'It's so much fun being in control of your own destiny'
Let's foster entrepreneurship, reward success and get this country thinking outside the box, writes Peter Casey
George W Bush, discussing the decline of the French economy with Tony Blair, famously said: "The problem with the French is that they don't have a word for entrepreneur."
Let's start the discussion with whether you believe everyone can be an entrepreneur. I firmly believe that the answer to that question is a resounding yes. It is so much fun being in control of your own destiny, and it is generally accepted that the more entrepreneurial the economic environment in the country is, the better the economy will be. That being the case, let's examine exactly what the Government is doing right, what it is doing wrong, and consider what it should be doing to foster and encourage entrepreneurship in the island of Ireland.
One of the essential skills for an entrepreneur should not be to simply have good ideas, but possess the ability to recognise bad ones. And it is that skill that should enable our prospective entrepreneurs to avoid spending years of their lives on projects that simply will not fly – and prevent our Government from backing them on fools' errands.
After two seasons on Dragons' Den, I have been presented with over 160 business propositions, many of which had received grants from various Government agencies. While some were ingenious and deserved backing, lots were just plain silly.
The real tragedy of the latter category is not just the total waste of taxpayers' money – it is the fact that these people have invested portions of their lives in a total dog of an idea that is never going to be a success.
Often, this investment in time is fuelled by the validation received from someone in an agency such as Enterprise Ireland who may have never been in business before and who has backed the "clever idea" with your money.
Civil servants tend not to be great entrepreneurs. They are given money to invest in start-up companies and they get measured, not by the success of the start-up companies, but by whether or not they spend the money that they were allocated.
I would contend that if the semi-state officials were experienced entrepreneurs themselves, they would have stopped the madness there and then, pointed out that lots of clever ideas cannot be monetised, and steered the applicant on a clearer path to potential success.
Successive governments over the past 20 years have demonstrated difficulty running their own business, so their role should perhaps be limited to creating a stable financial environment where businesses can make long-term investment plans.
Instead of spoon-feeding our would-be businesspeople and sponsoring them to enter the world of business, we need to create a different style of State-led entrepreneurial culture.
In this culture, it would be acceptable to fail and start again, but fledgling businesses would be rewarded for having, and implementing, successful ideas.
Instead of being given seed capital for simply having an idea, anyone setting up a business should get a 15-year capital gains tax holiday. This would encourage more people to take the plunge and also attract a lot of foreign and domestic private equity firms to invest in start-up ventures. These firms know the value of an idea and will be far quicker to recognise, and back, a potential success – leading to a far smaller failure rate.
A managing director of a new business should also be free from paying personal income tax on income related to any new venture for five years. This should be capped at €250,000 and would allow the entrepreneur to reinvest back into the business. The employees would pay taxes as normal.
Although Enterprise Ireland has had some success with the high-potential start-up schemes, I believe that the more mentoring we can give to would-be businesses the better.
We need to harness the skill sets of our retired business class to provide mentoring services on either a regional or a sectoral basis to up-and-coming firms. Approved mentors should be given tax credits to encourage this sharing of a wealth of ideas and experience, to really get the country thinking outside the box.
As our society grows older, our pool of wisdom is expanding and one of the first lessons from the wise old owls is always that it is OK to fail. This has been a real issue is Irish life and one that needs to be addressed by a further and immediate change in our archaic bankruptcy laws.
Release from bankruptcy in Ireland was changed in 2011 from a ridiculous 12 years to a punitive five. In the UK, it can be as short as 12 months. This is because we need our best people to try again.
In the meantime, the State should make it easier for entrepreneurs to access short-term social welfare benefits if necessary. This should not be a privilege of employeeship, and should be used to support people until they take off again.
On a positive note, the Government has invested heavily in financing Enterprise Ireland, IDA Ireland, Intertrade Ireland, Connect Ireland and many local enterprise programmes. It is also trying to improve co-operation between educational institutions and business.
The expansion of the Consulate Programme is another very promising step as this helps Irish companies abroad get their products and services into foreign markets.
However, there are not enough entrepreneurs serving on these boards, and this is shown in the decisions that they are taking.
Enterprise Ireland's last annual report announced that it was allocating €1m for investments in big data/analytics projects. This is a pathetic allocation in one of the hottest growing areas on the business planet.
To its credit, Enterprise Ireland does co-invest occasionally with private equity firms, but nowhere on the scale that it should.
If these suggestions are taken on board, private industry will work arm-in-arm with the State to foster a brighter future for entrepreneurs – and some harder decision-making for the Dragons.
Peter Casey is founder of Claddagh Resources and a panellist on RTE's 'Dragons' Den'
Sunday Indo Business