Twenty or so years ago an old friend of mine set up a “knowledge-based” business and needed a loan of a couple of hundred thousand pounds to get up and running with the infrastructure required to establish a company – an office, furniture, kit, staff and so on.
Five years ago I heard a chap from Hitachi Consulting talking about an exercise they had done with the top team of a client where they gave the management group a day and a thousand pounds to set up a business. There was enough for a few rounds of drinks left over at the end of the event, aimed to bring home how software as a service in particular changes the costs and agility for small businesses.
I reckon I’ve spent about £350 so far; and of that, the lion’s share is a cheap laptop (£230) and some stock imagery from http://www.iStockPhoto.com (about £90). Other than that, there’s a domain registration (about £15), Google Apps account (a few quid a month), CRM from http://www.insightly.com (free), expenses management from http://www.expensify.com (ditto), and a WordPress ad-free, domain-mapped account for the website (about £30). Over time, if the business scales, undoubtedly so will the costs, but becoming a new business is a very low cost activity these days.
That, of course, is a double-edged sword. I once heard someone describe TechCity as being “income support for middle class kids”; low cost of entry means lots of daft ideas getting further than they would have done in times previous (my own, potentially, included). But I do concur with the ideas at Reid Hoffman and Ben Casnocha put forward in their recent book http://www.thestartupofyou.com/ that effectively “we are all startups now”; I’ve had many a conversation in recent months with folk on whether the world of employment will polarise in the coming years into macro (massive multinationals) and ultra-micro (an employee roster of one).
It’s not, of course, just about setting something up; there needs to be a compelling business proposition that a client or customer is willing to buy for a business to be a business and not merely a pipe-dream. But the friction that used to exist between nothing and something (in terms of capital investment) has seriously diminished in recent years. That’s important not only for individuals who try to make the leap, but also to big businesses who have a whole new category of competitor for people, and a whole new category of competitor in the form of micro-businesses who can have more effective business support than the bigger, slower-moving, more risk averse companies we are used to.