This blog is posted in conjunction with our recently released podcast #128 – The Peasants’ Revolt

The key to influence is being in the room when the big decisions are made.

Ideally, you should be physically present: few can ignore completely a person who is right in front of them. Next best, if it is impossible to be there in person, is to have someone in the room who will represent your interests faithfully and actively. At the very least you need to have someone in the room who is aware of your existence as a factor to be taken into account.

The problem for most entrepreneurs and small businesses is that we are rarely in the room. We like to think we make our own decisions and control our own lives – indeed, many of us went into business for ourselves precisely because we do not like being told what to do – but the truth remains that we do not make many of the decisions that have greatest impact on our businesses. They are made for us – without our asking – by politicians and bureaucrats.

They can decide to interfere with any aspect of how we run our affairs. They can decide to tax us or grant us access to contracts. They can decide to make economic conditions better or worse –usually the latter. We have no say in what they decide.

So we need to get someone in the room where they make their decisions. The problem is that the rooms in question are filled entirely with bureaucrats and – sometimes – politicians. Occasionally the odd representative of the banks or big business might be allowed in – but, as far as the people in the room are concerned, we do not exist, either as individuals or as a small business sector.

Here is how political influence works in the West...

Overt bribery is rare. However, wealthy individuals, corporations, or front organisations, or lobbyists acting on their behalf, can and do make very large donations to funds close to the hearts of powerful politicians. These funds may be the politicians’ own campaign chests, or their parties, or other organisations in which they take a benevolent interest. A donation to a charity which has a politician’s wife on the board of trustees can be as effective as a direct gift to the politician himself.

It is important to stress that an experienced lobbyist will never so much as hint that a deal is being made when he makes the donation. The politician would almost certainly walk away with a fine display of disgust if there was the slightest suggestion of “We are doing you a favour, and we hope you will remember it when we ask you for a favour”.

There is not so much as a nudge, a nod, or a wink.

It is enough that a channel of communication has been established. This may mean that the donor has direct access to the politician, but it may be sufficient if the donor has access to the person who runs the fund to which he donates, if that person has the politician’s ear.

A politician may pay more attention to his campaign manager whispering “We should be nice to this guy” than to the donor himself.

Either way, the important point is that the politician now knows that the donor exists. When the politician goes into the room where decisions are made, that knowledge goes in with him. The donor himself may not be present, but he is a factor to be taken into account. There will be other factors, which may turn out to be more important, but the donor has at least bought the right to be taken seriously.

For most individual entrepreneurs and small businesses, this is not an option. For one thing, as individuals, we lack the sort of money necessary to make a real impact. We could, of course, raise it collectively – there are over four million of us in the UK alone – but the whole point about entrepreneurs is that we do not like doing anything collectively.

If there are more than four million of us, then there are more than four million sets of opinions and divergent interests.

Yet most of those millions also have certain interests and opinions in common. We need to find a way of getting them across to those in power who are currently ignoring them.

We need to get into that room.

Britain’s new economic strategy is sound: cut the wealth-consuming public sector and expand the wealth-producing private sector.

This is no more than simple common sense. Yet the UK’s public sector has been expanding for years while the private sector has not been growing as it ought. The laws of mathematics tell us that the inevitable consequence of increased expenditure and insufficient income is debt. It is a shame that it took a recession to force Britain to face that reality and try, at last, to reverse both trends.

The problem is that, in adopting this laudable strategic objective, Britain’s new Coalition government has no idea how to achieve it.

Here is how to do it. Do not try. Just let business get on with it. If the politicians and bureaucrats would leave us alone – and by that we mean take away all their meddling, interfering regulations, rules and compliance burdens – the private sector would not only achieve their objective of taking up the slack of the reduced public sector but would go on to expand far more than their narrow little minds could ever imagine. History proves this.

However, the politicians do not really have faith in this. Unless they are prepared to act on their words, business will not be able to take up the slack. The strategy will then be perceived to be failing, then blamed, then abandoned – without really having been tried.

If they rely on business, they must trust it. They must take us seriously when we say that legislative interference like the “Equality Act” in the UK, the maternity proposals of the EU, and the poorly drafted healthcare reforms in the USA, will prevent us from completing the tasks they have assigned us, to generate income and employment.

They must also understand that no government schemes or spending programmes designed to “help” business can make up for that interference. For President Obama to tout a “Small Business Bill” after approving the pork barrel of the stimulus package and federal healthcare is like shooting a man in the guts and then offering him a Band Aid.

Similarly, the language of the new British government is suspiciously reminiscent of its unlamented predecessor, which thought a few handouts to selected businesses – its friends – could compensate for increased tax and regulation that drove businesses and jobs abroad.

Message from Business to Government: Yes, we can take up your slack for you – but only so long as you do not try to “help” us – just get out of our way.

A controversial candidate in this year’s US Senate elections feels that the media are not portraying her as she really is, so she came up with a clever little advertisement in which she looks at the camera and says “I’m You”

...only to be met with entirely predictable chorus of “Oh No, You’re Not”.

Yet the question implied in the advertisement is a good one. Who in government is “Us”? In particular, who among our hundreds of thousands of bureaucrats and politicians really identifies with the millions of hard-working entrepreneurs who generate all the wealth and pay all the taxes to fund our rulers’ expensive lifestyles?

In the UK, we are ruled by an independent political class that is increasingly divorced from the real world. The leaders of all three major political parties look like clones – all thin, dark-haired males in their early forties with the same privileged background, Oxbridge degrees, and not a single day of real business experience between them.

The same description, sometimes with slight variation, applies to most of the people around them. The fact that they know nothing about business does not stop them interfering with it. Indeed, the more ignorant they are, the more they want to interfere.

Real businessmen are, of course, too busy running their own businesses to respond in kind. At best they might take a break long enough to write a letter to the newspapers, like the one signed by 35 leading British businessmen urging the government to be firm on cutting state spending. These letters can do some good. A similar letter just before the May general election stimulated a long overdue debate on payroll taxes.

Yet it would be a mistake to think that 35 of the highest paid executives in the country speak for all five million British businesses – some of whom are frightened by the prospect of cuts because they depend on government contracts. Nor are the five million represented by Sir Philip Green, Chairman of the Arcadia Group, who spoilt an excellent report on government waste by suggesting the state should delay payments due to private business. Late payment by government has long been identified as a major source of cash flow crises.

Big business and the banks have a fairly loud voice, but who speaks for the vast majority of those five million, who are small businesses or self-employed entrepreneurs?  We do not trust the fat cats of the CBI to speak for us, nor moribund Chambers of Commerce, nor the ineffective FSB, nor a celebrity “czar” ...

nor the bankers who are always being brought into government – our second worst enemies joining our worst! Where is our voice?