[Silhouette]

Also, we have an annoying amount of red tape from both the UK itself and, at least for the immediate future, the EU. It gets in the way of starting a business, but worse, it gets in the way of taking significant steps necessary to grow a new business like taking on your first employees.

If you've got months or years of runway from external funding, that's irritating but not a big deal. You hire someone to deal with it and get on with more important things.

However, if you're bootstrapped and at first it's just three friends working out of someone's garage or a family business with an office in the dining room, that red tape can be a significant overhead that holds your business back from taking on staff and dedicated facilities and so on.

Given this culture, it's hardly surprising that a lot of UK start-ups with ambitions of hockey stick curves look to the US for support. The alternative is fighting your way out of being a lifestyle business for some number of years, at the same time as trying to do whatever it is you do that actually has value.

[stefanfisk]

Whenever this argument comes up I feel like I'm missing something. which typical European regulations get in the way of bootstrapping startups?

[zerkten]

I wouldn't make the argument that regulations get in the way without specifying which one. I would make the argument that, philosophically, Europe is very conservative and risk averse in terms of terms of releasing funding. For the purposes, of this argument, I'd also ignore states and political unions. However, you segment Europe, the result tends to be same.

This is at all levels of banking and financing. In the US, the balance is very different for almost all types of business. Of course, you can find exceptions, but investors will engage without the level of due diligence, or qualification, that is required in Europe.

There are various papers like Assessing the Potential for EU Investment in Venture Capital and Other Risk Capital Fund of Funds (https://ec.europa.eu/newsroom/horizon2020/document.cfm?doc_i...) which cover some of the issues.

[lazharichir]

Do you have examples of what you mean by red tape from the EU that prevents a bootstrapped startup from thriving?

[Silhouette]

I don't think it prevents a bootstrapped business from doing well. My own are proof that this is not the case.

I do think it makes growing a business slower and more expensive than it needs to be.

Some examples that come to mind from from recent years are the Consumer Rights Directive (soon to be superseded, but the UK will probably have fully separated from the EU by then), the GDPR and ePrivacy Directive (ditto), and the VAT rules (of which there are so many variations depending on context that I won't even try to list them all here).

To be clear, it's not that I object to things like strong consumer protections or privacy rights. On the contrary, I am a strong advocate of such things, and my own businesses have never done the sort of shady stuff in these areas that tends to attract criticism. I just find the EU's approach to these things unnecessarily onerous and not always effective at achieving its intended goals anyway.

[tonyedgecombe]

I don’t know where you got that idea from, the UK is one of the easiest places to start a business.

[zerkten]

Starting a business is easy. I've personally done it in the early 2000s, and it's easier today. However, it's structured for traditional businesses which produce returns relatively early.

It is not structured to support "startup"-type companies like those in the US. Yes, Silicon Valley is the focus on HN, but the range of options beyond what you find in the UK is available in many more places than just SV.

In the UK and Europe you can potentially find an angel investor. Once you go to the next levels of finance then it gets tougher. In the US, you have access to the next level of VC finance which comes from a relatively large pool. Most financiers in Europe tend to be conservative, although there are efforts to change that. Hence, companies flipping to being US-based.

[Silhouette]

Starting a business here is easy.

Growing a business here is harder.

You want an office? Welcome to the wonderful world of business rates, commercial lettings, site security, ever-changing transportation and infrastructure arrangements that will be largely out of your control, etc.

Hiring your first employee? Welcome to employment contracts, documenting policies for things like grievances and disciplinary actions that you hope you'll never need, arranging pension plans, H&S regulations, statutory leave, benefits rules, and all the other HR fun and games.

Providing a service online, where your customers might come from abroad? Welcome to international tax regulations that you can barely keep up with, never mind properly comply.

Don't want to have users steal back all the revenue you ever took from them based on a legal technicality? Better have a good lawyer to write all your documents.

Don't want an intervention by the data protection regulator? Better make sure all your GDPR compliance processes and documentation are up to standard.

Remember to file your real-time payroll data and VAT returns and confirmation statements and annual financials on time. Don't forget you'll need to use suitable online systems for a lot of this stuff now, since HMRC insist on it, and you'll need to get anything else you're using for financial management integrated with them.

Don't forget your public liability insurance. And employer's liability insurance. And professional indemnity insurance. And property insurance. And...

Now, you can outsource a lot of this work. For some legal and accounting matters, you will have little choice, unless that happens to be your field of expertise. But of course the services offering to do it for you will charge you, and even if it's just a thousand pounds here or 3% of your revenue there, it will soon add up. Until you're big enough to have in-house people for things like HR, facilities management, IT, legal and financial, that's how it goes.

Now, run along and make sure your designated H&S officer has checked that all your employees currently working from home have suitably ergonomic workspaces set up, recent sight tests done and glasses/contacts provided if they're working with computers, and proper reporting in place for all the extra expenses they'll be claiming due to the sudden home-working this year, because you could be on the hook for a big bill if you get any of that wrong.

[mercer]

While I can't tell how you feel about these things, most of it sounds pretty good, from an employee perspective.

Sure, there's stuff that is infuriatingly misguided, but all in all I rather like living in a place that puts the onus on the employer when it comes to all sorts of financial and practical issues that an employee might deal with.

I definitely don't want things to be more like the US, much as it complicates things for myself as an entrepreneur and employer.

[Silhouette]

It is good from an employee perspective. For example, in a country where a lot of people aren't saving enough for retirement, there is logic in saying that employers must make pensions available to their staff as part of their compensation package.

The problem, as always with these things, is that this only helps you if you're employed in the first place. If the burdens of taking on a new employee, particularly the first one, are too high, then that lifestyle business run by its founders will remain a lifestyle business run by its founders, possibly for years or even forever.

Similarly, if you're a customer shopping for clothes online at the moment, it's great that UK consumer protection law requires vendors to give you 14 days after delivery to change your mind and cancel the purchase, and the vendor must accept the return without charge if you do. You can buy multiple sizes or colours to try things on, or just try a few different styles to see what you like, and then send the rest back, and all it costs you is a bit of postage.

It's less good as a merchant, when the reality is that a significant fraction of your returned items will come back unfit for resale and unless you can prove they didn't reach the customer already in that state you'll still be on the hook for the refund. Even for goods that do come back in as-new condition, you'll still have to go through the whole restocking process and you'll be missing that stock for as much as 28 days. Generous return policies didn't matter quite as much a few years ago when the law was introduced, as most people were still shopping for their clothes in bricks and mortar stores and would try things on in-store before buying. Right now, with fashion retailers going bust all over anyway, this surely isn't helping.