Remember, today's minnows will be tomorrow's big fish

These days, it seems that entrepreneurs are everybody's heroes. The likes of Richard Branson and James Dyson, maker of the bagless vacuum cleaner, are held up as Davids who have successfully taken on the Goliaths of the business world.

But it was not always like that. Though it is hard to credit from his current position, Mr Branson had his share of trials and tribulations on the way to securing his millions, while Mr Dyson struggled to find backing for his ventures.

Both of them would doubtless claim that life is anything but plain sailing even now - only last week, for instance, Mr Dyson found himself on the wrong end of a legal case brought by an established rival manufacturer upset by his advertising. But when they were starting out there was much less interest - in Britain, at least - in what we now term "growing businesses". Even more so than is the case today, attention was focused on the large quoted companies that it was assumed were and would continue to be the main creators of wealth and jobs.

The Independent on Sunday can claim to have played a part in changing such attitudes. The survey of Britain's fastest-growing, privately-owned companies that the paper launched in 1991 with what was then Price Waterhouse, has demonstrated that not all unquoted companies are little more than one-man bands struggling to survive. On the contrary, the survey has highlighted the staggering performance of organisations that are now well known but were then essentially unsung.

The pub chain JD Wetherspoon, the transport group Stagecoach and Merlin - the maker of the football cards so popular with young children - are among the graduates of the Independent 100. Other organisations have remained private and appeared in the listing several times - notably Loot, the publisher of the revolutionary classified advertisement newspaper that is the only company to have appeared every year; and Carphone Warehouse, the rapidly expanding supplier of mobile telephones that has just bought the Tandy chain of electrical shops. Morse, the computer company that has also made frequent appearances, only announced it was going public earlier this year.

Such companies would be remarkable enough if they had just managed in a very short space of time to come from nowhere to imprint their names upon our memories. But they have also between them created tens of thousands of jobs.

It is this last factor that has made entrepreneurial businesses impossible to ignore. At a time when big business is frequently characterised by cutbacks and mergers, they have been dynamic and expanding fast, largely through organic growth.

Consequently, politicians of all parties have hailed such firms as playing an increasingly central part in the national economy. And hence the various pledges in budgets and elsewhere to introduce fiscal incentives for their development. And hence the review of banking policies under Donald Cruickshank.

Meanwhile, various other organisations have sought to measure and highlight their performance. Recent years have seen a spate of books and other publications devoted to a sector of the economy that previously was largely the preserve of a dedicated band of academics.

Gratifying as all this is, particularly for those of us who have been singing the praises of such businesses since long before it was fashionable to do so, it should not lull us into complacency. Though the combination of deregulation of certain markets and the rapid development of information technology has created the conditions for many of the businesses identified over the years, it is still true to say that a good number succeed despite the conditions rather than because of them.

As Mr Cruickshank is no doubt discovering, funding of small businesses remains a key problem. Yes, the venture capital industry has a much higher profile than it once did, but much of its money goes, not to fresh start- ups but to established businesses that are changing hands through management buy-outs. Much like the banks, such operators look increasingly like people who are set on finding sure-fire bets. In reality, very little finance finds its way to genuine start-ups.

This poses a problem for government ministers. They need to move beyond talking about the subject and set about making things change. It is all very well coming up with supposedly well-crafted measures designed to achieve very precise objectives in certain circumstances. But if they are serious about emulating the experience of California's Silicon Valley, they need to breathe deeply and create genuine and substantial tax incentives for wealthy individuals to invest in their neighbours' pet dreams.

At the same time, business needs to learn to help itself. Though it is difficult for individual organisations to buck markets, there is a strong case for a large corporation to make a stand against the short-sighted and demeaning practice of share buy-backs or special dividends.

It would be more logical if those companies that had contributed to the astronomical rise in the number of buy-backs over recent months had opted to go in for corporate venturing and invested their surplus cash in smaller companies.

Now, it has long been realised that big businesses are not the source of all knowledge. Entrepreneurial companies have much to teach their larger counterparts about such things as flexibility and adaptability. What they gain from the larger organisations is better deals on raw material prices and the like.

But it is not just the direct participants who win. The community as a whole benefits if organisations can create relationships of this sort. Indeed, if a big company wants to learn to behave like a start-up, what better introduction can there be than actually doing it?

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