(above) Nick Boles, MP, talking to winners of the Mosaic Enterprise Challenge. Image.
Britain is increasingly a country of entrepreneurs and this is especially true for young people, who are founding 100,000 more companies a year than they were in 2008. But research suggests that less than a quarter of under 35s who have a business idea realise it.
With SMEs contributing to 60% of private sector employment and nearly half of British GDP, it is vital that these start-ups go on to become established and fast-growing companies, while the people behind them get the support they need in the early stages.
What is motivating this change in aspiration? Is it simply a response to the tough time young people and recent graduates have experienced in the current job market or does it show a deeper change in the way career-building is approached?
And how can schools, universities and the government work together to create an environment that supports and nurtures the next generation of emerging entrepreneurs?
Why is entrepreneurship increasing in popularity?
Although the scarcity of secure, full-time jobs, particularly for young people, during the recession prompted some into creating their own, it’s far from being the only reason entrepreneurship is growing.
“There is a profound cultural shift taking place in terms of people’s understanding and attitudes towards entrepreneurship,” says James Hickie, Lecturer in Enterprise at Manchester Business School.
He credits programmes like Dragon’s Den and The Apprentice with raising the profile of entrepreneurship and presenting it as desirable and aspirational.
“There is also generally a political consensus between the two main parties that it’s a good thing to encourage and support young entrepreneurs,” he continues, but still points out that many government initiatives are designed to support self-employment rather than founding a growing business.
Technology also plays a role, making it easier to start a business than ever before. “Now it’s relatively easy to have a go at something other than your full time education or job,” says Adam Shaw, founder of Ideas Britain, a new entrepreneurship platform. “You don’t need an office or expensive equipment. You just need wifi and a laptop.”
“This is particularly the case in business to consumer markets, where young people usually have direct experience of consuming the type of products they wish to sell by starting their own business, for example social apps,” points out Hickie.
Perhaps one of the biggest factors behind this change is personal rather than professional. “It’s about a sense of self-fulfilment which in turn gives us happiness,” says Shaw.
How can schools and universities develop and support budding entrepreneurs?
A lack of entrepreneurial skills among young people could be making EU countries less competitive globally, making it imperative that young people have opportunities to gain this skills during their education.
“I think there certainly needs to be a change of attitude,” says Shaw. “At school entrepreneurs can be seen as a ‘Del Boy’.” He recounts how his teenage son was reprimanded at school for selling soft drinks, rather than encouraged to apply his entrepreneurialism.
“There are two key things schools should be doing,” says Hickie. “The first is giving students the opportunity to meet and interact with significant entrepreneurs as role models and the second is learn about being entrepreneurial through doing.
“Universities can provide a range of enterprise education courses and support a mixture of enterprise extra-curricular activities to encourage entrepreneurship,” he says. “My research with high performing young entrepreneurs suggests that extra-curricular enterprise activities are highly valuable because they enable the practical application of enterprise education in the real world.”
How can business finance providers, both traditional and non-traditional, help?
Sustainable long-term funding is still a crunch point for businesses, not just at the start-up stage but when businesses are growing. A recent survey by UK Bond Network shows that a lack of finance is holding back growth for a third of SMEs and expansion is the leading reason businesses look to raise capital.
“Increasingly finance providers are building relationships with universities, and at the University of Manchester we often hear guest speakers from these finance providers,” says Hickie.
“The unfortunate reality is that a successful business where the outputs are greater than the inputs takes time and a considerable amount of effort, skill and luck,” says Shaw. “And it’s finding the right kind of money that I think is the key.”
“The area is a minefield and I think having a single and independent financial one-stop-shop would be perfect,” he continues.
Hickie points out that there are already some specialist alternative finance platforms springing up for students. “Crowdfunding websites are increasingly working with universities to provide customised platforms where students can raise money for their commercial and social enterprises, for example from alumni.”
Do we need more mentorship opportunities and how could this be facilitated?
Young entrepreneurs don’t just need financial backing. Finding an experienced business mentor can help them avoid common pitfalls, find new opportunities and provide vital contacts. But finding these mentors, particularly for young people who might have access to few established networks, can be challenging.
“We do need more mentorship opportunities – but the right type. Many of these people offering mentoring lack the relevant experience as an entrepreneur,” says Shaw.
The University of Manchester have developed a scheme where enterprising students are matched with business contacts according to the business ideas being worked on.
As well as formal schemes, it’s important that young entrepreneurs are encouraged to find and attend the type of events where they can informally meet potential mentors. “Some of the best mentoring relationships develop more organically, rather than through a scheme,” says Hickie.
The move towards entrepreneurship among young people is far from a recession-induced temporary fad. It’s being fuelled by much wider societal trends, from an emphasis on personal fulfilment, increased visibility of entrepreneurialism and lower barriers to entry.
School and universities have an important role to play in this – and not just for students on business-focused courses. There’s no reason why all students shouldn’t have access to business-focused clubs, activities and mentorship schemes, providing the vital support and information that might just get the next Richard Branson started on their entrepreneurial journey.