John Emmins

The Federation of Small Businesses (FSB) is a pressure group promoting and protecting the interests of the self-employed and owners of small firms. Formed in 1974, it now has over 185,000 members across 230 branches. The FSB has a Westminster office to help lobby ministers and runs a 24-hour small business helpline.

John Emmins is the FSB’s Honorary National Chairman as well as being the director of three engineering companies based in London. Here he talks to Startups.co.uk about enterpreneuralism, the government and what the future holds for small firms.

For our readers who don’t know, what do you feel that the FSB can do for small firms in the UK?
The FSB can do an immense amount of good for small firms in the UK. It represents them at all levels from Westminster to Town Halls. The FSB has achieved major wins for small businesses such as the exemption from Union recognition for those with under twenty workers.

Other victories include the transitional relief for those paying high business rates.

What do you feel are the main challenges facing small businesses today?
One of the main challenges facing small business today centres around the death of distance. With improving technology and the worldwide web, small businesses can operate on a worldwide basis. For this to succeed they need to be as professional, as efficient and as cost effective as possible.

The other challenge facing them is the immense competition from larger companies and indeed from the public sector including local authorities.

They also need to face up to the compensation culture which is increasingly worrying small businesses and they need to ensure that they are up to scratch with all laws as they apply to employees and indeed to an increasingly aware consumer.

In regards to red tape, when we spoke to Brendan Barber of the TUC, he said most of this was due to the introduction of the minimum wage and other regulations that ensured a fairer workplace – how do you respond to that?
The minimum wage has been a success and will continue to be so provided it is set at a reasonable level. Individual pieces of legislation to ensure fairer workplace also have merit.

However, it is the cumulative effect of a raft of regulations on tax collection, working tax credits, on VAT, on the environment that really are disproportionate when they are applied to small businesses.

Digby Jones of the CBI has been involved in a few disagreements with the unions lately. Do you feel that unions and business groups can work together a bit more productively than they do at present?
The best way forward for Unions and business groups is to work together as a partnership. Unions need work for their members. Businesses can provide work for their members but also need a skilled, reliable and relaxed workforce.

The FSB is working together with the General Federation of Trade Unions which represents the smaller unions. In fact, despite the jockeying for position in the run up to party conferences, the CBI and the TUC do belong to the Partnership Challenge, which seeks to improve the competitiveness of UK industry.

What kind of state do you feel that entrepreneurialism is in the UK at the moment?
Entrepreneurialism is thriving in the UK, but there is a high churn rate of entrepreneurs who come and go. 500,000 entrepreneurs will give it a go this year in terms of setting up their own enterprise but over 300,000 of these will close within their first three years.

Can you ever see the UK becoming like the USA in terms of successful small business?
The Government is laying great store by introducing measures already in place in America. For example, the new insolvency legislation is a direct copy from the American Chapter 11 system, which encourages serial entrepreneurs to set up again and again despite failing.

I think the thing that serves the USA best is the small business administration, which has enormous resources some ($40billion) to help women and ethnic minority people to set up in business.

It is only when we have a well-resourced business support service, at arms length from government, that we will get anywhere near the American system.

You run several businesses as well as represent the FSB - what type of person do you think makes a good entrepreneur?
If you are a bit of a loner, it does tend to help, as sometimes the whole world is against you. You could go into the business one morning and find a bank breathing down your neck, a supplier wanting to know what is happening, orders stacking up and staff not turning up for whatever reason. So a good entrepreneur needs to have a “thick skin”.

How do you assess the government’s performance over the last six years in terms of small business?
The Government’s performance in terms of the economy is good. Interest rates are low at 3.5 per cent and inflation is under control at under 2 per cent.

However, some of this good economic performance is being cancelled out by the propensity to over-regulate.

What can the government do to improve things? If you had a wishlist, what would it be?
Government should try to improve things by looking at alternatives to regulation. Self-regulation is one way. Major advertising campaigns urging businesses and consumers to do things in a particular way is another route.

If there was a wish list it would be to prune down Government and downsize departments which would be better for smaller businesses.

You have had quite a strong presence at fringe meetings of the party conferences this year– what do you hope to achieve through these gatherings?
Fringe meetings are an opportunity for us to host members of the party in question. It allows the Party to actually be questioned, not by the FSB, but actually be their members who are delegates at their own Annual Conference.

We get situations where a Labour Minister will be questioned by a delegate, from the floor, at our Fringe meeting on over regulation facing small businesses. The same applies of course to the Conservative Party and the Liberal Democrat Party.

In terms of taxation, Labour have committed to public services, so how would you balance that need with giving small firms a tax break?
We have no problems with Labour committing themselves to the public services but we would urge them to extend tax breaks that they have given to incorporated companies to the self-employed sector.

The Liberal Democrats want to scrap the DTI. Do you think the DTI has done a lot for small firms or should it be abolished?
We believe that the DTI should be reformed on a massive scale and along the American lines. The Americans have a Department for Commerce and I think Commerce is a much better term than the old Trade and Industry model.

The DTI has done a lot for small firms in the past, especially through the Small Firms Loan Guarantee Scheme, but it now needs to spread itself away from central London.

How do you feel Europe will effect small businesses in the future? Will Europe’s influence increase in the future; if so, is this a good thing?
Europe will have an increasing influence on small businesses in the future. The number of regulations coming from Brussels is worrying, but as the Member States settle down with the new enlarged system, we hope that we will be able to show the European Commission that high unemployment in some member states will only be reduced through jobs in small firms.

How about the general economic picture, do you see that picking up?
The general economic picture is stable. Businesses are working much harder, have more orders, but in terms of profit it seems to be the same.

Costs for rent, rates, wages, energy, utility costs, telecommunications costs, all of these have gone up by more than the rate of inflation, but the small entrepreneur cannot put up their prices to meet those increased costs.

How do you see things realistically panning out for small firms over the next few years?
It depends on whether the political rhetoric on over-regulation is turned into action. We also envisage with the increase in business rates and rents that more and more small firms will set up their operations from home and will allow their staff increasingly to work from home.