I was at the Lunar Society’s Boulton and Watt Lecture this week, an interesting exploration of financial regulation (yes, really it was) by Prof George Feiger, the Dean of Aston Business School. One remark that he made during the Q&A struck me. Asked if London was sucking funding away from Midlands firms, he acknowledged that funding was an issue, but thought the bigger problem was a lack of ambition among small businesses. This was not how to build the next Google.
I do not think that he was singling out Birmingham within the UK, rather he was comparing where he is now, to where he has come here from, namely California. His thought was however interesting enough to discuss it with two speakers at another event, both of whom help new technology businesses succeed.
The view was that the Professor was, as a generalisation, right, and that indeed this is not Midlands specific. (I have for instance heard similar comments about businesses in Wales). However, funding is very much easier to obtain in the USA (particularly California), and the tax regime can mean that the proceeds of sale of a business can be reinvested in another business before attracting a tax charge.
So what are we talking about? The cup cake shop may bring joy to the neighbourhood, and provide a living, but is limited. It will not suddenly turn into a chain of shops – that would require a great deal of planning and effort, if it could be done at all. Similarly it is possible to envision a nationwide chain of law practices, but that is unlikely to grow from the newly formed 2 partner firm.
This does need a word of caution. Size is not necessarily the right criterion, nor is profit. Germany is successful in part because so many companies in the Mittelstand (larger SMEs) are world class, and work hard to stay that way. This is often in conjunction with their local university. Equally, a social enterprise or co-operative can be ambitious. After all, John Lewis is doing fairly well!
If a business owner is happy with a cup cake shop, and can make it successful, that is their choice. Indeed, that owner is probably not the right person to look to build something much bigger. However, if we want a successful economy, we also need the ambitious people who will build long standing and successful businesses which employ people.