Franchise Focus Business News…

Representatives from Recognition Express, ComputerXplorers and the ZipYard franchises led the British Franchise Association delegation to the Houses of Parliament this week.

The group met with MPs including Andrew Bridgen MP for North West Leicestershire who were interested to learn more about the benefits of franchising and how this business model could help regenerate the UK economy.

Nigel Toplis is the managing director of Coalville based Bardon Group. Within the group sit three of the country’s most successful franchises; Recognition Express, ComputerXplorers and the ZipYard.

Mr Toplis said: “Despite the fact that franchised businesses in the UK last year turned over £12.4 billion employing over half a million people, awareness of franchising as a business model is still very low. The meeting with MPs was set up so that BFA members could brief them in more detail about the concept of franchising and its continuing success.

“It’s a proven fact that success rate amongst people starting up their own business as a franchisee is far greater than those who set up without the backing of a proven business model and ongoing support from the franchisor.”

Key business and political  figures have shown interest in franchising and entrepreneurship as a means of boosting job creation and economic expansion.

According to Prof Roy Seaman, managing director of Norwich-based Franchise Development Services (FDS) “We are talking next year of creating 100,000 new jobs through franchises,” he said. “Franchises are a solid foundation with which companies can expand and new jobs can be created.”

With redundancies and unemployment at levels not seen since the early 80s, franchising is offering a solution to get Britain working.

“Young people have a “do anything” attitude; they don’t know that it’s not possible. There’s no fear of failure. And young entrepreneurs have the luxury of few responsibilities. Their naivety means they’ll try anything.”

Tom Hadfield
Founder of soccernet.com (at 12 years of age!)

Won’t somebody please think of the children? Apparently, we do! During the economic low, the UK’s young people have been busy starting their own businesses. A recent survey of 1,720 people aged 18-30 by the Prince’s Trust and the Royal Bank of Scotland Group, 41% of respondents said they aspire to start their own business, and 78% said they have a business idea. So what is the UK doing to help these exciting young entrepreneurs?

The global economic recession has had a significant impact on Generation Y (those born in the 1980’s and 1990’s) as a high level of unemployment and increasing competition for university and local authority training places has dampened momentum for the financial success of this generation. Official figures indicate that the number of 16-24 year olds out of work surged to 943,000 last September. In addition to this, the Dept. Of Children, Schools and Families recently revealed that 13% of 16-18 year olds are “NEETs” – Not in Employment, Education or Training. With widespread redundancy and a lack of new jobs, many employers have indicated they do not plan to recruit school leavers. It seems that the only option left for many is to start their own business.  Figures realeased by Durham University’s Centre for Entrepreneurial Learning indicates that more and more young people are taking part in early entrepreneurial activity. Of 2,500 students surveyed, 4% were already running their own business, and a further 17% indicated that if the right job is not available, they will either start their own business or become self employed following graduation. In addition to this, Prof. Cary Cooper of Lancaster University Management School says, “Generation Yers [...] understand that jobs aren’t for life any more. They have to create their own jobs because big companies are getting smaller. I think this generation realises that they have no other option but to be that way.”

Along with a £60 million a year the government began investing in business start ups in 2005, there are a number of organisations dedicated to the promotion of early entrepreneurial activity. The most active and influential of these organisations is The Prince’s Trust. The Trust’s Enterprise Programme “supports unemployed young people aged 18-30 to work out if their business ideas are viable and whether self-employment is right for them.” In 2007/08 the Trust helped 9,447 young people through their Business Programme – 2,536 of them were new entrepreneurs, while a further 6,911 entrepreneurs received ongoing support from a Prince’s Trust mentor. 59% of young people supported through the Business Programme are still trading into their third year. In May 2008 The Trust marked the 25th Anniversary of the Business Programme by celebrating the achievements of 70,000 young entrepreneurs who had received support. Further support can be received from Business Link, which we’ve blogged about before, Enterprise UK set up by the British Chambers of Commerce to provide advice and support to new and existing entrepreneurs, Youngbusiness.Net and NESTA, a group which invests in early stage enterprises. Benedict Arora at NESTA believes in the importance of investing in the UK’s young entrepreneurs “We’re talking about the whole human capital that we’ve got in this country that needs to be optimised. We can’t afford just to focus on the very gifted or the lone innovator, that’s not a viable model for putting the UK economy on a successful path for the future. We will be a poorer society, both financially and in other ways if we don’t push the innovation agenda.” In 2008/09 NESTA invested in five new projects (totalling £1.2 million) and 14 follow-on investments (totalling £1.7 million). They have a portfolio of 50 investee companies.

Many young people in the UK have taken advantage of the variety of financing and support options available to them to start their own business. Following years of substance abuse but with a lifelong desire to achieve success, Adrian Wheeldon started his own plastering business with the help of the Prince’s Trust. Adrian reflects on the help the Trust has given him, “They gave me £1000 grant and £800 loan to start up a plastering business. I bought all my tools and a small car. Because of my history, I thought there was no one on this earth who would give me the money.I had a mentor for over a year. He taught me about cash flows. Forecasting. Marketing. That sort of thing. He helped me step over that line of responsibility that I would never have crossed without his help. When The Trust said at first that I would have a mentor I wasn’t sure. But what it did, every month I met up with him, reminded me why I’d been given the money. I always dreamed of doing something like that. But I never believed it. But my mentor, coming out of his way to meet me at my house, just encouraged me to believe in myself.” Tom Hadfield took a different road to success, starting very young – at the age of 12, when he started soccernet.com. Tom grew his business and eventually sold it to US sports network – ESPN for $40million. Even though most of that sum went to the company’s investors, it gave Tom a foothold to be able to start a new business. Tom gives life experience the credit for his success, even though he is now studying in Harvard University, “being entrepreneurial was my alternative to university. I got to travel, meet lots of interesting people. That was my education experience.” Tom now sits on NESTA’s Innovation Programmes Committee. Even though Tom and Adrian have taken very different paths to success, they are examples of the type of success the UK’s early entrepreneurs can achieve.

Clearly, Generation Y are the future for the UK and business investment in this group will no doubt be an important investment in the UK’s economy. For the franchise industry, this can also have a significant influence on the path taken by the UK franchise industry. Early stage entrepreneurs can develop highly innovative business models, if these models are then franchised, the face of UK franchising can be changed and bring new exciting changes to the UK franchise economy.

Sources

http://www.nesta.org.uk/
http://www.youngbusiness.net/
“Young Pioneers”. June 2009. http://www.director.co.uk/
http://www.dur.ac.uk/resources/cel/GenerationZ-anewentrep…pdf
http://www.guardian.co.uk/money/2009/dec/12/starting-your-own-business

In this week’s Franchise Update, we report on Lord Carter’s controversial Digital Britain report and the Association of Certified Chartered Accountants’ call for more guidance for small businesses on tax law.

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The Digital Britain report published Lord Carter of Barnes, Minister for Communications, Technology and Broadcasting has been met with controversy from industry officials. David Frost, Director General of the British Chambers of Commerce (BCC), has hit out saying that the report is not ambitious enough. Visit Culture.gov to read the the Digital Britain report and decide for yourself.

A new ACCA policy paper highlights certain areas that the association believes require specific attention by governments across the world, including simplifying legislation, tightening the rules on the difference between tax avoidance and evasion and making green tax laws more explicit and accessible. Visit the ACCA’s website to find out more about green tax laws and more!

In this week’s episode of Franchise Update, we bring you news on a report published by the bfa, on the ongoing success of the franchise industry despite the economic downturn as well as what Sir Alan Sugar’s appointment as enterprise tzar will mean for the small business industry.

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The British Franchise Association have released a report which shows that over 90% of franchises are trading profitably and the industry contributed over £11 billion to the UK’s GDP last year.

Sir Alan Sugar has been announced as the government’s Enterprise Champion. As part of his appointment, Sir Alan is expected to give advice on how to ensure small businesses and entrepreneurs make the most of the real help available from Government and other organisations. It is expected that he may look at specific areas such as access to finance, prompt payment, how to handle the downturn and how to start a new business.

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