Yesterday morning the RSA and RBS hosted a short and sharp seminar to discuss a new project of ours looking at the ‘lived experience’ of young entrepreneurs. The goal of this piece of work, which we are half way through, is to provide lessons for how young enterprise support could be enhanced by better understanding the real (and what we supposed to be the unconventional) ways in which young people start and run their businesses. The research is primarily being undertaken through a series of qualitative interviews with young entrepreneurs, as well as with experts and practitioners in the field.
Our hypothesis when commencing this project was that our assumptions about how young people get their businesses off the ground – whether in terms of securing finance, using social media, or working with customers – is somewhat out of kilter with the reality. Part of the reason being that we rely quite heavily on surveys to find out about what young entrepreneurs think and feel, arguably at the expense of examining their actual behaviours.
Here are 4 of the top-line messages from the seminar:
From ‘entrepreneurial’ to ‘venturesome’ – 37 years ago, Howard Stevenson from Harvard Business School coined the term entrepreneurialism as ‘the pursuit of opportunity without regard to resources currently controlled.’ Using this definition, we can start to see entrepreneurial-like behaviours occurring in unconventional places, for instance within the public and third sectors, or within large organisations (aka ‘intrapreneurialism’). If we could broaden our terminology, would it open up more opportunities to encourage this type of behaviour? One way of thinking about it may be in terms of ‘venturesome’ actions (look out for an upcoming article on this by Adam Lent).
Get to grips with an unfavourable culture and mind-set – It was widely agreed that some of the most significant barriers preventing people from becoming entrepreneurs relate to a culture that is not conducive to enterprise. There are assumptions about risk and the price of entrepreneurship that are misconceived, for instance that failure will be seen negatively by future employers, or that entrepreneurs earn less than the average PAYE employee. The question is how can we overcome this entrenched mindset? Here we tend to fall back on role models, but perhaps there is also a place for legislation in sending out a pro-entrepreneurial message and setting the right kind of tone that institutions such as councils, schools and universities could follow.
Finance is not the be all and end all in the age of the lean entrepreneur – One of the most interesting findings emerging from our interviews was the degree of enthusiasm among young entrepreneurs for a bootstrapping business model. Many would rather try to make ends meet on a minimum amount of money (often using their own savings) than take out a loan from a high-street bank or government scheme. This is particularly curious given that access to finance nearly always comes to the top of the list of things which young people perceive as preventing them from getting up and running. The general feeling of those who attended the seminar was that this rang true with their own experiences. Would young would-be entrepreneurs be better served with micro-loans that enable them to build a prototype and test it at the market?
Stoke demand for young entrepreneurs’ products and services – Government efforts to support young enterprise are typically centred on the likes of campaigns, finance, mentorship schemes and entrepreneurial education; all of which are on the ‘supply side’ of support. There may be an argument for turning the idea of support on its head and using the purchasing power of central government, local government and large corporations to stoke demand and create a market for the services/products of young entrepreneurs. One option is to build young enterprise into supply chains, for instance by altering council procurement exercises to favour young entrepreneurs. However, this may be complex and unfair to other firms in the market. A simpler and less controversial solution would be to address the issue of late invoice payments, which often create headaches for young entrepreneurs with limited cashflow.
A report detailing the full findings of our project will be published early in the Spring.
Benedict Dellot is a Senior Researcher within the Enterprise team of the RSA’s Action and Research Centre. @benedictdel