Small is beautiful: the environmental benefits of home-business

As world leaders head to Copenhagen to trade ideas, if not actions, on a low-carbon future, let’s hope their reading lists are not restricted to the new and shiny.

Thirty five years ago EF Schumacher wrote ‘Small is Beautiful’, which predicted the devastation we now see from squandered natural resources. He called for an economics of permanence to replace the economics of limitless growth. Small scale solutions Schumacher argued “are always less likely to be harmful to their natural environment than large-scale ones, simply because their individual force is small in relation to the recuperative forces of nature.” Recent research from the Smith Institute think tank suggests that home-based self-employed people can deliver considerable environmental benefits from reduced commuting, congestion and other lifestyle changes. Three quarters of all home-workers are self-employed people, and they make up at least 40% of all UK businesses (and most women’s businesses). What’s more, most have fairly modest incomes so they consume less too.

Schumacher considered that capital intensive work is ultimately dehumanising and that those who have more control over their work are more satisfied. This tallies with research which finds that those who work for themselves are generally considerably happier than those who are employed. On average the self-employed have lower incomes and often have to work bursts of very long hours, but all that is more than compensated for by the positive benefits of independence and having control over your work. One study found that during a ten year period in the 1990s well-being among employees dropped, while it went up for the self-employed. Beyond a threshold level, wealth and growth doesn’t make any of us happier. In fact we start to get a negative relationship – social dislocation, less time for family and friends, disagreeable jobs – which has an impact on health and a social cost.

Despite those economic, social and environmental efficiencies, self-employed home-workers are largely dismissed by policy makers as ‘lifestyle’ businesses. Aided by the proliferation of cheap new technology and redundancy push, it’s an economic choice which is spreading anyway. 

We still need smart growth; we need a cure for cancer and new environmental technologies. But we also need to value, support, enable and develop 21st Century infrastructure for small and beautiful micro-businesses.

Childcare supply crisis for start-ups

Just when we were beginning to think it wasn’t the big issue it used to be, it seems that childcare has returned as a problem for start-up businesses, but in quite a different way to before. 

A few years ago, the issue was cost.  Now with great help from tax credits and Sure Start, that doesn’t seem to be as great a barrier as it was.  Now the problem is supply, according to some of the providers of business support here in Norwich.  Even when they are able to help with costs, a significant number of their clients just can’t find anyone to mind their children. 

What’s going on?

Firstly, there’s been a sharp decline in the number of registered childminders since Ofsted stepped up regulations a year ago.  All childcare providers were required to adhere to the Early Years Foundation Stage, which sets out a series of 69 early learning goals, which have to be recorded.  And if they provide any kind of snack, the childminder has to have their home registered as food premises.  I won’t go on, but there’s more, much more. 

Over 14% or 10,000 childminders have given up since 2004, with 4,000 in the last year since the latest round of regulations were introduced.

It’s not just childminders who have despaired.  I remember those ‘requirements’ being introduced to my daughter’s nursery.  An astonishing number of tick-boxes, resulting in my child being more assessed and measured than a prize winning race horse and the child-carers becoming bogged down by paperwork, which sadly had little to do with glitter and glue.  I found a lovely childminder at that stage, who provided lots of cuddles, play and home cooked food: a lovely secure and homely environment.  Personally, I prefer the German and Scandinavian approach where the early years are for play and creativity and children are generally not introduced to formal learning until 7.  Here, one of the 69 Ofsted learning goals is whether pre-schoolers “sometimes use punctuation”. 

The second issue.  Informal childcare is now also subject to Ofsted regulations if it lasts more than 2 hours per day.  Last month, two police officers were told that they contravened the Childcare Act 2006 by caring for each other’s children, while not registered as childminders.  Even though no money changed hands, Ofsted ruled that the reciprical arrangement constituted a ‘reward’. 

This story, not surprisingly, has been widely ridiculed and the Children’s Minister is reviewing Ofsted’s interpretation.  Most people with informal arrangements, will sensibly ignore it. 

However it does present training and business support providers with a major problem.  Childcare costs are usually a significant barrier for just a small number of clients at a time, not usually enough to justify putting on a creche.  Some providers have found it easier to have a fund to pay registered carers or babysitters directly.  With the decline in registered carers and regulatory clarification regarding informal carers, it is now very difficult for training and business support providers to support new businesses in this way. 

It’s all very bad news for women in business, not least the thousands of formerly self-employed childminders.

Global gender gap: Iceland tops while UK slips

Iceland’s woman-powered response to the global recession appears to have propelled it to the top of the global gender gap charts. The World Economic Forum released its annual Global Gender Gap index (GGGI) on Tuesday, a comprehensive country-by-country ranking of gender equality. Overall it finds that 67% of countries have improved gender equality, while 33%, including the UK and USA, have got worse.

Iceland has been particularly hard hit by the global financial crisis. Women there have been outspoken in blaming a high-risk masculine banking model for the country’s financial mess. And they have been determined to replace it with “a new improved capitalism” guided by feminine values, such as more diligent risk taking, collaboration and a long term perspective which takes into account wider social values alongside profits. Since the crisis hit, women have taken over the top jobs in Iceland’s newly nationalised banks and Johanna Sigurdardottir has become the country’s prime minister.

Of course, Iceland was already a highly egalitarian country, with one of the highest levels of female participation in the workplace and enviable childcare and maternity provision, shared between both parents. As one Icelandic businesswoman put it: “There is never a problem with me being a woman, whereas in the UK there is always an undercurrent. Most Icelandic men genuinely view women as equal”. Such entrenched and taken for granted equality between the sexes means that it has been possible in Iceland for the idea of a feminine response to recession not just to be taken seriously but to actually be put into practice.

More broadly, the Global Gender Gap index has established a clear correlation between gender equality and national competitiveness. In other words, countries with the highest levels of equality in business, politics, health and education are likely to have higher levels of GDP and prosperity. In business, the Index reports that “Innovation requires new, unique ideas—and the best ideas flourish in a diverse environment. Studies exploring this link have shown a positive correlation between gender diversity on top leadership teams and a company’s financial results”. UK competitiveness is being hampered due to this particular issue: “Countries like the U.S. and the U.K. are lagging behind when it comes to senior leadership,” said GGGI co-author Saadia Zahidi. “They haven’t made a big push in the last few years.”

Financial crisis: women respond

The single minded pursuit of profit diet just isn't working

Ruth Sutherland, Business Editor of the Observer, reported today on Deauville, the Women’s International economic summit.  The illustration above beautifully sums up the event buzz: in a nutshell, the impact of the financial crisis needs holistic and long-term responses and to take into account the context of climate change, food supply, health and governance. 

Women in developing countries are taking the brunt of the crisis: girls are the first to be taken out of school, and the last to eat, as resources tighten.  Enterprise development, especially methods like micro-credit, which put resources directly into the hands of women can help.  But elsewhere, reports suggest that this recession is in contrast to others, resulting in a significant contraction of the informal sector in many developing countries.  The potential of the micro-enterprise sector to provide a financial cushion has shrunk considerably. 

Women are a safe and lucrative investment: much more likely to use earnings to develop their family and community.  A fact just confirmed, yet again, by a new report from Goldman Sachs. 

The message from Deauville is that women do things differently and it is more important than ever that their voices are fairly represented in corporate and political power structures.   As Einstein put it, “We can’t solve problems by using the same kind of thinking we used when we created them.”

Ethical business – learning from the Co-op

What an honour. This morning I was the first ever customer of a new Cooperative mini-market in Norwich: glad to be accosted by excited balloon waving, sash wearing staff, though slightly unsure about the one squashed into a squelching strawberry outfit.  There are now three Co-ops within a mile of my home.  The Co-op, a not-for-profit organisation, owned by its members and publicly committed to ethical business, is thriving.  Earlier this week the Co-operative group posted a 17% rise in first-half profits.  It has responded to recession with sales of its Simply Value range increasing by 80% and at the same time sales of its extensive fair trade range have gone up 35%, reflecting wider success of fair trade brands.

Ethics are big business. And they are an important driver for growing numbers of new businesses too, many of which unfortunately fail to get the balance right between passion and profit.  So what can idealistic start-ups learn from the success of the Co-op and the fair trade movement?

Quality Ethics on their own are not enough, the product or service also needs to be top quality.  Ten years ago the only local Co-op seemed chaotic and grubby and I gave it a wide berth.  Now it competes on every level, including price and service.  Its ethical values give it a winning edge in a tight market.

A clear message Fair trade is about fair working conditions and terms of trade.  It’s a simple and powerful message, which growing numbers of consumers are prepared to pay a small premium for. In contrast, the organic food industry has suffered from not being clear enough about the benefits of organic food. Focus on nutrition and ‘local’ back-fired as evidence showed little nutritional difference and supermarkets with massive organic food miles. Confused consumers won’t pay more for unclear ethical benefits.

Involvement Both brands work hard to build genuine relationships with customers and suppliers, or indeed members for the Coop.  When fair trade brand Café Direct decided to become a Plc, share offer applications were printed on the packs of coffee, raising £5million from 4,500 investors. It also invests half of its profits into the businesses of its grower partners.

Authenticity US based ‘Whole Foods’ retail chain, started thirty years ago as a vegetarian co-op buying from farmers, selling to students.  Today, it has almost 300 branches and an $8 billion turnover. Its customers are largely left-wing liberals. So when the Whole Foods CEO went public with his opposition to Obama’s health care reforms, it undermined the brand and enraged customers, many of whom joined online boycotts of the Company.

Companies that trade on ethical values need to be consistent and express those values through leadership behaviour, environmental and investment policies and how they treat staff.  Of course they won’t get it right all the time, what is important is the genuine commitment.  So, on this occasion I will forgive the Co-op for stuffing that poor employee into the strawberry outfit, but I might draw the line if it happened again!

Marketing Awards to Women

The future’s not female, it seems, if you live in Norfolk.  Following a campaign to identify the ‘Future 50’ businesses by regional Daily newspaper, the EDP, only two of the businesses to watch have any degree of female leadership.

This just doesn’t add up, either with enterprise statistics or my local knowledge.  So what went wrong and how could the EDP and others reach more women?

Here are some tips from my experience of gender sensitive marketing and Awards schemes for women:

1. Segment your marketing. Run the campaign in phases targeting specific sectors, such as hospitality and services, where women’s businesses are more dominant. This helps overcome a sense that ‘it isn’t aimed at me’.

2. Target women. It just works and will attract a higher response from women. The Flying Start programme, aimed at graduates, increased its take up by women by 800% with this kind of targeting.

3. Diverse judges. It’s often said that people recruit in their own image and perhaps the Future 50 result had something to do with the fact that 8 out of 9 of the judging panel were white men.

4. Language can be loaded. The top criteria was ‘potential for rapid growth’. Pace of growth is one of the things that distinguishes many female businesses. Most women want to grow steadily, not rapidly, and few are interested in scaling to sell-out and make a packet. They want to build successful, sustainable and worthwhile businesses above all. The EDP’s language implies the Future 50 isn’t for them.

5. Broaden success criteria. The Future 50 success criteria seems a bit, well, macho. I can’t see any indication that success is measured other than financially. What about supporting other businesses, contribution to the community etc? That’s not to say that finance isn’t a key indicator, but on its own it can suggest a kind of Del Boy enterprise that many female and creative entrepreneurs reject.

This is not to take away from the first tranche of Future 50 entrepreneurs, who are awe inspiring. Awards like the Future 50 can stun you with just how much innovative talent is right under your nose. Like Takeover Entertainment, an international, chart-topping music promoter, run by a couple of young men my son has known since nursery school! Next time I’d just like to see them joined by some women I know too.

Calls for a benefits buffer

Emma Harrison, founder and Chair of leading welfare to work provider A4e, has called this week for a ‘benefits buffer’, which would cushion the sharp transition from welfare benefits into work (or starting a business). ”It’s very, very frightening if you’re on benefits, to take a job,” she says in the Guardian , highlighting worries about the sharp removal of secondary benefits, like housing benefit. “If you’ve been unemployed for a long time, you don’t have a great stock of food in your cupboard. You don’t have a buffer. If you take a job and something goes wrong you can’t go back to your stocked up cupboard, because it’s empty. And if you have got kids, it’s just untenable”.

She is absolutely right. It’s has been a persistent problem, for potential entrepreneurs on the margins, for the last couple of decades.  Lobbying about this issue was a feature of my career for many years. In 2003 along with colleagues from Community Links , who continue to do sterling work in this area, we were invited to have a meeting with a then top Treasury Mandarin, about the issue. Fascinating. A three hour meeting, where with his team he tried to demolish and deter our arguments in a most ’Sir Humphrey’ manner. Ministers were keen, but the Treasury wasn’t budging. Later I co-wrote a report ‘Who Benefits: the difficulties for women in making the transition from unemployment to self-employment ‘ which helped to sharpen up the evidence. Over half of women start businesses part-time and generally women start their businesses more gradually. If they have the resources to get through the first few years of business start-up, this feminine starting pace is no less successful than the faster male approach. But the benefits system doesn’t take pace – or level of risk involved in flexible employment or self-employment – into account. One day you’re on benefits; the next day you’re not. And if it doesn’t work out, getting all your benefits back in order is not quick or easy. With kids? Just untenable, as Harrison says.

Iain Duncan Smith’s Centre for Social Justice has just reached similar conclusions in a major report for the Conservatives. I don’t agree with all of his recommendations, but the principal of a benefits buffer or taper could be critical in freeing a lot of people from benefits traps and withered potential. I’m glad to see the debate renewed.

Why a blog about Enterprise & Equality?

So, why a blog about Enterprise & Equality?  I believe both are necessary for healthy business and society.  And given current economic, social and environmental challenges, innovators are more important than ever.  While it’s fairly well established that diverse teams almost always produce a better result than narrower groups; there is growing evidence that that the same applies to the involvement of a broader range of people in innovation, enterprise and business leadership.  As it is we have a mostly pale, male monoculture in those roles.  How can we or should we mix it up?

I’ve been having this conversation with myself and a few fellow travellers for many years.  The Enterprise & Equality Blog takes it ‘out loud’.