Start-ups and the confidence factor

An intriguing comment from the CEO of Microsoft in the UK about what is stopping start-ups from getting off the ground in the UK.

Gordon Frazer, managing director of Microsoft, has said that not enough is being done on the ground to encourage entrepreneurs in the UK. He is quoted as saying:

“We know today, with a good idea, a laptop, and a spare room you could set up a business for the price of a family holiday – so what is holding people back?

“Innovation and entrepreneurship go hand in hand and our experience of working to support business start ups and innovation in the UK suggests it’s more a lack of confidence than a lack of funding that is the problem.”

I like the first sentence. That’s a neat summary of the basic essentials that new businesses in the service sector need. A laptop and a spare room (+ a good idea). Thats exactly how we started at tutor2u; many thousands of small businesses have started the same way since Internet world was opened up to us all.

Is Frazer right about the confidence factor being the problem? I suspect he is. Low start-up costs and a spare bedroom location invariably mean low funding requirements. Savings, a personal credit card and maybe some excess asset sales on ebay will often be enought to provide the seedcorn finance for a start-up.

But money can’t buy confidence. Concern over gloomy economic conditions would be one reason why start-up confidence weakens; maybe there is also a cultural hurdle to overcome in the UK. To fail in a new business in the UK is often viewed as evidence of weakness, whereas in the States, a business failure is almost a badge of honour amongst entrepreneurs.

What I’m less convinced about is Frazer’s suggestion that more needs to be done on the ground to encourage entrepreneurs. If such support is to come from the bureaucratic (and largely useless) government support schemes in the UK, then start-up entrepreneurs shouldn’t hold their breath.