How to Overcome the Entrepreneurship Gap
Entrepreneurs create jobs, increase living standards, stimulate the economy, encourage competition in the marketplace and drive innovation. However, for the past three decades, start-up activities have been slowing down in the States, particularly in the 20–25 age bracket (Inc., 2016). To combat the potential consequences of dwindling innovation, millennials must be encouraged to branch out and pioneer with support from local government.
Lifeblood
New companies are disproportionately responsible for all new job creation, as well as economic growth, innovation and productivity. As per Ernest & Young’s 2013 financial statements, two thirds of Western employment is reliant on new companies opening. They also contribute to maintaining a dynamic economy, which demands constant flux with businesses continuously being born, growing and dying. With fewer start-ups and more aging industries, the economy will begin to slow, leaving labor and capital perilously dependent on older companies.
Start-ups Slow Down
There are several theories as to why innovation as a whole is falling. Yet, with younger generations, there are a few concrete issues in play. The most prominent of which is finances; 21st century youngsters are now saddled with a crippling amount of debt that their parents were free from. Over the last 10 years, student debt levels in the U.S. have doubled, now surpassing $1.2 trillion. This affects their success rate when applying for loans, and diminishes the resilience of new businesses against cash flow issues early on. This is acutely affecting levels of entrepreneurship; figures from a study by the Kauffman organisation show a direct correlation between rising student debt and decreasing start-ups.
Aside from economic freedom, there is another essential trait youngsters lack: risk tolerance. A report from the Congressional Institute last year found that millennials are far more risk-averse than their predecessors. As a result, the millennial generation is shunning the stock market, real estate, and entrepreneurship. Conversely, they are choosing more cautious career paths and planning for the long-term.
What the Government Can Do
As a vital cog in the working economy, the government should be doing everything they can to support and promote entrepreneurship. This doesn’t have to mean huge taxpayer bills, although cancelling student debt is the ultimate answer. Whilst we wait for that miracle (I’m not holding my breath), federal governments can do the following:
· Start early — make entrepreneurship part of the school curriculum and teach kids how to set up a business. Make start-up courses and support readily available.
· Support networking groups and hold events like Start Up Weekend for likeminded inventors to share ideas (be careful to do this indirectly as government-led entrepreneurship schemes rarely succeed).
· Celebrate and promote the success of resident entrepreneurs and encourage the community to get involved with their start-ups.
· Welcome immigrants with open arms as they are twice as likely as those born on American soil to open a business. This includes creating a friendly environment for newcomers through embracing diversity.
· Check current legislation and revise where needed for a more accessible process.
What Young People Can Do
Though they’re viewed as the mavericks of society, many entrepreneurs are more risk-adverse than you would expect. It may seem daunting, but opening your own business does not have to be the gamble it is portrayed as. The advice below will help get you on your way to success:
· Find your passion. Failure is inevitable at some point and will be crushing if you do not have the drive to see it through. If you love what you do, you’ll be able to roll with the punches and see your dream through to completion.
· Seek loan advice if you are struggling with student debts. There is a number of ways to keep payments manageable when you are in the early stages of your start-up.
· Do your research and learn from the mistakes of others. There are plenty of resources online from experienced entrepreneurs who have been where you are now.
· Get some experience in your desired area. Companies such as BUNAC offer opportunities to work abroad, which will provide you with valuable work and life experience. Not only will you gain insight into the workings of a similar company but it will also be a big confidence boost.
· Know your audience and tailor your product, marketing strategy and user experience to them. This is the most common hurdle for new innovators, so make sure you take the time to get it right.
· Budget sensibly and keep costs down wherever you can. Think about starting with a minimal, viable product (the most basic version of your creation) at first. You can always update later if necessary.
· Remember PR and self-promote in every way possible. You don’t want to saturate your social media pages but you do want a presence. Competitions are also a valuable tool to get your brand out there and if you win, it adds legitimacy to your product.
New business is the lifeblood of our economy and as such, millennials must be encouraged to build their own start-ups. Though they are facing a tougher economic climate, with the right support and knowledge they can be as successful as their parents.
