Challenge stereotypes or risk wasting entrepreneurial talent

If we want to help more young people start and run successful businesses we need to recognise the wide variety of entrepreneurial journeys that they take.

Benedict Dellot is a senior researcher at the RSA’s Action and Research Centre

With the economy stagnating, living standards falling and levels of unemployment stubbornly high in some areas, it is little wonder that building an ‘aspiration nation’ has become one of the central underpinnings of this government’s policy agenda.

As David Cameron put it at the 2012 Conservative Party conference:

“Aspiration is the engine of progress. Countries rise when they allow their people to rise. In this world where brains matter more, where technologies shape our lives, where no-one is owed a living … the most powerful natural resource we have is our people.”

This ‘exhortation for aspiration’ has been matched by practical steps to help more people start up and run their own business. In particular, a significant amount of enterprise support has been directed at young people, over 1 million of whom are still without work.

Among other initiatives, the government and its partners have helped to establish the StartUp Britain and Business in You campaigns, the StartUp Loans scheme, the Enterprise Finance Guarantee scheme and the MentorsMe programme.

We are also witnessing the growth of many non-state enterprise support initiatives, particularly within universities.

The question is, are these initiatives actually working? At first glance, it seems that perhaps they are.

The number of young people in the early stages of planning a venture has increased sharply over the past couples of years. The graph below, put together by Professors Mark Hart and Jonathan Levie, shows that early-stage entrepreneurial activity among young people is at its highest level in more than 10 years. It is now almost equal to the rate among the older generation.

Graph new

Look more closely, however, and we can see that there are at least two key issues still blighting the landscape of young enterprise in the UK.

The first is that there remains a large gap between the numbers of young people who say they wish to start a business and the numbers who are actually doing so.

While 10 per cent say they wish to start their own venture, only three per cent are making the leap. The second issue is that many of those who do create business cease trading soon after. One estimate is that a third of young entrepreneurs drop out within a year of starting up, compared to one in 10 of those over 30.

Anyone seeking to stimulate young enterprise in the UK therefore needs to think long and hard about how these kinds of hurdles can be overcome.

It is of some concern then that our latest report, Disrupt Inc., reveals that many enterprise support initiatives may not be up to the task.

Informed by conversations with dozens of young entrepreneurs, our findings indicate that much of the support today tends to be grounded too heavily in supporting one ‘type’ of young entrepreneur at the expense of other types who follow less conventional, but increasingly popular, routes to start-up.

The level of debate over the availability of start-up finance, for instance, disregards the large proportion of young entrepreneurs who are reluctant to rely on loans, and who would prefer to grow their business slowly but surely on a shoe string budget.

Likewise, the deafening noise about the importance of having experienced mentors distracts us from supporting all those young people who prefer informal assistance from peers.

More generally, the language and imagery of entrepreneurship used by some in the government and media may inadvertently put it on a pedestal and serve to discourage young people from starting a business.

If we want to help more young people start and run successful businesses then we need to begin recognising the wide variety of entrepreneurial journeys that they take.

Without challenging crude stereotypes and reengineering enterprise support to cater for this new reality, we run the risk of wasting the potential of thousands of would-be young entrepreneurs and losing the contribution to growth and employment they could have made.

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