Member Article

Support to young entrepreneurs is out of touch

Outdated perceptions that entrepreneurs are ‘isolated, highly driven, risk taking mavericks’ are putting off some young people from starting up their own businesses,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 today by the RSA.

Pointing to figures released by the Global Entrepreneurship Monitor, Disrupt Inc found that whilst 9.5 per cent of 18-24 year olds say they intend to start a business, only 3.6 per cent 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% 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.

This was posted in Bdaily's Members' News section by Coutts & Co .