It’s hard running a startup. I’ve spoken to CEOs who’ve slept on their office floors as they worked to get their business off the ground and those who’ve travelled the country trying to impress VCs enough to invest in their firm.
So surely the last thing entrepreneurs want is more red tape making it harder to get their product to market. With that in mind, at first glance it appears odd that Rohan Silva, David Cameron’s former senior policy adviser on technology, has suggested entrepreneurs establish a trade union.
Speaking at an event in Old Street this week, he said a union could better advance the interests of SMBs – which he claims are underrepresented in Westminster.
The Evening Standard quoted him as saying: "Small businesses are generally massively failed by the representative groups that are supposed to stand for them. There should be a trade union for entrepreneurs and the voice of entrepreneurs is much diminished as a result [of there not being one]."
Perhaps the term trade union is obscuring the issue, but what Silva seems to be calling for is a central body that can represent entrepreneurs’ interests because it’s not a job being done well enough for them to benefit from public sector procurement.
As Andy Harter, CEO of remote access firm RealVNC, points out, there is already a raft of initiatives for SMBs, and there’s also a Crown Representative for them, explaining how best to tender for government work.
Harter – whose firm won the MacRobert Award for engineering innovation this summer – thinks Silva is "being deliberately provocative" and labels the idea unfeasible.
He says: "[Entrepreneurs are] too diverse a group, both in terms of products and services, but also size and geography.
"There are substantial existing initiatives, and it looks like some very positive policies have been put in place recently. I think we should start by asking how well these are working before creating yet another lobby group."
Yet there is little doubt that SMBs often lose out in the public sector to larger companies which have built relationships and have good track records with the government, NHS or council figures responsible for hiring contractors.
So what kind of value are they missing out on? According to an Information Services Group report last week, public sector financial activity totalled $2bn (£1.2bn) in the first half of the year – far outstripping the rest of Europe.
But Jason Yeomans, founder and CEO of managed IT services firm PMGC Technology Group, believes a union will not help entrepreneurs – or SMBs (though Silva conflates the two, they are of course not necessarily linked) break into the market.
Instead he believes SMBs must play to their strengths.
"This approach will just result in more red tape to answer red tape," he says. "Small businesses should be able to succeed through their agility, tenacity, flexibility, value offering and ultimately, for the really good ones, through their ability to develop their business effectively because they genuinely have a brilliant product or solution.
"It should never be because they lobby government better than the competition."
Harter seems to agree, and RealVNC software is used in pockets of government to serve various purposes.
Nigel Dias, co-founder of Croydon Tech City, a startup hub in south London which hopes to rival the more established Silicon Roundabout, believes tech firms will have a bigger part to play in the public sector as their services become so technically advanced they can take on huge tasks despite having a small team behind them.
"It will be entirely appropriate in the future to deliver some of these services by SMBs," he argues. "But in some contracts you do need a lot of manpower.
"It depends on the size of the contract. There’s something to be said for when a large contract goes wrong or when the client is very demanding that it would put a lot of strain on the SMB, whereas the bigger guys can take that strain."
Almost all the companies and experts CBR spoke to acknowledged the dominance of big enterprises – but mainly in the public sector, where they are often called on to tackle a sizeable contract.
And that fits, by and large: most startups – especially tech startups – are successful because they fill a gap, doing something very well which either wasn’t a service being offered before or was a service that did exist but had plenty of room for improvement.
There’s always going to be aspects of government which will want to use SMBs for precisely that reason, that they’re more efficient and cost effective, or that they offer a unique service, but most of the public sector spend is on transport, health, public safety, to name three examples.
While innovation in these areas is critical in the private sector, the public sector is much slower moving. But when we reach a point where change becomes inevitable – when private sector innovations are so successful that the government has to take notice – that’s when the entrepreneurs who are already experts in those fields will find they’re suddenly in much more demand.
