Entrepreneurship is very much on the national agenda at the moment. With job prospects for 16-24 year olds looking unpromising, the UK government has recently launched the StartUp initiative to encourage young people to work for themselves instead. Recent research by Money also found that the up to 38% of employees felt they could run their company better than their employers. So how realistic is the idea of setting up a company for the young (and possibly unemployed)?
Let’s look at the issues a 26 year old who might want to set up a small business selling, say customised t-shirts might face.
-First of all, there is the question of funding. The young entrepreneur might be able to keep overheads low initially, possibly by keeping a strong online presence rather than paying rent on a business premises, but they may well struggle to market their product and take it to the next level. Fortunately, there is funding available for this – despite the difficulties small companies are having currently in accessing credit. Certain companies may be able to give you seed capital or a seed loan – Seedrs, for example, or Zopa, which matches up individual lenders with individual borrowers. So, this is all very well if the company does well and begins to turn a profit quickly, but what if the company is more of a slow burner?
This brings us to the 2nd problem for (very) young entrepreneurs: they may have a great idea, but do they have the support of a strong network of entrepreneurs or experts in their field? The answer for a sizeable minority of them is no – and as Newsbeat reports, 30 percent of start-ups stop trading within three years. The problem is that many of the would-be funders and mentors of these companies do not believe that these young people have enough experience in their field – after all, many other people have had to grapple with high level professional qualifications, and some of these entrepreneurs might not even have a university degree.
The angel/’dragon’s den’/private equity’ scenario is another minefield. If they cannot see instant potential in a brand, they won’t invest – and that can often mean sacrificing a diamond in the rough for a a glorified get-rich-quick-scheme – unless, of course, the business plan stands up to scrutiny.
But actually, entrepreneurs are very supportive of their colleagues. There are a number of entrepreneurial groups – Julia Hobsbawn (daughter of historian Eric) for instance, runs a networking group for young entrepreneurs, and there is a strong community of entrepreneurs in London, from the Richard Reids (of Innocent Smoothies/BBC3’s Be Your Own Boss fame) to those in the tech savvy East London area.
But this brings us to the final hurdle, especially for young people coming out of university with limited job prospects: can an entrepreneur be made? Successful entrepreneurs are generally fairly unequivocal about this, spouting stories about how they left school at 16 with no qualifications and built up a successful business. In practice, though, these lucky individuals had enough financial backing to allow them to fail a few times.
Nowadays, building up a brand is much easier – free social media platforms, such as Twitter, Facebook, even YouTube have allowed young people to rapidly create strong and loyal fan bases. This has done away with much of the access to funding needed for traditional start-ups and gives the opportunity for may to enhance their skill sets and express their creativity – even allowing a lucky few to earn a salary from it, in the form of GoogleAds.
Perhaps universities should be teaching Google and YouTube studies as a way of empowering the unemployed youth of today?