THE BLOG

Entrepreneurs: Make the Grade, Even Without the GCSE

02/04/2014 10:19 BST | Updated 01/06/2014 10:59 BST

Entrepreneurs are different from the rest of us as high priests of business. But I believe passionately that more of us could be called to this secular faith.

Part of the problem is that the British education system seems unable to encourage entrepreneurial thinking from an early age. What a smart GCSE that would make. It is striking how many of the greatest innovators are university or school drop-outs.

But there is a curriculum that I believe can take the germ of an idea through to fruition. It is a journey of five key steps.

The first is to be clear what the plan is for the venture, preferably for the next three years, and to write that down as a route map to follow, always. It might be to sell.

The next issue is the boring troika: book keeping, compliance and administration. These might seem the dull sludge designed to slow a brilliant idea as it soars. But in reality they are its engine.

Even quite established firms deliver accounts which on further investigation show bad debt, overdrawn directors' accounts and work being delivered without a hope of profit. These are warnings to a trained eye.

Keeping on top of regulations is also vital; and 'administration' includes awareness of issues such as updating employment contracts. 'Compliance' covers ensuring monthly payroll reporting and issues which otherwise draw unwanted and time-consuming regulatory scrutiny. Nobody wants a regulator on their case.

The Government has made tax avoidance a signature issue, but there are also plenty of tax incentives, too, which people are seemingly unaware exist. The third step is to find out about them.

Her Majesty's Revenue & Customs estimates that tens of thousands of companies fail, for example, to claim the research and development tax relief, a generous encouragement that returns either cash of 14.5 per cent or a tax deduction of 225 per cent of expenditure.

Similarly, the 'patent box' regime allows companies to pay tax of just 10 per cent on profits attributable to qualifying patents. There are other goodies, too, that good advice will reveal.

The fourth step is to embrace social and digital media from day one. Social media is an important marketing and sales tool for any entrepreneur, not just for their leisure time. That means Twitter, YouTube and LinkedIn. There is always a temptation to hire some tech-savvy apprentice and to leave them to it. In fact, it is vital for the person with the vision to get involved with the content and put their stamp on it.

Finally, spend some time getting to know your employees as people rather than cost centres. There probably will not be many of them at the beginning. It is surprising how much energy and how many ideas are volunteered by people who feel valued in their work. Celebrate success and forgive mistakes.

An afterthought: A good idea for a business does not mean all ideas are good. If someone offers a tax idea, investment product or sales tool that sounds too good to be true, it probably is. Entrepreneurship requires some time-tested qualities above all others: Hard work, tenacity, courage and creativity. Without them, the germ will remain just that.