has to win seats in the South and the South won't vote for Ed.
Overall, the Labour movement had a choice: a challenging new leader who would take them back to the middle-ground of UK politics. Or to do some comfort-eating and elect the candidate who makes them feel warm inside. To their credit, the Tories chose Cameron, we chose Clegg, both candidates who are not really `of' their parties - but who connect to voters. Ed is the opposite.
Interesting times ahead.
Wednesday, September 22, 2010
My Piece from today's Guardian on public sector pensions
Pensions are on many public managers' minds, particularly those involved with potential social enterprises that are about to "step out" of the public sector.
For some of these, pensions are a big headache.
There are several public sector schemes, each a little different, but all have three things in common. One is that they are a "defined benefit" – you get a proportion of your final salary linked to inflation. The second is that the employer (the state) contributes up to 20% of the employees' salary – much more than is now usual in other sectors (0%-6% is fairly common). The third is that most schemes are in deficit – meaning that the payouts are not covered by those paying in. The bill for this is picked up by HM Treasury, and the most recent official estimate of the total cost of these unfunded liabilities is £770bn.
All this is highly relevant for the divestment of public services to social enterprises and the third sector. If the government insists that former public sector workers are offered a "broadly comparable" pension once they move into these new bodies, then we have a potential show-stopper on our hands. Taking on these pension commitments creates a huge obligation for the third sector.
I spoke recently to a chief executive in the third sector who had received a bill for £360,000 from the local authority pension scheme for four members of staff the charity had taken on from the public sector a few years earlier. The bill reflected a deficit in those employees' pensions that had built up over the whole of their employment with the local authority, not just the three or so years with their new employer. The deficit had, in effect, been dumped on the charity. Just imagine the damage this causes to a medium-sized charity. And this is aside from the resentment felt by other employees in the same organisation, who do not have these kinds of deals.
Any charity today looking at taking on state services may therefore face a local authority insisting it took on responsibility for funding staff pensions.
This is why the third sector and new social enterprises have to read the small print on pension deals. The handling of long-term pension liabilities is absolutely critical.
Lord Hutton's forthcoming review of pensions is a one-off opportunity to deal with this imbalance between public section pensions and those in other sectors. Most observers are confident that Hutton will raise the employee contribution. But it is unclear whether he will recommend the abolition of the Treasury's Fair Deal guidelines. If he did, it would enable social enterprises and third sector organisations to move new staff out of public sector schemes and into money-purchase schemes, and to pay pensions at existing charity levels, usually about 6%, without generating future liabilities.
It would also mean that all employees in an organisation would be on a similar deal, which is better for workforce morale. Former public sector employees would still be on a slightly better deal than existing staff, however, because the transfer regulations, Tupe, would give them more favourable sick pay and other benefits. But the really big differences created by the pensions gap would be eliminated.
Some charities have reached an understanding with public sector bodies so that staff moving out of the public sector will stay in their existing pension scheme under "approved provider" arrangements. This will often be underpinned by a short to medium-term commitment from commissioners to meet the costs of the pension scheme, now and in the future. But this is only useful for as long as commissioners can afford to pay. Once this ceases to become the case, it automatically becomes the charity's problem too.
Better to avoid that by seeking to get people coming out of the public sector on to money-purchase schemes as soon as they leave state employment. Let's hope Hutton's review allows this to happen.
For some of these, pensions are a big headache.
There are several public sector schemes, each a little different, but all have three things in common. One is that they are a "defined benefit" – you get a proportion of your final salary linked to inflation. The second is that the employer (the state) contributes up to 20% of the employees' salary – much more than is now usual in other sectors (0%-6% is fairly common). The third is that most schemes are in deficit – meaning that the payouts are not covered by those paying in. The bill for this is picked up by HM Treasury, and the most recent official estimate of the total cost of these unfunded liabilities is £770bn.
All this is highly relevant for the divestment of public services to social enterprises and the third sector. If the government insists that former public sector workers are offered a "broadly comparable" pension once they move into these new bodies, then we have a potential show-stopper on our hands. Taking on these pension commitments creates a huge obligation for the third sector.
I spoke recently to a chief executive in the third sector who had received a bill for £360,000 from the local authority pension scheme for four members of staff the charity had taken on from the public sector a few years earlier. The bill reflected a deficit in those employees' pensions that had built up over the whole of their employment with the local authority, not just the three or so years with their new employer. The deficit had, in effect, been dumped on the charity. Just imagine the damage this causes to a medium-sized charity. And this is aside from the resentment felt by other employees in the same organisation, who do not have these kinds of deals.
Any charity today looking at taking on state services may therefore face a local authority insisting it took on responsibility for funding staff pensions.
This is why the third sector and new social enterprises have to read the small print on pension deals. The handling of long-term pension liabilities is absolutely critical.
Lord Hutton's forthcoming review of pensions is a one-off opportunity to deal with this imbalance between public section pensions and those in other sectors. Most observers are confident that Hutton will raise the employee contribution. But it is unclear whether he will recommend the abolition of the Treasury's Fair Deal guidelines. If he did, it would enable social enterprises and third sector organisations to move new staff out of public sector schemes and into money-purchase schemes, and to pay pensions at existing charity levels, usually about 6%, without generating future liabilities.
It would also mean that all employees in an organisation would be on a similar deal, which is better for workforce morale. Former public sector employees would still be on a slightly better deal than existing staff, however, because the transfer regulations, Tupe, would give them more favourable sick pay and other benefits. But the really big differences created by the pensions gap would be eliminated.
Some charities have reached an understanding with public sector bodies so that staff moving out of the public sector will stay in their existing pension scheme under "approved provider" arrangements. This will often be underpinned by a short to medium-term commitment from commissioners to meet the costs of the pension scheme, now and in the future. But this is only useful for as long as commissioners can afford to pay. Once this ceases to become the case, it automatically becomes the charity's problem too.
Better to avoid that by seeking to get people coming out of the public sector on to money-purchase schemes as soon as they leave state employment. Let's hope Hutton's review allows this to happen.
Monday, September 20, 2010
From Liverpool
At Lib Dem conference where I am courtesy of Charities Aid Foundation and the Charities Commission, whose respective Question Time events I took part in yesterday and today.
The big talking point is the Big Society. What is it? How is it going to take shape? What are the implications for charities large and small. The sector seems to split into three camps. One is deeply cynical, adopting a Unite-like attitude. `What if no-one shows up to the Big Society?' scoffed a TUC delegate, unaware, it seems, of his own movement's drive for a more associcative and communitarian society
For this lot, it's all about mocking the idea that everything can be done with volunteers. Then they switch off.
The middle group, me included, feel energised and optimistic but a bit disenchanted with the rather simplistic and un-inclusive approach of the administration to date. This seems to paint the charity establishment as a fat, left-leaning, self-regarding force of conservatism which mustn't be allowed into the tent. Naive stuff, if you want this agenda to fly.
The third group - and there aren't many of them - are the direct beneficiaries - the chosen few of the Big Society who are being directly sponsored to make it all happen. These are often new arrivals, refreshing new faces which, quite appropriately, have taken new angles on old problems, giving the existing charity sector major food for thought.
Four months into the administration, the Big Society has, perhaps to everyone's surprise, become a defining theme. Cameron himself has nailed his own reputation to its success. The difference between this and a Labour Mega-theme is that there is no master-plan. Indeed, they appear to have gone the other way and we have No Plan.
The truth is that they could have done with saying more. Not much more, but at least a laying out of idea - an opener for discussion. We are at a perfect moment for a national conversation on the issue - but every conversation needs an opener, every party needs an animating spirit.
So too do we need a clear, visible champion for this who can communicate comfortably and who is willing to `put out' in ways which centre the conversation, give it traction and reality. As it is, we're all floundering. Which is a shame because people are willing, at this early stage in the Coalition, to engage and help. Even the traditional charities.
So let's make the Big Society a Big Tent and we will soon be able to give this young idea its underpinning.
The big talking point is the Big Society. What is it? How is it going to take shape? What are the implications for charities large and small. The sector seems to split into three camps. One is deeply cynical, adopting a Unite-like attitude. `What if no-one shows up to the Big Society?' scoffed a TUC delegate, unaware, it seems, of his own movement's drive for a more associcative and communitarian society
For this lot, it's all about mocking the idea that everything can be done with volunteers. Then they switch off.
The middle group, me included, feel energised and optimistic but a bit disenchanted with the rather simplistic and un-inclusive approach of the administration to date. This seems to paint the charity establishment as a fat, left-leaning, self-regarding force of conservatism which mustn't be allowed into the tent. Naive stuff, if you want this agenda to fly.
The third group - and there aren't many of them - are the direct beneficiaries - the chosen few of the Big Society who are being directly sponsored to make it all happen. These are often new arrivals, refreshing new faces which, quite appropriately, have taken new angles on old problems, giving the existing charity sector major food for thought.
Four months into the administration, the Big Society has, perhaps to everyone's surprise, become a defining theme. Cameron himself has nailed his own reputation to its success. The difference between this and a Labour Mega-theme is that there is no master-plan. Indeed, they appear to have gone the other way and we have No Plan.
The truth is that they could have done with saying more. Not much more, but at least a laying out of idea - an opener for discussion. We are at a perfect moment for a national conversation on the issue - but every conversation needs an opener, every party needs an animating spirit.
So too do we need a clear, visible champion for this who can communicate comfortably and who is willing to `put out' in ways which centre the conversation, give it traction and reality. As it is, we're all floundering. Which is a shame because people are willing, at this early stage in the Coalition, to engage and help. Even the traditional charities.
So let's make the Big Society a Big Tent and we will soon be able to give this young idea its underpinning.
Saturday, September 18, 2010
Out of the Blocks
Its official. I am in business. Stepping Out was born on Wednesday at 3.30pm. It was swaddled in an email from my accountant, saying that, despite a few difficulties, everything had gone OK. I held the Certificate of Incorporation in my hands and looked at it lovingly, muttering promises to myself about its bright future.
Of course, it wasn't this simple. `Stepping Out' is actually the name of a Community Interest Company in Wales so I couldn't be called that so, after a couple of iterations, came up with `Stepping Out Business Development Services Ltd'. Catch or what? Fortunately, I can trade as Stepping Out, as long as I put the longer name on my letterheards.
Oh, the letterheads. The logo. The website, the new bank account. The VAT registration. Finding a book-keeper. Getting insured. Writing terms and conditions. Three-year P & L and Cashflow. The 0845 number. All the stuff that is filling my life as I try to actually sell something, fulfil on orders and do all my normal stuff like this.
Three things have really struck me about starting-up all over again. The first is the generousity of other people in business in terms of time, advice and freebies. Incredible support with no expectation of payment. The second is just how bloody hard it all is. During my last year as a CEO, I hardly touched a piece of paper unless it had been placed in my hand. Now it's all down to me. Thirdly is how bloody alive I feel. Although I was and still am scared to death by the whole thing, I feel that my future is in my hands - fly or bomb.
As observant readers will know I am setting up a private business. I toyed with a social business but, given the risks I was taking financially and reputationally, a business from which I could only ever draw a salary seemed a bit crazy, if I am honest.
Is this not a bit contradictory of me, given that Stepping Out exists to help social businesses grow out of the public sector? Well, no, actually, because there is an important distinction to be made between the social entrepreneurship of a local authority manager coming out to lead a new social venture and the blood-and-guts of pure start-up.
First of all, the risks are different. Everyone in these ventures is coming out with income guarantees and contracts. Secondly, nothing is asked financially of people up-front. And finally, the focus of these businesses is explicitly social - while mine is only indirectly so.
The whole experience of starting-up has caused me to reflect on the nature of social entrepreneurship. My own reluctance to start another one did reflect a desire to be rewarded if my risk comes off. Were I to have registered as a CIC, while the downside of failure would be the same - me broke- the upside would be a very constrained gain on my investment and risk. It would, in fact, be more rational to just go and work for a social enterprise than start one.
For this reason I think we need to think afresh if we want to see more social entrepreneurs actually setting up businesses from scratch, as opposed to joining them as managers or from the public sector. I believe that the risks people take have to be more explicitly rewarded than is now the case. CICs don't currently offer enough to the entrepreneur him or herself.
Would the raising or even abolition of the caps on dividends and growth in equity-stake help to incentivise more social entrepreneurship? In some cases, no, it wouldn't. Many social entrepreneurs are not remotely interested in the money, like I wasn't aged 25. Others don't need it or, as you see more and more now, have already made a lot of it.
But this isn't most people. Most of us have tons of financial responsibilities and a basic choice between either a job, self-employment or setting up a business, each progressively riskier. If we want people to go from socially-oriented lifestyle businesses (which is what a lot of social enterprises really are) to proper, high employment, high turnover businesses, the incentives have to be there. They perhaps don't need to be as high as in the private economy, but they have to be pretty damn good.
This post is not in any way knocking social entrepreneurs or public sector managers who are about to lead a new social venture. All are worthy of respect and honour. None are taking the easy route of a nice job. Some will indeed take financial risks too. What I am trying to say here is
1. There are nowhere near enough social entrepreneurs - founders of high growth businesses
2. That the reasons for this could be linked to the lack of reward.
3. That we probably need to find a way within the social enterprise sector to link risk and reward in a more sensible way than is the case now.
4. That the goal of `more, bigger social enterprises' can only really be achieved by a larger number of social entrepreneurs with big ambition.
5. Ergo, the social entrepreneur him or herself has to be treated as a special case when an enterprise they create really succeeds.
I would be very interested in views on this. My own life at the moment feels like a move into a new place. I am struck by how powerfully motivated I am both by ownership and control - and by the prospect of creating a successful business that will give me not riches (if you see my car, you'll know riches don't excite me) but choices. It feels like a force for good. Indeed it is encouraging me to move forward much quicker than if I was working for someone - or if the venture returned the same, more or less, as a job over the long haul.
This is not Greed is Good. Far from it. But as humans, we all judge risk and reward fairly well. We have complex motivations. Social enterprise touches on many of these. But it leaves others ignored. For it to have a big future, social enterprise needs to embrace the range of our motivations, the whole person.
Then we really will be in business.
Of course, it wasn't this simple. `Stepping Out' is actually the name of a Community Interest Company in Wales so I couldn't be called that so, after a couple of iterations, came up with `Stepping Out Business Development Services Ltd'. Catch or what? Fortunately, I can trade as Stepping Out, as long as I put the longer name on my letterheards.
Oh, the letterheads. The logo. The website, the new bank account. The VAT registration. Finding a book-keeper. Getting insured. Writing terms and conditions. Three-year P & L and Cashflow. The 0845 number. All the stuff that is filling my life as I try to actually sell something, fulfil on orders and do all my normal stuff like this.
Three things have really struck me about starting-up all over again. The first is the generousity of other people in business in terms of time, advice and freebies. Incredible support with no expectation of payment. The second is just how bloody hard it all is. During my last year as a CEO, I hardly touched a piece of paper unless it had been placed in my hand. Now it's all down to me. Thirdly is how bloody alive I feel. Although I was and still am scared to death by the whole thing, I feel that my future is in my hands - fly or bomb.
As observant readers will know I am setting up a private business. I toyed with a social business but, given the risks I was taking financially and reputationally, a business from which I could only ever draw a salary seemed a bit crazy, if I am honest.
Is this not a bit contradictory of me, given that Stepping Out exists to help social businesses grow out of the public sector? Well, no, actually, because there is an important distinction to be made between the social entrepreneurship of a local authority manager coming out to lead a new social venture and the blood-and-guts of pure start-up.
First of all, the risks are different. Everyone in these ventures is coming out with income guarantees and contracts. Secondly, nothing is asked financially of people up-front. And finally, the focus of these businesses is explicitly social - while mine is only indirectly so.
The whole experience of starting-up has caused me to reflect on the nature of social entrepreneurship. My own reluctance to start another one did reflect a desire to be rewarded if my risk comes off. Were I to have registered as a CIC, while the downside of failure would be the same - me broke- the upside would be a very constrained gain on my investment and risk. It would, in fact, be more rational to just go and work for a social enterprise than start one.
For this reason I think we need to think afresh if we want to see more social entrepreneurs actually setting up businesses from scratch, as opposed to joining them as managers or from the public sector. I believe that the risks people take have to be more explicitly rewarded than is now the case. CICs don't currently offer enough to the entrepreneur him or herself.
Would the raising or even abolition of the caps on dividends and growth in equity-stake help to incentivise more social entrepreneurship? In some cases, no, it wouldn't. Many social entrepreneurs are not remotely interested in the money, like I wasn't aged 25. Others don't need it or, as you see more and more now, have already made a lot of it.
But this isn't most people. Most of us have tons of financial responsibilities and a basic choice between either a job, self-employment or setting up a business, each progressively riskier. If we want people to go from socially-oriented lifestyle businesses (which is what a lot of social enterprises really are) to proper, high employment, high turnover businesses, the incentives have to be there. They perhaps don't need to be as high as in the private economy, but they have to be pretty damn good.
This post is not in any way knocking social entrepreneurs or public sector managers who are about to lead a new social venture. All are worthy of respect and honour. None are taking the easy route of a nice job. Some will indeed take financial risks too. What I am trying to say here is
1. There are nowhere near enough social entrepreneurs - founders of high growth businesses
2. That the reasons for this could be linked to the lack of reward.
3. That we probably need to find a way within the social enterprise sector to link risk and reward in a more sensible way than is the case now.
4. That the goal of `more, bigger social enterprises' can only really be achieved by a larger number of social entrepreneurs with big ambition.
5. Ergo, the social entrepreneur him or herself has to be treated as a special case when an enterprise they create really succeeds.
I would be very interested in views on this. My own life at the moment feels like a move into a new place. I am struck by how powerfully motivated I am both by ownership and control - and by the prospect of creating a successful business that will give me not riches (if you see my car, you'll know riches don't excite me) but choices. It feels like a force for good. Indeed it is encouraging me to move forward much quicker than if I was working for someone - or if the venture returned the same, more or less, as a job over the long haul.
This is not Greed is Good. Far from it. But as humans, we all judge risk and reward fairly well. We have complex motivations. Social enterprise touches on many of these. But it leaves others ignored. For it to have a big future, social enterprise needs to embrace the range of our motivations, the whole person.
Then we really will be in business.
Saturday, September 11, 2010
Squaring the Circle
How do we square the circle between less money and the need to maintain, even improve services? As a social entrepreneur I actually believe the answer is pretty straightforward. Its implementation however is not. It requires political courage, a new attitude to risk and a willingness to go forward on a number of reforms before consensus has been reached.
But before I start let me say what I bring to the discussion. I started my career in care services and swiftly realized that most of the money is wasted on services that people don’t like or want and on transaction costs. So I set up Speaking Up to empower the user. This became a seven million pound social business which I now Chair.
I am now founding a new business to help large chunks of the public sector `step out’ into mutual or social enterprise format. The idea is to liberate themselves from public sector culture and grow as socially focussed businesses. I have been in and around public services for 20 years (now also as a Lib Dem County Councillor) and have long held the view that only vast reductions in spending would force the kind of reform needed. And here we are.
So what is my answer? It has three parts. The first is that we must push-on hard with the personalization of social care and health budgets. This was started under Labour but stalled because it threatened state services. But putting resources directly into the hands of people in need not only cuts transaction costs it also means that the money is used more efficiently. People then need less of it than before.
The work to date tends to supports this. At the moment personal budgets are used for only a few thousand people . We need to make it a few million very quickly by requiring local authorities to immediately move this money out to people unless there are big reasons not to. This idea fits with the Big Society because personal budgets encourage people to become more involved in their community . That’s what I saw happening again and again with Speaking Up. It works, we should all we doing it.
The second part of my answer is that we must move rapidly to move large parts of the public sector into new mutual and social enterprise structures. Why? Because these organisations, by and large, will do the job faster, cheaper and better than if left in the state sector. Competition is essential as life without a threat to survival makes organizations lose sight of efficiency.
The evidence to support this is already there in the leisure-centre sector and is emerging in former NHS services. Set free, these businesses have been free to innovate, use business disciplines and alter the culture . They can then grow and take over other services. Again, I have seen enough evidence both through my own business, Stepping Out, to be in no doubt that this is a massive part of the solution.
The third part of the answer lies with politicians. We cannot go faster with any of this stuff unless politicians press certain buttons. What are these buttons? One is around public sector terms and conditions. The whole reform agenda will go nowhere unless pensions and current terms and conditions are quickly normalized. The incentives to remain in state employment will be too great. The Hutton Review and the ongoing work on civil servants pay and terms has to go the full-hog. This means no significant compromises with public sector unions.
Another key `button to press is to insist that all public authorities spend 80% of their budgets on external provision and view themselves only as provider of last resort. Margaret Thatcher did this with community care budgets in the 80s and we now have, on the whole, very good local markets in this sector.
The final key button to press is to make room for social enterprise and charity providers, particularly in social and healthcare services. Make no mistake - the private sector has a massive role to play and wit will deliver strong short-term savings.
But it will not create the Big Society. A strategy of divestment must go hand in hand with building community-capability. One must feed the other. This is where the really massive savings are made - from those new providers able to mix public money with the energy and resources of both the citizen themselves and the wider community.
The beauty of social enterprises, and indeed many charities, is that they can do just this– at far less cost to the taxpayer. But this will take time and some patience to develop. And we must not crowd this out by rushing straight to traditional privatization of health and social care which will, deliver short-term saving but little radical innovation or social capital. Privatization as a sole strategy will get you the same shirt - but cheaper. We need a new type of shirt.
So, to conclude, three key recommendations. Push personal budgets to the next level so the money is out there working harder and not absorbed in the state. Second, press on with divestment to the social enterprise sector. Third, create political conditions which incentivize people to move out of the state sector in large numbers. But remember that the biggest savings and changes will only arise if the Big Society is properly nurtured through divestment to social enterprises and charities – in addition to the private sector.
But before I start let me say what I bring to the discussion. I started my career in care services and swiftly realized that most of the money is wasted on services that people don’t like or want and on transaction costs. So I set up Speaking Up to empower the user. This became a seven million pound social business which I now Chair.
I am now founding a new business to help large chunks of the public sector `step out’ into mutual or social enterprise format. The idea is to liberate themselves from public sector culture and grow as socially focussed businesses. I have been in and around public services for 20 years (now also as a Lib Dem County Councillor) and have long held the view that only vast reductions in spending would force the kind of reform needed. And here we are.
So what is my answer? It has three parts. The first is that we must push-on hard with the personalization of social care and health budgets. This was started under Labour but stalled because it threatened state services. But putting resources directly into the hands of people in need not only cuts transaction costs it also means that the money is used more efficiently. People then need less of it than before.
The work to date tends to supports this. At the moment personal budgets are used for only a few thousand people . We need to make it a few million very quickly by requiring local authorities to immediately move this money out to people unless there are big reasons not to. This idea fits with the Big Society because personal budgets encourage people to become more involved in their community . That’s what I saw happening again and again with Speaking Up. It works, we should all we doing it.
The second part of my answer is that we must move rapidly to move large parts of the public sector into new mutual and social enterprise structures. Why? Because these organisations, by and large, will do the job faster, cheaper and better than if left in the state sector. Competition is essential as life without a threat to survival makes organizations lose sight of efficiency.
The evidence to support this is already there in the leisure-centre sector and is emerging in former NHS services. Set free, these businesses have been free to innovate, use business disciplines and alter the culture . They can then grow and take over other services. Again, I have seen enough evidence both through my own business, Stepping Out, to be in no doubt that this is a massive part of the solution.
The third part of the answer lies with politicians. We cannot go faster with any of this stuff unless politicians press certain buttons. What are these buttons? One is around public sector terms and conditions. The whole reform agenda will go nowhere unless pensions and current terms and conditions are quickly normalized. The incentives to remain in state employment will be too great. The Hutton Review and the ongoing work on civil servants pay and terms has to go the full-hog. This means no significant compromises with public sector unions.
Another key `button to press is to insist that all public authorities spend 80% of their budgets on external provision and view themselves only as provider of last resort. Margaret Thatcher did this with community care budgets in the 80s and we now have, on the whole, very good local markets in this sector.
The final key button to press is to make room for social enterprise and charity providers, particularly in social and healthcare services. Make no mistake - the private sector has a massive role to play and wit will deliver strong short-term savings.
But it will not create the Big Society. A strategy of divestment must go hand in hand with building community-capability. One must feed the other. This is where the really massive savings are made - from those new providers able to mix public money with the energy and resources of both the citizen themselves and the wider community.
The beauty of social enterprises, and indeed many charities, is that they can do just this– at far less cost to the taxpayer. But this will take time and some patience to develop. And we must not crowd this out by rushing straight to traditional privatization of health and social care which will, deliver short-term saving but little radical innovation or social capital. Privatization as a sole strategy will get you the same shirt - but cheaper. We need a new type of shirt.
So, to conclude, three key recommendations. Push personal budgets to the next level so the money is out there working harder and not absorbed in the state. Second, press on with divestment to the social enterprise sector. Third, create political conditions which incentivize people to move out of the state sector in large numbers. But remember that the biggest savings and changes will only arise if the Big Society is properly nurtured through divestment to social enterprises and charities – in addition to the private sector.
Monday, September 6, 2010
Vignettes
1. Took my daughter Ruby to first-school last week. She's four and a bit but ready for it - articulate, confident and happy. We have three entry-points in Suffolk, September, January and April so she was one of only a handful of littlies. I asked her at the end of the day if she'd played with any of the children. No dada, I played on my own, but that was ok she told me. I had one of those moments and had to gather myself up, the thought of a solitary Ruby among playing others being a little too much. `But I like it, lots, dada, she continued, catching my register a little. Who says kids aren't smart?
2. Ever seen the cartoon about men and women. It depicts a bloke and woman sitting on a bed holding up placards to each other. The man's says `NO SEX = NO LOVE'. His wife's reads 'NO LOVE = NO SEX'. I have been meditating on gender relations since reading Lucy Kellaway's excellent `The Secret Life of the French'. The author married a Frenchman and moved there, had kids, got divorced but remained in France. In her book she talks about the role of pleasure-seeking in French society where it is considered a right, even among the married. While people, of course, still hurt each other, it isn't necessarily the end-of-the-world in the way it is in UK and US cultures. People still tend to stay together, even if an affair is revealed. While the French state of mind has lots of imaginary appeal, I am alas too much of a staight-laced, guilt-ridden Anglo-Saxon to ever step seriously out of line, even if I was miserable. And anyway, I am far too busy...
3. My Dad the other day advised me to change my car. I drive a 13 year old Ford Focus that looks its age and has 130k on the clock. Take anyone in that car and you'll struggle to win their business, said the 65 year old company Director with a 40 year career in sales. Today I went to see a client I hope and expect to sign up and out in the car park the deputy CEO told me, jokingly that my choice of car helped them make up their mind to use us. We're clearly not people who are bleeding clients dry, he smiled. I'll tell my dad that, I thought, as I attempted to start the car.
2. Ever seen the cartoon about men and women. It depicts a bloke and woman sitting on a bed holding up placards to each other. The man's says `NO SEX = NO LOVE'. His wife's reads 'NO LOVE = NO SEX'. I have been meditating on gender relations since reading Lucy Kellaway's excellent `The Secret Life of the French'. The author married a Frenchman and moved there, had kids, got divorced but remained in France. In her book she talks about the role of pleasure-seeking in French society where it is considered a right, even among the married. While people, of course, still hurt each other, it isn't necessarily the end-of-the-world in the way it is in UK and US cultures. People still tend to stay together, even if an affair is revealed. While the French state of mind has lots of imaginary appeal, I am alas too much of a staight-laced, guilt-ridden Anglo-Saxon to ever step seriously out of line, even if I was miserable. And anyway, I am far too busy...
3. My Dad the other day advised me to change my car. I drive a 13 year old Ford Focus that looks its age and has 130k on the clock. Take anyone in that car and you'll struggle to win their business, said the 65 year old company Director with a 40 year career in sales. Today I went to see a client I hope and expect to sign up and out in the car park the deputy CEO told me, jokingly that my choice of car helped them make up their mind to use us. We're clearly not people who are bleeding clients dry, he smiled. I'll tell my dad that, I thought, as I attempted to start the car.
Friday, September 3, 2010
Building the Big Society in Bury
One of the best bits about the Councillor role is that it puts you in the middle of community-life. You get to meet the movers-and-shakers locally. By that I don't mean the Lord Lieutenant or the Mayor but those people in every neighbourhood who quietly make the place tick. People who I wouldn't meet in the course of work.
These people are relatively uncommon, though they often don't realise it. They think broadly, they are ambitious for their area and they are prepared to act. Although many of them would laugh if I told them, I consider to be social entrepreneurs. Not in the Tim Smit sense, but people who are able to use the resources at their disposal for the common good.
I spent a morning and an afternoon this week with two such groups. One is led by a chap called Bob, the other by a bloke called Ernie. They live in opposite area in my patch. Bob is charing a new trust which will probably take over and re-develop a council-owned community centre next year. Bob used to manage our local hospital and is a key member of the main church on the patch. Bob is leading talks with our LA, the Development Trusts Association and will co-ordinate the project as it develops, all for no pay.
Ernie is the Chair of Residents in another area where we are hoping to get a patch of land for a new community centre. Ernie is working with Tony and Mike from a church group who will put 20% of building costs. My job is to secure the freehold for a peppercorn from the County Council. No small task but I will try! Also involved is the school on which the land sits and whose Head is full-square behind us.
What is my role in all of this? Well, as you can see, it isn't to provide the drive for all of this. This should and does come from the Bob's and Ernie's. But where I have been useful, I think is in three ways. The first has been bringing people together. The Councillor role is kind of accepted as a legitimate broker. It is somehow easier to get people round the table when asking them from a position of elected authority.
The second is a bit more subtle. Both of these groups have a kind of fear of officialdom and have, in the past, been deterred by the grey bureaucracy of public bodies. I have, I think, been able to give them the assuranc that I'll deal with any problems for them at that end. Interestingly, no such problems have arisen and now they actually know the people from the council rather well I very much doubt I will ever be called upon.
The final one, again almost intangible, is the `confidence-giving' role. By getting alongside community-action as a Councillor people tend to feel more like they are going to succeed. Which has a good effect on motivation.
While I love my work and my business, I get massive pleasure from being a Councillor. And it is perhaps this side of it, alongside Bob and Ernie, that I love the most. It reminds me that, when it all comes down to it, it is they not the names we all know that will build the Big Society to which we all aspire, whatever our political colour.
These people are relatively uncommon, though they often don't realise it. They think broadly, they are ambitious for their area and they are prepared to act. Although many of them would laugh if I told them, I consider to be social entrepreneurs. Not in the Tim Smit sense, but people who are able to use the resources at their disposal for the common good.
I spent a morning and an afternoon this week with two such groups. One is led by a chap called Bob, the other by a bloke called Ernie. They live in opposite area in my patch. Bob is charing a new trust which will probably take over and re-develop a council-owned community centre next year. Bob used to manage our local hospital and is a key member of the main church on the patch. Bob is leading talks with our LA, the Development Trusts Association and will co-ordinate the project as it develops, all for no pay.
Ernie is the Chair of Residents in another area where we are hoping to get a patch of land for a new community centre. Ernie is working with Tony and Mike from a church group who will put 20% of building costs. My job is to secure the freehold for a peppercorn from the County Council. No small task but I will try! Also involved is the school on which the land sits and whose Head is full-square behind us.
What is my role in all of this? Well, as you can see, it isn't to provide the drive for all of this. This should and does come from the Bob's and Ernie's. But where I have been useful, I think is in three ways. The first has been bringing people together. The Councillor role is kind of accepted as a legitimate broker. It is somehow easier to get people round the table when asking them from a position of elected authority.
The second is a bit more subtle. Both of these groups have a kind of fear of officialdom and have, in the past, been deterred by the grey bureaucracy of public bodies. I have, I think, been able to give them the assuranc that I'll deal with any problems for them at that end. Interestingly, no such problems have arisen and now they actually know the people from the council rather well I very much doubt I will ever be called upon.
The final one, again almost intangible, is the `confidence-giving' role. By getting alongside community-action as a Councillor people tend to feel more like they are going to succeed. Which has a good effect on motivation.
While I love my work and my business, I get massive pleasure from being a Councillor. And it is perhaps this side of it, alongside Bob and Ernie, that I love the most. It reminds me that, when it all comes down to it, it is they not the names we all know that will build the Big Society to which we all aspire, whatever our political colour.
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