Saturday, 16 November 2013

Tomorrow's Enterprise - Assembly Youth Entrepreneurship Report

Starting your own business is often daunting. A recent National Assembly committee
inquiry highlighted the good and bad in terms of support for entrepreneurship in Wales.
(Pic : BBC)

Entrepreneurship is one those "big issues"in the Welsh economy you always see mentioned, but never quite understand or look into in any great detail, as it seems very much about your own experiences of it. Where successful Welsh businesses of tomorrow come from - and how they're helped to get to the top - is an issue of vital importance though.

The Assembly's Business and Enterprise Committee report into Youth Entrepreneurship was launched at Caerphilly's Innovation Centre for Enterprise earlier this week (pdf).

In total there were ten recommendations, summarised as :
  • Better monitoring of entrepreneurship, and trying to bridge the gap between numbers of young people thinking of starting a business and those actually starting one.
  • Ensure entrepreneurship and social entrepreneurship are part of the school curriculum from primary school through to further and higher education, possibly becoming part of the Welsh Baccalaureate.
  • Review the advice available to young entrepreneurs, with the idea of creating a single central body for entrepreneur support, with centres established around Wales.
  • The Welsh Government should explain precisely why funding for Young Enterprise was withdrawn.
  • More networking and mentoring between entrepreneurs themselves, and sharing good practice between the existing regional support hubs.

Welsh start-ups

Traditional barriers to entrepreneurship are breaking down, with a
majority of early-stage start ups in Wales led by young women.
(Pic : Wales Online)
The Welsh Government have numerous support schemes for business start-ups, mostly as part of its Youth Entrepreneurship Strategy 2010-15 (YES), which covers 5-25y.os. YES includes grants and bursaries (up to £6,000), six regional hubs, a network of 385 business role models and Big Ideas Wales - all backed by £4.4million in central funding.

There's plenty of good news
  • Early-stage entrepreneurship rates amongst 18-24s are the highest of the UK nations (10.2%).
  • 52% of 18-24s had an aspiration to "work for themselves".
  • 9.6% of all UK graduate start-ups, and 10% of those surviving for at least 3 years, are in Wales.
  • 53% of FE Colleges say they encourage students "to think about enterprise".
  • Female entrepreneurship rates are higher than the UK (6.1% v 5%) and a majority of early stage start-ups (60%) are from women.
In terms of the bad news, there's little conversion of business idea to business reality – Wales had just 42 start-ups per 10,000 people compared to 64 across the UK.

The Federation of Small Businesses (FSB) said those studying business at university and college are "cautious" and "lack ideas and originality", spending too much time working on presentations. Their companies subsequently tend to play it safe. Alacrity Foundation's Steve Gibson said young people are more risk averse – choosing a safe career over entrepreneurshipprobably because of high student debts.

It was hard to determine the effectiveness of Welsh Government initiatives because it was unclear if positive outcomes came as a result of their interventions. Deputy Minister for Skills & Technology, Ken Skates (Lab, Clwyd South), said the Welsh Government were looking into ways to properly track the progress of young entrepreneurs.

The Entrepreneurial Spirit

Although profit is clearly important, it's believed that the idea of entrepreneurship
should be based around "well-rounded people helping their communities".
(Pic : Wales Online)

After taking evidence from organisations around the country - including a Flintshire Enterprise Group - the committee believed they needed to take a wide-view of "entrepreneurship", as many people often started successful businesses in areas like music and culture, not just high-tech industries. Entrepreneurship should be viewed as "well-rounded young people going out and making a difference in their communities".

Ken Skates agreed, but highlighted specific cultural barriers - such as attitudes towards business itself and gender.

However, having no family history of entrepreneurship was no longer the barrier it once was, with entrepreneurs coming from more diverse backgrounds, often "channelled into the entrepreneurial direction" by teachers and mentors. Gender was no longer cited as a significant barrier either, with Alacrity Foundation saying their schemes had a 50:50 gender split, though there were fewer women "high-tech graduates".

In terms of pitfalls, comparisons are made with the USA, where entrepreneurs are hailed as "champions" if they succeed only once after multiple failures. Here, if you fail once as an entrepreneur you rarely get a second chance. One entrepreneur said they were told to "get a proper job" when starting out, and when they made a success of themselves, were told "it's alright for some." Welcome to Wales.

Perhaps the most widely-publicised evidence came from Masterchef finalist, and director of Yolk Recruitment, Dale Williams, who highlighted how important it was to make connections with people and give a good impression in order to build up your own confidence.

In terms of the wider economy, Neath Port Talbot Council said "being your own boss" is a viable way out of youth unemployment – the figures of which in some parts of Wales, including Bridgend, are scandalous. FSB, however, note their sadness at people saying they were "forced into self-employment" as a result of the Great Recession as if it were a bad thing.

Business & Economy Minister, Edwina Hart (Lab, Gower) noted the Prince's Trust work with the young unemployed and highlighted their role in both helping start-ups and reaching people the government often can't reach.

Enterprise in Education

The importance to teaching practical skills with regard entrepreneurship
was highlighted, along with general enterprise education in the curriculum.
(Pic : BBC Wales)

Many witnesses laid out the importance of enterprise in the school curriculum, but provision was said to be mixed. The FSB argued that traditional "climb the career ladder" thinking often prevails in schools, while UnLtd said there's plenty of examples of good practice elsewhere. Dale Williams argued against working with primary-age children though, instead saying 14-18yos are best targeted as that's the period in life where career and university options at at the forefront of people's minds.

Many witnesses raised concerns about a "lack of practical training" – things like sales, marketing, intellectual property and managing taxes.

At university and college level, there's plenty of support, with University of South Wales saying 65% of their students received some form on entrepreneurial training as part of their studies. It was suggested that universities needed to do more to nurture on-campus businesses, including "business incubators" which could include empty high-street shops (I've suggested industrial estates in the past).

When it comes to social enterprises, witnesses said enterprise shouldn't be taught/seen as exclusively about profit, inspired by TV shows like Dragons' Den and The Apprentice. UnLtd and Young Enterprise say they instill a sense of social and community responsibility in the young people they work with, so they "reinvest in their communities" (for more ideas on this, see The Collective Entrepreneur).

It might also be worth visiting this as part of Bethan Jenkins AM's (Plaid, South Wales West) proposed Financial Education law.

Confusion, Careers Advice & Young Enterprise

There were serious concerns about a "lack of clarity" on the options available, with suggestions there needed to be a single organisation people knew exactly where to to turn to for money and advice.

In those terms, could that form part of the functions of the Development Bank of Wales mooted by Prof. Jones-Evans earlier this week (and Plaid Cymru previously)?

Careers Wales are responsible for delivering the YES scheme, and since April have been absorbed into the Welsh Government itself. However, because of changes in its remit – and £6million cuts to its operating budget - Careers Wales no longer directly funds things like Young Enterprise, which Young Enterprise say in their own words "puts them at risk".

Ken Skates said it was down to Young Enterprise to "prove its value within the marketplace" because there were plenty of other providers. The committee questioned the rationale for this line of thinking, and want clarification of the assessments carried out to determine the decision.

Funding, Mentoring & Support

Once again, support is confusing, with a "menu of options". There are also problems with eligibility for various schemes, with an example given from the Prince's Trust where Work Programme participants couldn't transfer to their Enterprise Programme because they (Prince's Trust) lack a Work Programme sub-contractor agreement and, subsequently, couldn't receive funding.

It's said access to initial capital isn't much of an issue, but there were problems with continued/ongoing support. Cardiff University argued for a tiered system of support because requirements to access some start-up funding were "unrealistic" (£80,000 turnover in first year, with 20% year-on-year growth for the Graduate Start-up Bursary).

Witnesses couldn't decide if location was a big factor in entrepreneurship. The Welsh Government, however, did say there was "geographical inconsistency" in support.

YES established six
regional entrepreneurship hubs based at universities and colleges. Colleges/universities were said to be "enthusiastic" about the hubs, and despite a "steep learning curve", were eager to help young entrepreneurs. The committee were said to be "impressed by the potential", suggesting it could form a key part of the one-stop shop model mentioned throughout the inquiry.

Direct mentoring was said to be just as important as getting the right finance.
Alacrity Foundation has around 50 mentors, while school projects often invite successful alumni back to teach others. Dale Williams said personal support is often more difficult to find than financial support, suggesting that mentoring could be difficult for business people because of their own time commitments, and mentors could be unwilling to give their time for free.

Conclusion : Time for some joined-up thinking

They've done it again!

Business & Enterprise is fast becoming my favourite committee (if such a thing can possibly exist).

I've sometimes thought about starting my own business, and I've known people who've started their own business – including family members. The array of support out there is welcome, but confusing. I think it's correct to say that there's risk aversion amongst young people too, as the penalties for a business failure can be very harsh and sometimes stay with you for the rest of your life.

On the whole though, there's a lot to be optimistic about. So the Welsh Government – past and present – deserve some credit for actions they're taking or have previously taken.

The troubles seem to be the format. That could be rectified with a bit of thought and a bit of joined-up thinking so we don't end up coming back to this with the same problems again and again.

Some sort of one stop shop appears to be vital, and – as I said – any "Bank of Wales" could be perfect for that. I've also mentioned the Financial Education Bill, which could include provisions relating to enterprise education and business advice for children and young adults. I'm sure there are plenty of ways to streamline the sheer number of schemes available as well, or at least market them better.

Wales, perhaps contrary to stereotypes, has a very entrepreneurial mindset it seems. It's just not a country 100% suitable for entrepreneurs at present. The goodwill is there, and I'm confident with the right sorts of policies enacted at the right age, that can change and rather quickly too.


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