Outdated perceptions that entrepreneurs are ‘isolated, highly driven, risk taking mavericks’ are putting off some young people from starting up their own businesses, according to a report published by the RSA.
Pointing to figures released by the Global Entrepreneurship Monitor, Disrupt Inc found that whilst 9.5 percent of 18-24 year olds say they intend to start a business, only 3.6 percent are actually doing so.
The report, supported by the Royal Bank of Scotland Group, concluded that whilst ‘valiant steps’ have been taken to support young people (via schemes such as StartUp Britain and Business in You), the language used by the enterprise support industry alienates some young people and puts them off starting a business.
Support organisations should launch a joint marketing campaign in order to challenge some of the myths surrounding enterprise and encourage more young people to come forward and access business support, the report said.
It warned, however, that much of the support has itself become misdirected – concluding that it doesn’t always cater for the many unconventional ways in which young people are now starting up their businesses.
The level of debate around the availability of start-up finance, for example, appears ‘old school’ and overlooks the large numbers of young people who are reticent about taking out a loan, preferring to ‘bootstrap’ their way through the initial stages of their business. Likewise, the effort spent in establishing formal mentorship schemes belie the preference that many young people have for more informal support from personal contacts.
Channelling funds into grand policy solutions via a burgeoning ‘enterprise support industry’ may not actually bring about much impact, the report concludes. In order to stimulate greater levels of entrepreneurial activity, what is needed is small scale support that’s built on experimentation at a grass roots level and which goes with the grain of young entrepreneurs’ real experiences, however unconventional they may sound.
Commenting on the report, RSA senior researcher Benedict Dellot said:
“Despite the flurry of media commentary surrounding young enterprise, very little is actually known about how young people become entrepreneurs. We discovered that many do not conform to traditional stereotypes of entrepreneurs. Instead they often stumble into business ‘accidentally’, start up on a shoestring budget and with an imperfect product, and rely on a whole host of other people – most personal acquaintances – to get them to where they want to be. If we’re to win the ‘global race’ as outlined by the Prime Minister, there’s an urgent need for support organisations to quickly get up to speed on this rapidly changing businesses environment.”
Andrew Haigh, Executive Director, Client Propositions, Coutts, added:
“As the economic environment changes around us, so too does the way in which young entrepreneurs seek to engage with enterprise – in the hands of entrepreneurs, it is hardly surprising that the nature of entrepreneurship itself will evolve and re-invent itself.
“RBS and Coutts have long been committed to supporting and encouraging our customers to create and build their businesses. There is much to learn from this report both for us and the broader enterprise support community”
Whilst 2010 saw the number of young people in the early stages of an entrepreneurial venture rise sharply to be at its highest level for a decade, RSA researchers highlighted that 35 percent of those who actually begin a business cease trading not long afterwards. It identified that other countries have much higher start up rates among their young people than the UK does. In the United States 1 in 7 young people engage in early stage entrepreneurial activity, compared to 1 in 17 in the UK.
Notes to editors
1. For more information contact RSA Head of Media Luke Robinson on 020 7451 6893 or 07799 737 970.
2. The report recommended that the support services rebalance their efforts by:
Establishing micro-loans to help young entrepreneurs test business proof of concepts.
Spending less time helping fledgling entrepreneurs prepare a business plan for external finance, and more effort enabling them to build and test prototypes in the market.
Stoking demand for the products and services of young entrepreneurs through building young entrepreneurs into supply chains, or by altering council procurement practices.
Encouraging local authorities, mayors’ offices and LEPs to create new marketing and networking opportunities for young entrepreneurs to meet potential customers.
Expanding co-funding initiatives such as Founders Hive at Google Campus that help young people find business partners.
Helping well established businesses incubate young entrepreneurs for mutual benefit.
Supporting the ‘favour economy’ where fledgling entrepreneurs can access free help and favours via skills exchange platforms like Barterplace.
Promoting entrepreneurialism to young employees who might create a spin-out from their current company.
Embedding entrepreneurial learning at all levels of education (rather than bolting it on to school curricula) so that pupils might develop competencies such as networking, creativity and acting on opportunities.
Establishing a corporate venturing league table in which organisations publish the number of young entrepreneur spin-offs and ventures they’ve created, incubated or invested in.
A culmination of the findings from the first year of RBS’s Inspiring Enterprise initiative, the Manifesto argues that more could be done to help young people at every stage of their ‘entrepreneurial journey’ – from exposing them to the very idea of entrepreneurship through popular media, to developing their entrepreneurial abilities in school, to helping them start and scale their own venture.
Corporate Venturing in the UK concludes that while the UK remains ahead of its European rivals, its position is fragile with countries such as France quickly gaining ground by doing more to encourage innovation and ‘deal flow’.