Committee Reports > List of Committees > Joint > 2000 > Committee on Enterprise and Small Business > Report on the experience of successful entrepreneurs in small business and those who failed and are struggling

TITHE AN OIREACHTAIS

HOUSES OF THE OIREACHTAS

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Joint Committee on Enterprise and Small Business

An Comhchoiste um Fhiontraíocht agus Mionghnóthaí

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Report on the experience of successful entrepreneurs in small business and those who failed and are struggling

Tuarascáil faoi thaithí fiontraithe ar éirigh leo i ngnóthaí beaga agus faoi thaithí fiontraithe ar theip orthu agus atá ag streachailt

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This report was prepared by Deputy Noel O’Flynn on behalf of the Joint Committee on Enterprise and Small Business and was adopted by the Joint Committee at its meeting on 11 January 2000.

Review of literature and reports from state agencies

Contents

1 Introduction

1.1A vast amount of research has been completed on the subject of entrepreneurial start up business. In the main researchers agree that start up companies should be able to survive on their own product potential, and the business drive of the entrepreneur involved in the start up.

1.2State support is important in accelerating the growth of the company through assistance with market research, training and feasibility studies where these are appropriate.

1.3This paper sets out to review some of the literature, recount the results of meetings with experienced entrepreneurs and make some recommendations for improved support of start up businesses.

1.4Over the last number of years the contribution of entrepreneurs has been very significant. Later in this presentation some figures on job creation as a result of entrepreneurial start-ups or small enterprises as some people refer to them will be presented.

1.5There are many factors that are common to entrepreneurs whether they are successful or not. There are many reasons for such start-ups and these will be covered later in the document. Entrepreneurs are not always successful in their first or second projects. The reasons are varied, but failure rate can be minimised by putting in certain controls at the start up stage.

1.6Failure in the first or second venture should not discourage an entrepreneur from having “another go” on the contrary venture companies in the United States are more likely to offer support to an entrepreneur on the third time around. This is based on the assumption that if an entrepreneur has failed twice they will have gained a lot of experience and will have learned how to avoid the pitfalls of start-up.

1.6The vast majority of entrepreneurs are product driven, while they may have had experience working in a manufacturing facility they have little knowledge of general business processes such as sales and marketing.

1.8One of the dangers of start up is the assumption that a valid reason for a business opportunity is that “No one else is doing it”. The real situation could be that people have looked at a project and rejected it as being of no potential. For this reason some market research is essential before committing to the business. The research does not have to be too sophisticated but should give some indication as to the potential of the project.

1.9As mentioned before strict time targets should be put in place with checkpoints for achievement of short-term objectives. These should include sales targets, cash flow targets and profit plans.

1.10Entrepreneurs are reluctant to allow “outsiders” invest in the business. This is based on the principle that these outsiders will restrict the decision making process in the organisation. Very often the support of an experienced investor can keep the company on the right track financially while offering excellent business advice based on their own knowledge.

1.11The entrepreneur should examine carefully the benefit of any help programmes such as start your own business courses to ensure the subjects covered are appropriate to their requirements. As entrepreneurs may not have a lot of experience in managing staff it may be helpful for the person to get some analysis of their management style to ensure good cooperation from staff.

1.12This report will also cover the different support services available to those starting a business and the attitude of some entrepreneurs to those support services

1.13For a long time people in start-up situation felt that the onerous constraints put on them by the Government in the management of tax affairs was a deterrent to starting a business. While things have been simplified over the last few years there is still concern that the entrepreneur is overburdened with bureaucracy and much valuable time is taken up filling out Government forms of one kind or another.

1.14The U.K. seem to have developed a much more user friendly system of reporting company results and this system should be studied with a view to bringing to Ireland a less complicated tax reporting system.

2 Methodology

2.1Within the time span available to complete this report it was not possible to research all aspects of entrepreneurial success and failure.

2.2Research for the report was through the following.

Interviews with successful and unsuccessful entrepreneurs.

2.3Limited review of the vast amount of literature available on this subject. (Some companies felt that there was too much reporting and not enough action).

2.4Review of the Government support agencies and company’s perception of these agencies.

2.5Meetings with companies involved in training for start-up businesses.

Plato (see attached literature)

Optimums Results Ltd. a training organisation in Dundalk recognised by the Irish Marketing institute who specialise in training for start-up business.

2.6Research was geographically varied and was mainly in the Cork, Dublin and North-East area.

3 DISCUSSION

3.1Statistics

•In the last 4 years small enterprise accounted for 160000 new jobs.*

•Last year small enterprise accounted for in excess of 16700 new start-ups.*

•This year small enterprise will account for in excess of 17000 new jobs.*

•One in four new small enterprises are owner/managed by females.*

•Fifty percent of small enterprises survive more than 5 years.*

•Approx. 70 percent of family businesses will not survive the second generation.*

•Small business managers are reluctant to offer an equity share in their business from outside investors.

•Entrepreneurs in general have little or no knowledge of good business practises.

•Entrepreneurs in general are slow to delegate authority to staff.

•Entrepreneurs in general do not develop a replacement for the managerial function.

• Training in small business is seen as a luxury.

3.2Interviews were carried out mostly face to face and two were carried out on the telephone. The interviewees wanted confidentiality so they are referred to in this report by number with a brief description of business and location.

3.3As there was some repetition during the interviewing process this report will not give a complete dialogue of all the interviews but will concentrate on those points of most significance to the paper.

4 Analysis - Details of Interviews

Successful Entrepreneurs

4.1 Interview 1

This entrepreneur is a very successful businessman in the Cork area. In the earlier days when he commenced in business he had some early success in his ventures. However he soon encountered failure for various reasons, mainly for lack of business acumen, experience and capital. He is of the opinion that those with entrepreneurial spirit should be encouraged to educate, be informed of and encouraged to take part in the many assisted courses that are available today, either state sponsored or local sponsored.

His early ventures were in the building industry. These were highly labour intensive and needed large cash flow to sustain them. Due to the fluctuations in the building industry, seasonal and otherwise, cash flow is always difficult. Following his early success in those businesses, due to a downturn in the industry four of his main customers ran into financial difficulty. Three went into liquidation and defaulted on the debts due to him, thus causing the demise of a business, which had run successfully for more than six years. This caused a major impediment to the growth of the business and indeed forced him to start over again. The cycle repeated itself some five or six years later and all of these occurrences were in the early sixties/seventies. Having learnt from the experience he then ventured into the building industry, where prior to this he had been sub contracting. He became a property developer in his own right and in control to a larger degree of his own finances. Business grew and was successful.

He subsequently ventured into the pub and hotel trade, again with some considerable success. When asked what the impediments to start up business were, his immediate reaction was that in those days the Revenue Commissioners exerted a very heavy hand. One of the comments made was that the first letter of congratulations you received upon commencing business or forming a Company, was a formal demand from the Revenue for various pieces of information, with no encouragement or otherwise indicated. He believes that that has now changed and that there is a more helpful approach adopted by the Revenue Commissioners in more recent times. Nowadays instead of pointing out the penalties that apply for noncompliance the Revenue show and indeed assist in educating people on proper and full compliance. In this regard, he feels that bureaucracy still demands too much form filling, etc.

Entrepreneurial spirit should be rewarded and recognised. The public perception of entrepreneurs is poor and the general public feel, if someone is successful, they must be on some kind of fiddle. In todays climate that may have its own merit when related to the various tribunals etc. However it is not typical of entrepreneurs in general. Rather it is a cancer in society caused by the few rather than the many.

Noone seems to want to help on the way up or the way down when help is most needed and sometimes help is refused without any reason given. There is a possibility of personal bias among members of committees on State Support Groups. (This was mentioned by each of the interviewees during the interviewing process).

This particular entrepreneur together with some friends bought over an ailing industry with some fifty-five employees in an effort to sustain the employment, grow the business and breath new life into the business, with the injection of considerable capital and experience. On approaching State Agencies, no encouragement whatsoever was given. Grant aid which was normally available within that type of business was refused on the grounds that to give it to one they might have to give it to all. In the event the business failed after a period of approximately two years, but in the opinion of this entrepreneur it could have been saved with some little help from those state agencies.

The help requested was financial assistance in the renewal and upgrading of necessary equipment to modernise the plant. In this regard there was a loss of fifty-five jobs and all of those in that particular industry and employment were forced onto the Social Welfare list. This would have provided quite a considerable cost to the Exchequer over what might have saved the industry. However he pointed out that the Enterprise Board in Cork is seen as doing its best to offer support.

There is a strong involvement of local government personnel and this could be improved by introducing staff with good business experience. Indeed the supplementing of those particular boards by the type of “guardian angel personnel” i.e. retired personnel with many years of business experience and acumen who would be pleased to be involved in guiding both the business and informing the enterprise board. Indeed they could be placed as either watchdogs or assistants to businesses who are grant aided thus affording them the benefit of the experience which is now lying unused due to early retirement etc. Many of those early retirees, would be pleased to be involved, on a part time basis lending that assistance.

It is the opinion of this entrepreneur that most people tend to stumble into business and have little experience or the financial know how. Particularly in the building industry, tradesmen who are good at their job are encouraged to become self employed and ultimately become employers. The main impediment to success in this regard is the lack of business experience particularly in financial control. Forward planning, cash flow projections, are strange and new and indeed often unknown to those who tend to start up in their own business. The lack of this knowledge rather than the lack of ability or work ethic are the main causes of failure. It is felt that there is a wealth of talent and highly qualified people available who would love to get involved in assisting new businesses, but the recruitment of such people is not taken seriously. To fail to recognise and use such talents is a waste of resources. Enterprise Ireland is trying to tackle this issue through their “mentor program”.

Entrepreneurs should not be turned off by fear of failure, as a lot can be learned form past mistakes. Unfortunately the culture in Ireland is that if an entrepreneur fails twice he is too much of a risk for further support, while the experience in the United States is the opposite. This is typical of this entrepreneur who has in the early days failed but is now highly successful and the owner of multiple businesses.

4.2The following is a summary of his observations and comments:

•When he wanted to start up twenty years ago he did not know where to go for support. He felt the state support agencies had too much baggage and were too bureaucratic with much too much form filling etc.

•He was appalled at the control the Revenue Commissioners wanted to have on his business and they seemed to be anti-growth. He felt the Revenue were weak in instructing new businesses and concentrated on the penalties rather than helping people.

• Entrepreneurial spirit should be rewarded and recognised. The public perception of entrepreneurs is poor and the general public feel if some one is successful they must be on some kind of a “fiddle”.

•No one seems to want to help on the way up or the way down when help is most needed and sometimes help is refused without any reason given. There is the possibility of personal bias among members of committees on state support groups. (This was mentioned more than once during the interviewing process).

•The Enterprise Board in Cork is seen as doing its best to offer support, there is a strong involvement of local government personnel and this could be improved by introducing staff with good business experience.

•Entrepreneurs tend to stumble into a business and have little business experience or financial know how.

•It is felt that there is a wealth of talent and highly qualified people available who would love to get involved in assisting new business, but the recruitment of such people is not taken seriously. To fail to recognise and use such talent is a waste of resources. Enterprise Ireland is trying to tackle this issue through their Mentor programme.

•Entrepreneurs should not be turned off by failure as a lot can be learned from past mistakes. Unfortunately there is a culture in Ireland that if an entrepreneur fails twice he is too much of a risk for further support, while the experience in the United States is the opposite.

4.3Interviewee 1 - Factors that support success.

Dynamism of entrepreneur

Hard work

Ability to learn from past mistakes

Education and reading (general).

Adequate capital.

Adventurous spirit.

Recognition of cash flow requirements.

Proper management of money.

Funding of growth

Appropriate training of staff.

4.4Interviewee 1 - Factors that may limit success

Lack of business acumen.

Poor management skills.

Reluctance to delegate to any one else in the organisation.

Under capitalization of project.

Lack of a training and development programme.

Unwillingness to accept outside support.

Spending capital on non-productive items.

4.5Interview 2

This entrepreneur comes from a business background and is at present running a successful motor business in the Cork area.

4.6In the early days business was slow and he had great concerns for the future of the business. Thankfully through hard and excellent management skills the company is now thriving.

4.7This entrepreneur seemed to have different ideas to interviewee one in terms of the need for support.

•The product should not drive everything although a product has to have a market before it can be introduced. There is too much emphasis on the product and not enough emphasis on the opportunity. A true entrepreneur will see an opportunity and take advantage of it. There are plenty of opportunities all that are needed are courage and drive.

• This is an excellent time for entrepreneurial growth. The country is blessed with people with high skill levels and finance is not the problem to day it used be in the past. We also live in a friendly government environment where support for start up is better organised than ever before.

•There is a tendency for entrepreneurs to hold off on the decision to proceed until grant support is available; this is a negative attitude. While grants are a great help and support for the start-up they should not be the major driving factor.

•Tax structures are unhelpful especially in the service industry. The service industry has the capability to employ just as many people as the manufacturing industry yet the incentives to the manufacturing are much more generous in that capital costs can be written off against tax. The service industry has to earn the money after tax before they can invest in expansion. If the tax system was more favourable to the service industry there could be a lot more start-up businesses.

•Business people have a higher profile now days with newer skills coming back from abroad. This plus the expertise in third level institutions should encourage the entrepreneur to take that chance and start up.

•The entrepreneur nervous of start-up is only lacking courage to go it alone. A broad knowledge of business principles no matter how small is a great advantage.

•In the analogy of the fox and the hedgehog the successful entrepreneur is more likely to resemble the fox than the hedgehog. The principle being that ”The fox knows a little about a lot whereas the hedgehog knows a lot about a little.

•There are many ways the entrepreneur can be encouraged. More incentive for start-up such as a more lenient tax system in the early days, allowing the risk taker to benefit as soon as possible from the business.

•There should be more opportunity for the entrepreneur to harvest his business after a certain length of time. There is not a lot of activity in Ireland of people buying businesses as going concerns.

•Education needs to provide more practical business learning at an earlier stage this would improve the general business culture in the public at large.

•The mini company concept in schools is an excellent development in this area but this could be improved on by using people from outside the school, such as parents to coach young students. It would probably create a lot more interest for students to introduce more exciting business subjects into the curriculum. These subjects would include the more practical aspects of business management such as, Marketing, Market research, Advertising, Recruitment etc.

•Every start-up should be bound to participate in a Start your own business course. It would probably help a lot if new companies were automatically designated a guardian angel for the first year to help with such challenges as, cash management, recruitment, credit control, etc.

•Successful entrepreneurs should be encouraged to foster or support younger up and coming entrepreneurs. This would bring together the enthusiasm of the new and the experience of the established and could significantly increase the success rate.

4.8Interviewee 2 - Factors that support success

Plenty of courage

Grasping an opportunity

High work rate

Good delegation skills

Education

4.9Interviewee 2 - Factors that may limit success

Depending too much on grants.

Inability to delegate when organisation is in place.

Tax structure not helpful especially to the service industry.

4.10Interviewee 3

The third entrepreneur has a very successful business in the midlands recycling chemical waste. He started the business as a result of dealings with the motor trade. He established that they had difficulty in disposing of waste product. He now buys large quantities of chemical waste recycles it and sells the recycled product back to the same customer.

4.11This entrepreneur had some business skills but little contact in the industry, especially the major sources of chemical waste, the Pharmaceutical manufacturing industry.

4.12He was not afraid to ask for help and contacted FÁS in the midlands. FÁS recommended some training and from that he has brought in consultant services, which has bridged the gap in the organisation.

4.13Interviewee 3 - factors that support success.

Ready made customer base

Saw the opportunity and grasped it

Prior knowledge of the business

Excellent support from Fás midlands

Sought help when it was needed

Invested in the necessary plant

Included staff in the decision making process

4.14Interviewee 3 - Factors that may limit success

Lack of contact in the major customer sector

No reputation in an environmentally sensitive area

Inexperience in marketing

Trying to do too much himself

4.15Interviewee 1 - Companies which are not so successful

This is a glass company specialising in precision glass products for blood analysis. The company came into place after redundancies in a major multinational whose business was in the supply and service of customers who used precision glass products.

4.16The business was started by two employees to do repairs on a subcontracting basis for the multinational. The parent company agreed a programme of work for the new company and paid for the work as it was completed. As work was coming in on a regular basis there was no need to look outside for new business and the new company plodded along just nicely.

4.17Recently the supply of contract work has reduced and the new company is suffering. In the early days the new company did develop some new business but because of the convenience of dealing with the parent it never followed up on the new customers.

4.18The two directors who had started the business had only ever worked on the factory floor, blowing glass, and had no business experience whatsoever. At present the company is trading on a month to month basis and the future looks bleak.

4.19The company has now looked for support from Enterprise Ireland but even this could be too late. As an example of a start-up without the necessary resources and business ability this company stands out.

4.20Interviewee 1 - Reasons for poor performance

Lack of any business competence

Unwillingness or inability due to lack of knowledge to ask for any help

Too dependant on one customer

Failure to develop new products or customers

Failure to follow up on the small new business created

Lack of sufficient capital at start-up

Did not respond to negative situation until it was too late

4.21Interviewee 2 - Companies which are not so successful

This business was set up to offer statistical analysis to companies participating in clinical trials. The requirement is very technical with a need for above average computer skills. The company had one main customer that was engaged in a Europe wide trial on a product in the cancer treatment area.

4.22Because of the superior skill requirement specialised staff are hard to get and expensive. To overcome this problem the company had a policy of recruiting inexperienced staff and hoped their skill level would develop as they worked in the job. Because of this problems occurred with the main customer in that the service was not up to the standard expected by the customer and was not to a standard that the customer was used to in previous dealings with similar companies.

4.23The customer cancelled the contract in mid session and left the company with very little income.

4.24Reasons for poor performance

The company did not have the resources to provide the service required

The company wanted to develop its expertise as it grew rather than have that expertise at start-up.

The company did not have enough capital to meet the day to day running costs

Because of the limited resources good staff were not attracted to joining the company

The Managing Director is an academic with little business or communication skills

The staff are inexperienced and not up to the standard required for the job

Delegation is non-existent and some tasks are duplicated.

5 SUPPORT ORGANISATIONS

5.1Apart from the government agencies Enterprise Ireland and FÁS and several other organisations were visited.

5.2Enterprise Ireland is very supportive of entrepreneurial businesses and supports such businesses in many ways. The one most appreciated is the Mentor programme that brings experienced business people in touch with new companies requiring expertise.

5.3There is some confusion between the roles of the Enterprise Boards and the County Enterprise Boards.

5.4FÁS offer tremendous training support but there is some concern that it is not user friendly. Some companies have great difficulty in getting grants and are not always aware why grants are turned down.

5.5There is a perception that FÁS personnel are not as experienced in business as they might. Some interviewees expressed concern that some FÁS decisions are made on the basis of personal bias.

5.6Small Firms Association and ISME

These organisations are very supportive and strong lobbyists for the entrepreneurial community. Both organisations expressed satisfaction with the recent budget and apart from the increase in PRSI and felt the budget would help start-up business.

5.7Financial institutions.

The Banks are trying to be as supportive of start up business as possible but of course have to combine support with the risk factor. All the Banks produce literature that sets out the help available and these should be studied in depth by start up organisations. A selection of the material available is attached.

5.8Training Organisations

Two training organisations were approached for information both were co-operative. These were Plato in Cork and Optimum Results in Dundalk.

5.9Plato Cork

Plato is a Europe-wide organisation that facilitates training for start up companies. The Cork branch of Plato works closely with the Chamber of Commerce. They are very committed to what they do and have helped a large number of companies in the Cork area. Plato supplies training in groups and offer excellent training at good value for money.

5.10Optimum Results Dundalk

Optimum Results delivers a range of business services focused on the individual manager. All their courses involve one to one visits from experienced managers. They work closely with FÁS and most of their programmes are grant supported.

6 RECOMMENDATIONS

GOVERNMENT

6.1It is in the interest of government to continue to put resources behind entrepreneurial business. Small business is contributing significantly to the growth in employment. A little support can have a very significant effect on the success of a project. Such support would provide excellent returns and would be good value for money.

6.2Government departments must look at the paper work load of the entrepreneur and ensure it is cut to a minimum. At start up resources are very limited especially for personnel. A system that demands a lot of paper work is punishing for the organisation and also expensive as a lot of the paper work is farmed out. Paper work is probably the last thing on the entrepreneur’s mind and as it accumulates so he/she gets more bogged down and sometimes depressed. There is a system in place in the U.K. which cuts down greatly on paper work this should be looked as an alternative to our present system

6.3A task force of entrepreneurs should work with government to design efficient and user friendly reporting systems. The best people to decide the most appropriate form of reporting are those doing the report. Reporting for the sake of it is time wasting.

6.4A task force of entrepreneurs and government agencies should get together to decide the reporting needs and design a reporting system which satisfies both interests.

EDUCATION

6.5Mini companies should be encouraged in all schools and all students should be exposed to business principles. Mini-company programmes usually happen during transition year. Schools should be encouraged to use outside resources to teach students. Most parents with business experience will help with such projects.

6.6Students should experience such essential tasks as Market Research, Selling Skills, Marketing and Cash Management.

6.7Students should be encouraged to take business administration as a subject and practical business situations should be covered so that they may learn skills as described above.

6.8The establishment of a sponsored competition for second level students similar to the Young Scientists of the Year would be helpful in increasing the students participation in business studies. The financial institutions should be enthusiastic about sponsoring such a project and this would create excitement in the schools bringing a competitive component into business studies.

TAXATION

6.9Entrepreneurs should not be punished by the tax system and should be allowed early benefit from their risk taking. Who motivates the motivator? The entrepreneur works very much as an individual and like all workers needs motivation. If the entrepreneur considers he/she is being “picked on” by the Dept. of Finance he/she can get very disheartened.

6.10It would be very positive for the entrepreneur if he/she could show early success/profit. This could be achieved by special tax concessions during the early start up period, or some kind of tax credit based on results. A change in the approach of the revenue could help in this as at present they are seen as aggressive in their dealings with start up companies. There is a sense that the revenue is suspicious of new start up companies.

6.11The tax system should be fair to all companies and not favour manufacturing on tax liability. Manufacturers get special tax treatment but do not necessarily create all the jobs. The service industry is producing more and more entrepreneurial start-ups and should at least in the early development of the company be offered some tax concession.

6.12The tax system should be much more user friendly. The present system is laborious and time consuming. Most entrepreneurs’ farm out their tax returns. This is costly and quite often means that important financial information is not available in-house for vital decision making.

6.13The Inland Revenue in the U.K. have developed a number of initiatives to ensure that the administrative burdens on small businesses are reduced:

“Reducing the overhead costs and administrative burdens on business, especially small and medium sized enterprises”

•Small enterprises with limited tax and National insurance liabilities are allowed to meet these costs quarterly, as opposed to monthly, to help with cash flow.

•A single form for start-up businesses allows a single notification to the three tax authorities. An electronic version is being considered.

•A low cost “Employers’ helpline” gives advice on tax and National Insurance. It handles about 1 million calls per year.

•There is a network of enquiry centres throughout the U.K. where tax and National Insurance advice is available over the phone or in many cases, face to face.

•There are seminars for the newly self-employed to explain their obligations and how they can meet them.

6.14In addition to this it is proposed to:

•Create in April 1999, a single organisation to deal with tax and National Insurance contributions collected by business from their employees. This will improve customer service through the unified delivery of guidance and assistance and accelerate the alignment of tax and National Insurance Contributions.

•Provide through Inland Revenue, a new payroll service that will help reduce costs for new employers taking on their first employees, offering one-to-one assistance on a range of payroll issues.

•Pilot a new telephone call centre in Scotland to deal with tax affairs for all Scottish employers and employees electronically.

FUNDING

6.15Entrepreneurs should invite third party investment to help with the financial burden of start up. The tradition is for the starter to hold on to all equity in the company. The theory being that he/she has more control this way. They should be encouraged to allow third party investment, this has the advantage of taking the pressure off providing capital for start up as well as the support and experience of the investor.

6.16Some of the financial institutions will invest in projects if they are approached. These include the banks and also a number of venture capital companies now operating in Ireland.

6.17Profits invested in New Business should be exempt from corporation profit tax and from surcharge. This would create a huge incentive for successful companies to invest in new start up business.

RESEARCH

6.18Entrepreneurs should always do some basic market research to ensure the idea is viable.

6.19It is essential that a project or product have public appeal for it to succeed. No one can tell the future so some assessment is necessary to establish the potential of the business.

6.20Managers perceive market research to be very expensive. Basic and simple market research can be done which will give a good indication of the potential, this need not be too expensive.

6.21A product should never be brought to market unless there is some assessment of it’s potential.

TRAINING

6.22Specialist training should be a must for all start-up businesses. Specialist means specialist. Some of the training is of too general a nature and not specific enough for the new operator. Training as defined on some of the F courses is restrictive. Training should include practical demonstrations. Especially on training for selling skills, negotiation techniques, and man management skills.

6.23Training tends to be focused on learning rather than doing, the trainer should combine a consultant role with the training function

6.24Entrepreneurs should attend management training and assess their management style to ensure they get the best out of staff. The relationship between management and staff is vital to the success of an organisation. Entrepreneurs do not always have man management experience. There are a number of management training companies who assess management styles and can coach the manager how to use his style to best effect. A good management style will ensure co-operative staff and a stable workforce.

6.25Recruiting skills are essential when setting up an organisation and training in good recruiting technique is also important.

6.26One of the difficulties in start up is the ability to delegate at all, these managerial functions can be learned through good training.

SUPPORT

6.27Entrepreneurs should be assigned a “guardian angel” to help them with the decision making process in the early set up period. Help with planning in the early stages would ensure a better chance of success. Entrepreneurs because they tend to be short on general management skills need one to one coaching.

6.28Some of the entrepreneurs who attend “Start your own business” courses feel the training is not appropriate to their needs. Most training courses are based on sophisticated theory and can be hard for the participant to follow.

6.29A guardian angel with the relevant experience could guide the entrepreneur through a simple plan with checkpoints to ensure the objectives of the organisation are being met. There is a wealth of talent available for such support, managers who have taken early retirement, managers who were victims of rationalisation in organisations. A very obvious “angel” for a company would be a successful entrepreneur who wished to share their experience with the new start up.

6.30This could be managed through Enterprise Ireland or the relevant trade associations. It would be essential that the ”angel” has the relevant experience and fits into the organisation. Managers who have run very sophisticated organisations with a large work force and unlimited resources may not be the best in these situations. The “angel” should be available for advice and as a trouble-shooter.

6.31A counselling service should be available to family run businesses to ensure hand over of the business works smoothly from generation to generation. Statistics already show the difficulty family run businesses can have during the second generation of that business. Very often this is caused by communication problems within the family. It may be helpful to offer some kind of support to facilitate good co-operation within the company.

6.32It is much harder to start a new business than keep a business trading.

6.33Entrepreneurs should be encouraged to meet on a regular basis to facilitate networking and discussion of common problems. The experience of entrepreneurs is very similar regardless of the type of business. They have the same problems and face the same challenges. It would be helpful for them to meet on a regular basis to discuss how they overcame difficulties or exploited an opportunity.

6.34The state agencies are very supportive and could organise sessions that would allow the entrepreneurs to network etc. This could happen like a business to business meeting only specifically for entrepreneurs.

6.35The state agencies should publish a regular newsletter, which addresses issues relevant to entrepreneurial businesses. Entrepreneurs tend not to have time to review business journals. A regular newsletter that would cover some basic ideas would be helpful. This would also serve as a communication document to advise on training courses.

6.36Sometimes the entrepreneur is very isolated and reluctant to ask for help until it is too late. A newsletter would serve almost as a club letter to put people in touch with each other.

6.37State support staff dealing with start-up companies should have a good business foundation, or should have training in the principles of running a business. Very often the entrepreneur communicates with the state agencies at the start up stage. It is important that the personnel in these agencies understand good business practise. Some time spent in an actual established company might help to develop such skills.

6.38State support organisations should be willing to take risks with entrepreneurs who may have failed in the past. There is a different culture in Ireland regarding failure in business. In the U. S. A. investors prefer to support people who have failed at least twice. This is based on the principle that experience is the best teacher regardless of the outcome.

6.39We all know of entrepreneurs who just keep trying despite failure and invariably in the end they are successful. The entrepreneur who has experienced failure in the past will be much more careful in future projects, and will research the project more practically.

6.40The financial institutions should be encouraged to support entrepreneurs even if they have failed in the past. It takes a lot of courage to continue to strive for success after a number of failures. It is important that such entrepreneurs are not just ignored by the financial institutions without a hearing. Each business opportunity should be assessed on its particular merits regardless of history.

6.41While the entrepreneur is taking most of the risk the lending /grant agency has to include some risk taking in their own decision making. Many a project has been turned down by one agency only to prove very successful when supported by another.

7 Conclusions

7.1Entrepreneurial start-ups and small businesses provide a significant amount of jobs to the Irish economy and will continue to do so for the foreseeable future.

7.2Most entrepreneurs need significant support through training and on the spot assistance in business management.

7.3Entrepreneurs should receive adequate recognition for their contribution and should be treated as least as favourably as other taxpayers.

7.4At present the entrepreneur is over burdened with paper work. This not only takes up the valuable time of the entrepreneur but when measured on an annual basis creates significant unnecessary expense.

7.5Education plays a significant role in success or failure of the start-up.

7.6The service industry works at a disadvantage because of the tax system.

7.7Family businesses may require special attention to help them continue trading from generation to generation.

7.8A major factor influencing the success or failure of the start up business is the energy, courage, and management style of the entrepreneur.

7.9The state support agencies should be manned with staff who have good business skills and experience.

7.10One or two failures should not frighten financial institutions from supporting an entrepreneur in a third venture. Entrepreneurs are significant borrowers of finance. The financial institutions have a responsibility to ensure that the entrepreneur is aware of all charges and supported within reason.

7.11The system for collection of tax and reporting company results is cumbersome and needs reform.

7.12Entrepreneurs almost always need such things as a start your own business courses at start up time.

7.13Entrepreneurs are dedicated people who take risks in business.

7.14There are still plenty of opportunity for entrepreneurial start-ups.

7.15Entrepreneurs are reluctant to invite inward investment.

7.16Entrepreneurs may favour the start up product at the expense of the development of new products.

7.17Entrepreneurs tend not to put enough emphasis on sufficient capital requirements and often underestimate the problems that can arise at start up.

* Statistics supplied by the Small Firms Association.