A few months ago, I chaired a morning conference dedicated to small British businesses
One of the things that stood out most in the conversation about financing was the entrepreneurs’ houses. When each of them had set up, they had been asked by the banks they went to looking for money to put up their homes as collateral. One of them had; the rest had not.
That will make sense to any British ear. Our houses are so expensive and so hard won we are loath to risk them or any of the equity we hold in them under any circumstances at all. It doesn’t much help the UK to develop an entrepreneurial culture if a large part of our would-be entrepreneurs are handicapped by their fear of falling off the property ladder.
There’s another side to this too, one picked up by Simon Evan-Cook in the FT today. The people most likely to start businesses, he says, are those in their late 30s. But this lot “have sunk all spare capital into a house and are so heavily borrowed as to make borrowing any more simply too risky a business.” This doesn’t bode well for the future.
On the plus side, I have noticed a new trend. In the last few months I have bumped into a large number of 50-somethings starting businesses. Questioning has always revealed that they are in possession of whopping final salary or ‘A-Day’ protected pensions and have noticed how cheap it can be to set up news businesses in the internet age.
So, in the full knowledge that whatever does or doesn’t go wrong, they’ve got a nice income guaranteed for ever, they are prepared to take some risks. It’s not enough to drag the UK out of its growth doldrums (this is demographics and debt related). But it’s interesting.