March 29, 2016
Expansionary fiscal policy or stimulus is proffered by many populist politicians as the solution to our current economic situation. Spend more money through the Government channel of the national income equation and boost the economy through more jobs, more public services and reduced unemployment. However, we have seen this before especially in 2 periods, 1977-1981 and 2001-2008 and the purpose of this paper is to contribute to a discussion on the safe use of fiscal policy and remembering the lessons from previous periods of expansionary fiscal policy before we start increasing government spending. The size of the multiplier effect is critical for the success of these policies and Ireland, in line with most small, open, trading economies, have small to negligible multiplier effects. The current round of ‘austerity’ is the result of the last round of ‘stimulus’ and recognising that monetary policy has done as much as it probably can to stimulate the European economy and that more fiscal interventions are needed, it must be targeted and considered not broad stroked. The paper goes on to suggest one fiscal-policy strategy to stimulate the European economy by working across the single market and targeted expenditure on those countries and regions with the highest macro- multiplier effects and on those items with the highest rates of return. Thus, countries and regions with high multipliers get the benefit of increased stimulus which should boost total single-market growth and countries and regions with low multipliers get the private-sector growth effect without running up increased public expenditure where it generates the least economic benefit.
To read the full paper please click here
March 2, 2016
The aim of this paper is to discuss social enterprise and social entrepreneurship in the longer term. There seems to be a policy and academic understanding of social enterprise in the short term but little understanding of the reality of operating, running and constantly refocusing social enterprises in the longer term. To clarify, a social enterprise is an organisation, with formalised business model, corporate governance, management and staffing structures. It also has key social and economic objectives; the key performance indicators set by the Board of Directors for the company to achieve on an ongoing basis. The primary aim of a social enterprise is to achieve a core social mission but it needs to be understood that as circumstances and the social, economic, technological and political environment change, the social and economic objectives of the organisation will be refocused to ensure that the core social mission is still relevant and being met. The economic objectives will similarly be revised and updated to ensure the business model is still relevant and being met. The paper goes on to publish a survey of 102 existing social enterprises in Ireland conducted as part of my PhD thesis. This is one of the broadest in-depth surveys of long-term social enterprises conducted and gives detailed insight into these organisations.
To download and read the full paper please click here
February 18, 2016
The aim of this paper is to contribute to a coherent understanding within public policy of social innovation, social enterprise and social entrepreneurship. These are terms that are used regularly but are contested, in that, there is no single agreed definition of their meanings. However, this is not such a major issue for policy as there is only a requirement to understand how these mechanisms can be used. A key message is to focus on the key social issues and challenges being addressed, not on the mechanism being used to address them. Social innovation and social enterprise are not an end in themselves, they are a means to an end. It is easy to be distracted by the technical terms and new phenomenon but they are mechanisms to be used to achieve a goal; in this case addressing the social challenge identified.
The paper goes on to outline a practical process for social innovation. It recognises the integration of the innovation process and mainstreaming/commercialisation process. It outlines the practical steps that can be taken at the community level to develop new solutions. There is a need for greater social innovation infrastructure to facilitate the development of this sector. The development of social innovation hubs and philanthropic trusts based in the community, not just in third-level institutions, is needed.
To download the full paper please click here
I have worked in enterprise development and support in a number of roles over the past 20 years. One question that has always interested me is how can you create a culture that fosters entrepreneurship and enterprise development? Having seen the Irish entrepreneurial culture develop, grow, bust and re-emerge and also by working with entrepreneurs from many cultures and consulting in countries like the Czech Republic, I have always been interested in the process of creating the culture behind the economic process. This is a difficulty for many trained in economics as they have been inculcated in the neoclassical economic model which is underpinned by several assumptions such as culture, social interaction and motivations other than profit motive are isolated from the analysis, or ‘with all other factors being equal’. However, culture does matter and very much affects how a society, country or region promotes a culture of entrepreneurship. Some years ago I wrote a detailed literature review on enterprise and entrepreneurship and one of the areas I focused on was entrepreneurial culture. So, this article will continue by setting the context in which this issue is being discussed with a literature review and will then move to a discussion on the practical policy implications. In particular, I wish to emphasise that creating an entrepreneurial culture is best created by not trying to achieve a model of best practice or adopting someone else’s. It is created by taking the broad free-market framework and adopting it to local circumstances. It is created by accepting that one is engaging in a process that requires ongoing institutional and policy change as the city, region or country develops along the pathway to progress. It is achieved by recognising that political leadership is important and a broad consensus of the path of development is necessary. An independent and consistent legal system is a precursor to an entrepreneurial culture and creating a culture in which this process in enabled will take long-term policy commitment, and, in many cases, an evolution in the local culture as it changes to accept the culture of entrepreneurship within its traditional cultural norms.
To full article can be downloaded here
January 11, 2016
This is a discussion paper circulated in response of the decision of the Small Firms Association (SFA) to initiate a series of focus groups and develop a policy strategy on developing the small business sector in Ireland over the next period of years. The focus of the paper is on government enterprise policy and its role in developing Ireland’s enterprise sector moving forward. The primary case being made is that although enterprise policy has been successful over the past thirty years that ‘what got us here will not get us there’. It can be argued that many of the government’s interventions have achieved many of their primary goals and it is now time that government refocus its activities from micro-level support (picking winners and supporting specific companies through its government agencies) to a macro-level support (building up the infrastructure, institutions and ecosystem and creating the environment for all companies to succeed, grow and internationalise). The argument can further be made that the government should capacity build private-sector institutions to deliver enterprise-support programmes and refocus the enterprise agencies to address gaps in the infrastructure and ecosystem. Above all that policy should take a leap step forward in aiming to move the current enterprise environment from where it is to a new, more entrepreneurial and private-sector focused level. This is not a case for less government involvement in enterprise policy but a refocus of interventions and the establishment of new goals to aim at.
The full discussion document can be downloaded from here.
It is 2016! We survived the great recession and are now looking forward. Over the holiday break many people start to mull over business ideas. Some are ideas that have been kicking around the back of your mind for some time and some come as a quiet mid-winter break allows brain to work as space is freed up. Either way, the beginning of the year is one of the times when people start looking around for information on setting up their own business or developing a business idea.
If you have never done this before one of the key questions is how do I know if this idea will work and is potentially viable? Here are a few comments before we go further;
- You really should assess the viability of a business idea before investing real time and money
- There are standard ways of assessing a business idea; a business plan being the most common
- Anybody can write a business plan and you should write your own business plan
- It does not need to be too complicated, the objective is to assess your idea
- If idea is viable then you engage in a much more detailed process of business planning and execution but only if you have a viable idea
So how do you get from a business idea to a business plan/assessment? The following table gives an outline of the process.
The first thing is to develop a refined business concept. Before going forward do market research. Is somebody else doing this? Does someone have the intellectual property (IP) protected? Has this been tried before and not worked? Why did it not work? Has something changed? Has any academics/agencies/consultants done market reports on what you are thinking about? Market research is about finding answers to the pertinent questions you have. A lot of this information is freely available but be careful to separate facts and opinions. Focus on the facts. Having done this market research it is highly likely that you will reassess or redefine the business idea and have a refined business concept.
You cannot write a business plan on a business idea/concept. This is where many people get confused. You write a business plan on a defined business model. So to develop a business model you are asking what strategy and organisation do you need to get your good/service/programme to your customers/clients. In my write your own business plan programme we do this by spending two and a half days asking awkward questions on management, operations and sales and marketing. So who are the customers, what do they want, how do they want to buy, what type of organisation do we need to have to deliver this to the customers, how many people do we need in this organisation, what channels of distribution and what subcontractors can we use, what management skills do we need, what size of premises will we require? Lots of other questions but when you start answering them one on top of the other you build up a model of the type of business you will need to deliver what your customers want, when they want it. This becomes your business model. Doing a start your own business courses can help you with this as well as mentors.
Now you have a framework, you can start to put numbers on things. How many customers can we actually serve initially? What revenue will this generate? What are our costs and overheads? Will this generate a profit/loss? What is our breakeven sales figure? What investment do we need to put into the business to get passed the first few years? This leads you to putting together a cash flow projection.
Next write up a summary of all the different issues you have researched. Write up a section on:
- Management: what are your skills, what are your strengths and weaknesses, do you have a plan to address your weaknesses, do you need key people to boost management capacity and what skills do they require?
- Operations: how will the organisations nuts and bolts be put together? This is about writing an idiots guide to running your business. Where will it operate from, who is involved, what does it do, how do have systems, policies and protocols for running your business?
- Sales and marketing: who are your customers, what are they likely to want to buy, where do they want to buy, why should they buy from you?
- Finance: cash flow projections based upon gross margin, overheads, set up costs and of course projected revenues. This should then lead to an income statement (profit and loss) and your breakeven sales figure and how many units do you need to sell to breakeven?
Once this is done write up a short one-page summary where you outline the key points and finally make your assessment of this business idea. There are likely to be 4 potential outcomes from this process:
- This is a potentially viable business idea and I want to go and do it now
- This is a potential viable idea but I am not ready to start it yet. I may need to generate more money, get more experience, acquire a formal qualification or I need to finish off something before I clear my desk and then start this idea. I will do what I need to do and then reassess the idea and may start in 6, 12 or 18 months’ time
- This is a potential viable idea but it is not for me. An example being a creative person and a franchise. There is little room for creativity in implementing a franchise idea and the idea may work but not suit the person
- The business idea may not be financially viable. The idea may be nice but the cash flow projections show that the business will not make enough money quick enough to start covering its costs. It is not that the idea is bad or that the person will not do the work but building the customer base will take too long and you will run out of money before going into profit
All of these 4 outcomes are equally valid. Being honest with yourself will lead you to the right outcome for you. So if you are about to engage in taking your idea forward then may I wish you good fortune but be realistic and be honest with yourself. Happy 2016!
December 30, 2015
Use the system
Taking into account my previous comments regarding protecting yourself and your idea, there is a range of services and supports available to help entrepreneurs/inventors to develop and commercialise your ideas. You always need to remember who you are talking to and what they specialise in. So talk to:
• Local enterprise/development agencies (including local enterprise offices, partnership companies, local development bodies etc) about pre-enterprise programmes to help you develop your business plan and structure your thoughts on your idea
• University Technology Transfer Offices regarding the development of the idea (technical and commercial), IP protection and possible business incubation. This is for the any idea relating to technology, pharma, telecoms etc. The TTO office has staff who specialise in bringing entrepreneurs through the process and make the connections with the researchers in the university to help develop the idea technically. There may also be funding options available through feasibility grants, innovation vouchers etc depending on the country, region and time.
• Business incubators to help get a business started. There are a range of incubators: for profit, nonprofit, third-level and investment driven. They all provide affordable enterprise/office space for start-up ventures but they all provide other soft supports, networking opportunities and some give access to finance. If your idea is already developed and ready to go, go talk to your local incubator management about practical start-up support. Many incubators also offer business address services, where people can use their business address rather than using their home address if they do not have commercial premises
• Enterprise agencies regarding grants and funding, assistance with internationalisation (exporting), access to trade missions and support from sector-specific experts
Other agencies and enterprise-support organisations offer mentors, advice, connections to key business and public contacts and moral support when things are slow. There is a lot of funding made available by local, regional and national governments to promote innovation and new product development. Officials see this as a key economic growth factor and there is significant lip service made in this direction, even if the technical and economic understanding behind the rhetoric is a little thin at times. Find out what is available to your in your area and leverage the available resources to help you.
A final but important point is that agencies and organisations are made up of individuals and the strength of the agency is only as good as the strength of the people working there at the time. The reality is that many bureaucrats simply ‘do not get it’ and potential entrepreneurs may get frustrated by being ‘bounced around the system’. If you have a negative experience with an agency you must not be put off, it just could be the individual bureaucrat. In every system there are key, competent, people who do ‘get it’ and part of the process is finding the right people. Talk to people who have been through the system and had positive experiences and ask them who they dealt with and how they went about building relationships. Get referrals to the people in the system that do facilitate innovation and work with them. Use the system!