“Britain is a country with enterprise running through its veins.” So said David Cameron in a speech given at the launch of the Start-Up Britain campaign earlier this year. With the rate of self-employment at its highest ever level and with the number of newly registered companies close to 450,000 in the last financial year, it’s hard to argue with this statement. The extent to which the Government, support organisations and others are capable of nuturing the kind of environment where enterprise can flourish, however, is more open to question.
Right now at the RSA, we’re particularly keen on exploring how young enterprise can be better supported in the UK – both in terms of encouraging more young people to start a business but also in helping those who already have done so to stay afloat and grow should they wish.
As things stand, there’s plenty of room for improvement in both areas. According to a recent report by the Royal Bank of Scotland, whereas 1 in every 10 young people in the US (18-24 year olds) are in the early stages of starting a business, the figure is the UK is closer to 1 in 17. Young people also fare poorly when it comes to survival rates. The same study found that a third of those under 30 who had started to plan a business dropped out one year later, compared with 12 per cent of those over 30.
It is true of course that failing is an integral part of the journey towards becoming a successful young entrepreneur (and also that it is not the right path for everybody). Yet despite this there is still a strong sense in the enterprise community that a greater number of young people could be creating strong, sustainable businesses if only there were better and more widespread support.
On the face of it, the Government has heard these concerns and is responding with a solid set of policies. They have, for example, established a new national mentorship programme, created the StartUp Loans scheme to ease the supply of low interest finance, rejigged the Business Link website and DirectGov to cater better for aspiring entrepreneurs, and supported the Start Up Britain campaign to encourage more people to think about setting up a business. The extent to which these initiatives are successful will depend on a combination of whether people are aware of them and whether the ‘antidotes’ they are offering match up neatly enough with the challenges facing young entrepreneurs.
With regard to the latter, there is arguably some cause for concern in that the new provision of support may be based on an increasingly outmoded view of how existing and would-be young entrepreneurs operate. I’m referring here to that neat, linear notion of business creation, whereby people come up with an idea out of nowhere, write a business proposal, go to the bank to get a start-up loan, register their business, begin trading and then scale at some point further down the line. The problem is that this pattern rarely holds true in real life. In practice, for instance, many aspiring entrepreneurs get start-up finance from friends and family, they begin trading informally without registering their business and a good number find advice from informal sources far more useful than from formal ones.
So what does this mean for how we should be supporting young enterprise in the UK? If young people turn to family and friends for support, how much effort should we plough into the likes of Business Link and DirectGov? Or if crowd funding websites are proving increasingly popular as sources of finance, what does this mean for how we organise initiatives like the StartUp Loans scheme and the emphasis we give to bank lending? These are some of the questions we will be exploring in more depth as part of a new project on disruptive patterns of entrepreneurship among young people.
Here are some initial thoughts about what these unconventional behaviours might look like.