‘My shocking struggle to breathe fire into our entrepreneurs of the future’

Angus MacDonald is a champion for small rural businesses but it’s hard work, he tells Magnus Linklater

Last night in Fort William they held the finals of Dragons’ Glen — the Highland equivalent of TV’s fiendishly competitive business programme, Dragons’ Den.

Three potential entrepreneurs were bidding for the £7,500 investment that would take them to the next stage of development: a company designing ladies’ coats, a retail product innovation, and a health and lifestyle business called Bodytoolkit. The outcome was too close to call.

The man who dreamt up Dragon’s Glen and put in the money to get it off the ground is himself a successful entrepreneur who believes that Scotland’s rural economy will stand or fall on small businesses such as these. Angus MacDonald, 53, has launched more than a few of them in his time. The son of a Glencoe innkeeper, he left school early to join the Queen’s Own Highlanders, then discovered that he had a flair for finance.

Aged 26 and with no capital, he started a financial publishing company, and built it up to the point where he was able to sell it on to a major finance company. He then bought a struggling business newspaper, turned it around and sold it for £79 million.

After that he invested in forestry and has three new businesses in Scotland: a waste recycling company, an international correspondence school and a plant making parts for wind turbines. He also founded the Caledonian Challenge, an annual cross-country endurance event that raises thousands for charity.

He has written a novel based on the experiences of his great-grandfather, who commanded the Lovat Scouts in Gallipoli. Weaved into them are stories passed down in his family about the Highlands. Ardnish Was Home is already into its third reprint.

What interests Mr MacDonald most, however, is the task of encouraging small business enterprises in the Highlands. He founded the Moidart Trust, a charitable organisation whose aim is to mentor and advise small and emerging companies that now has 45 thriving companies on its books.

“We put a million pounds into it with the ambition of spending that money over ten years,” he said. “We help [the companies] by giving them grants, by giving them a mentor, and holding courses or seminars for them to attend. It is not at all public sector related, it is all done by people who have built their own businesses and faced the same challenges.”

People don’t get sacked, the population is relatively poor, so selling to poor people is hard work

It is, he admitted, uphill work. The history of economic development in the Highlands tends to be more about public subsidy than entrepreneurial flair.

“The public sector pays incredibly well from a rural Scottish perspective,” Mr MacDonald said. “People don’t get sacked, the population is relatively poor, so building a business and selling to poor people is hard work.”

He is shocked by how little interest rural schools have in passing on business skills or encouraging an interest in private enterprise.

“At the Dragons’ Glen heat on Tuesday night I asked the panel — the entrepreneurs — if any of them had been into a school to speak to the kids and none of them had. I then said to the audience how disgraceful it was that none of our schools will get entrepreneurs in to talk about careers in business. I myself had twice written to Lochaber High School asking if I could come and speak and they said ‘No’. It’s very shocking, because every private school is dying to have me come and speak.”

The net result is that interest in starting companies in the Highlands is relatively low.

“If Dragons’ Glen had been held in Cambridge there would have been hundreds of people keen to pay for tickets to attend,” he said. “As it was I don’t think we had more than 60 or 70 people in the room. And very few applicants.”

Angus MacDonald with his fellow “dragons” Anja Baak, Steve Ham and Emma Parton have been choosing the best investments among potential entrepreneurs

That does not mean that there is an absence of skills. He thinks highly of all three Dragons’ Glen finalists. But there is a big gap between having an idea and building a successful company.

The barriers they face are red tape and VAT. “It is almost impossible for a small company to start up in Britain because you need a whole range of services; human resources, IT, secretarial, finance, a huge amount of back office support, when really all the entrepreneur wants is to develop a product and sell it,” he said. “You really need a company with a minimum of five people, and proper funding in order to go anywhere. So either you are a single trader, under the VAT ceiling, or you have to be a company with £100,000 capital, five people, and mentoring or non-executives to help you get there.”

The VAT element is critical, he believes, because the threshold of £83,000 is a formidable barrier for small companies trying to expand.

“The best thing that could happen which would explode small company growth in Scotland, would be to raise the VAT threshold from £80,000 to £250,000, in which case every small trader would employ somebody. Because if you sell £100,000 of products you have to charge 20 per cent of VAT all the way up from zero. All these small traders would have a 20 per cent advantage over big companies. And they would all employ somebody. But until we split from the EU it won’t be possible.”

The thing they do negatively is planning…we are getting killed by bureaucracy

Mr MacDonald, who lives near Blair Atholl in Highland Perthshire and has four sons, has a high regard for Scottish Enterprise and Highlands and Islands Enterprise, but is less impressed by the Scottish government’s approach to business.

“They talk the talk but they don’t have any money and the best they can do for us is to keep out of the way,” he said. “The thing they do most negatively is planning, and that they do spectacularly well. If you want to extend your building or anything like that the various departments don’t work well together . . . for small businesses, it’s all about bureaucracy and we are getting killed by bureaucracy.”

He does believe that the weakness of the pound, the growth of the tourist sector and the expansion of renewable energy have been good news for the Highlands.

“I would say that the prosperity of the glens on the west coast has not been as good since the kelp industry,” he said. “They are all employing more people, fixing the fences; it’s made a fantastic difference to Highland estates. Tourism is doing well; the quality of the offering so much better and there are good places to stay. After all, the threat of terrorism is non-existent in the Highlands.”

The one thing that desperately needed fixing, he said, was broadband.

“It’s no surprise to say that superfast broadband is the key to the prosperity of the glens,” he said, adding that all types of households could benefit. “The shepherd’s wife can get involved in stuff like trading on eBay for example. But at the moment it’s just not good enough.”

He remains optimistic about the potential of the rural economy in the Highlands. “If we can get people involved and the government does not impose tax or business rates at too high a level, then people will stay and flourish. But we must have entrepreneurs as a matter of course going into schools.”