Supporting Youth in Entrepreneurship - David Halabisky
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The document discusses supporting youth entrepreneurship through public policy. It covers: 1) An OECD work program on inclusive entrepreneurship, including objectives, outputs, and ongoing work reviewing national youth entrepreneurship policies. 2) Data showing youth have high interest in entrepreneurship but low business creation rates, facing barriers like lack of skills and financing. 3) Key policy action areas to support youth entrepreneurship - building a supportive environment, improving skills, facilitating financing, and coordinating strategies. 4) Examples of good practices from Poland, Belgium, Slovenia, the UK, and Lithuania that deliver entrepreneurship training, financing, and networking to youth. 5) General principles for effective youth entrepreneurship
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Supporting Youth in Entrepreneurship - David Halabisky
- 1. SUPPORTING YOUTH IN ENTREPRENEURSHIP LEED Trento Centre 28 September 2015 David Halabisky Local Economic and Employment Development Programme OECD david.halabisky@oecd.org
- 2. Agenda 1. Work programme on Inclusive Entrepreneurship a. Objectives b. Outputs c. Ongoing work 2. Youth entrepreneurship in numbers a. The challenge b. Interest c. Activity levels d. Barriers 3. Key action areas for public policy a. Build a supportive institutional environment b. Improve entrepreneurship skills c. Facilitate access to finance d. Developing strategies and co-ordination 4. Principles for youth entrepreneurship support
- 4. Objectives: 1. Present data on the state of self-employment and entrepreneurship activities by under-represented social groups (e.g. women, youth, seniors, the unemployed, migrants, people with disabilities). 2. Examine existing policies, recent developments and areas for improvement. 3. Build capacities of policy makers at national and local levels for policy designs and implementation. Outputs to date: • 9 Policy briefs • 2 Annual reports (2015 forthcoming) • 3 Capacity building seminars Inclusive entrepreneurship
- 6. Annual reports: The Missing Entrepreneurs The Missing Entrepreneurs 2015 will be available on 23 November
- 7. 1. Youth entrepreneurship reviews: – 3 national case study projects in Italy, Lithuania and Spain 2. Rapid policy assessments: – Latvia, Poland, Slovenia, Netherlands, Hungary, Germany, Belgium, Finland, Portugal 3. Compendium of good practices: – 20 in-depth good practices – Identify key principles of good policy design – Published early 2016 Ongoing work
- 8. Youth entrepreneurship in numbers
- 9. The challenge: Unemployment rates, 2014 • Youth unemployment rates are double the rate for adults in most Member States. Source: Eurostat LFS 0 10 20 30 40 50 60 % Adults (15-64 years old) Youth (15-24 years old)
- 10. Perceptions and feasibility, 2012 • 45% of youth have a preference for self-employment and 41% believe that it is feasible to be self-employed in the next 5 years. Source: EC (2013), “Entrepreneurship in the EU and Beyond”, Flash Eurobarometer No. 354. 0 10 20 30 40 50 60 Total Youth % Preference for self-employment Feasibility of self-employment in next 5 years
- 11. New business ownership rates, 2009-13 Source: Special tabulations of the GEM adult population survey, 2009-13. • But few youth are successful in creating sustainable businesses. 0 1 2 3 4 5 6 7 8 % Total (18-64 years old) Youth (18-30 years old)
- 12. Barriers to self-employment, 2012 Source: EC (2013), “Entrepreneurship in the EU and Beyond”, Flash Eurobarometer No. 354. • Youth most often identify finance and skills as barriers. 0 5 10 15 20 25 30 Not enough capital Current economic climate is not good for start- ups Not enough skills to be self- employed No business idea Difficult to reconcile with family commitments Risk of failures and its legal and social consequences are too big Administrative difficulties % Reasons that self-employment is not feasible in the next 5 years All adults Youth
- 13. Key action areas for public policy
- 14. 1.Build a supportive institutional environment 1. Ensure that the regulatory environment does not discriminate or provide disincentives – Be supportive in welfare, tax and regulatory systems – Ensure that bankruptcy laws do not prevent second chances 2. Promote positive image of entrepreneurship – Inform youth and society about the potential of youth entrepreneurs – Celebrate young entrepreneurs as role models 3. Ensure that youth can access information – Provide ready information on how to start up – Make business start-up support easily accessible to youth
- 15. Technology InQbator, Poland • Target group: Students and graduates • Objectives: – To support new entrepreneurs in new technology fields and promote entreprenuership • Overview: – Provide standard incubator services: office space, consulting, training, networking – But also unique approaches to promoting entrepreneurship more broadly: 1. “Wheel of Fortune” radio weekly programme 2. Poznan Days of Academic Entrepreneurship 3. “On the Wings of Business” TV programme – Financed by Ministry of Science and Higher Education; National Research and Development Centre; Municipal government • Impact: – >4000 participants at Poznan Days of Academic Entrepreneurship – Radio show since 2006; has expanded to other cities
- 16. 2. Improve entrepreneurship skills 1. Provide entrepreneurship education at all levels – Develop entrepreneurial mindsets as well as new ventures – Provide opportunities to learn through experience – Include low educational achievers 2. Provide coaching and mentoring – Use an appropriate matching mechanism to ensure a good fit between coachee/mentee and coach/mentor 3. Encourage networking – Create links with other young entrepreneurs, senior entrepreneurs, investors and partners
- 17. DreamStart, Brussels • Target group: Unemployed youth (18 – 30 years old) • Objectives: – To support development of business idea and preparation of business plan • Overview: – Business plan development course – Participants are selected through in-take interviews that assess their business ideas, drive and chances of success – 3 full days per week to study and interact with entrepreneurs and experts for 2 months – Microcredit is often accessed through MicroStart, a sister organisation – Funded by Public funding (42%), private sector donations (7%) and in-kind contributions (51%) • Impact: – 60% start a business within a year; 30% of these worked full-time in their business and 60% combined their business start-up with paid employment – Budget is EUR 72 000 (excludes EUR 70 000 in-kind contributions), or EUR 1950 per participant
- 18. • Target group: Unemployed university graduates under the age of 35 • Objectives: – Reduce the unemployment among young graduates • Overview: – Training modules (4 months): business plan development; business financing; commercial law; human resources; accounting; marketing; sales; ICT; networking – Selected participants hired by a Regional Development Agency during training – National conference to facilitate networking and collaboration – Following training, 1 year of coaching and advisory services – Funded by European Social Fund (85%) and Slovenian Ministry of Labour, Family, Social Affairs and Equal Opportunities (15%) • Impact: – 2013: 1246 applicants and 250 participants; 134 set up business or found employment – Budget was EUR 3.89 million, or EUR 15 500 per participant Entrepreneurially into the World of Business, Slovenia 18
- 19. 3. Facilitate access to finance 1. Provide financial literacy education to all youth 2. Ensure youth can access loans and microfinance – Use grants when loans are not feasible 3. Encourage alternative financing mechanisms such as guarantees, crowdfunding, peer-to-peer lending, business angel investment 4. Complement financial support with business training and mentoring
- 20. • Target group: Non-bankable young people aged 18 to 25 years • Objectives: – Provide micro-finance and access to business development support • Overview: – Funded by Scottish government, Scottish Enterprise and European Regional Development Fund – Provision of a conditional startup grants of GBP 1 000 (approx. EUR 1 170) – Also offers three categories of loans of up to GBP 30 000 (approx. EUR 35 040) – Finance is complemented with training, coaching and mentoring provided by more than 650 volunteers from local business communities • Impact: – 2004-2005: 155 additional start-ups were launched (controlling for deadweight and displacement) and 416 started sooner or on a larger scale – In 2011, 620 young people started 581 businesses – For every GBP 1 spent, generated GBP 17 of additional net sales The Prince’s Scottish Youth Business Trust, UK 20
- 21. Entrepreneurship Promotion Fund, Lithuania • Target group: National programme but priority access is given to some population groups, including youth (under 29 years old) • Objectives: – Increase business creation and self-employment in Lithuania for all • Overview: – Established by the Ministry of Social Security and Labour, the Ministry of Finance and INVEGA – Co-operation with the Lithuania Central Credit Union (LCCU), which acts as the financial intermediary – Provides microcredit, up to a maximum of EUR 25 000 – Free training, business counselling and additional financial support through interest rate subsidies and partial employee subsidies – Also offers guarantees of up to 80% of the value of the loan • Impact: – 4 205 people have attended training and 4 117 completed it – 1 017 loans issued, of which 479 were to priority groups (47%) – Loan recipients have created 1 758 new jobs
- 22. Entrepreneurship Promotion Fund, Lithuania Registration for EPF • By phone • By internet • At Credit Union General Training • “Basics of entrepreneurship” (8 hours) Entrepreneurship Training • “Business plan training” (16 hours) • “Accounting and tax basic” (16 hours) • “Business and labour law basics”(8 hours) • “Business management basics” (8 hours) • “Marketing basics” (8 hours) • “Staff management in business” (8 hours) Consultations • Individual counselling on business plans provides training service providers Lending Loan manager: • Helps complete application for a loan of EPF • Verifies SME status declaration and admissibility of documents • Appeals to INVEGA for a specific borrower on a de minimis • Helps to complete application, collection and submission of required documents for INVEGA guarantees • Starts the debtor files and credit contract • Consults on the development and implementation of business plan Lending CU Board: • Business plan analysis and evaluation • Decision making on loan agreement A loan is issued: • Without INVEGA’s guarantee in 4-6 weeks • With INVEGA’s guarantee in 8 weeks
- 23. 4. Developing strategies and co-ordination 1. Develop a vision for youth entrepreneurship support – Embed entrepreneurship promotion and support within youth employment strategies 2. Communicate the objectives of youth entrepreneurship policies and programmes to youth, youth organisations and the community 3. Government actors and other stakeholders have defined, complementary roles in supporting youth entrepreneurship
- 24. Co-ordinating youth entrepreneurship, Lithuania Commission for Youth Sport Affairs of Seimas Ministry of Social Security and Labour and other ministries Department of Youth Affairs Council of Youth Affairs LiJOT Youth Organisations Agency of International Youth Co-operation National Youth Affairs Co-ordinator Association
- 25. Co-ordinating youth entrepreneurship, Lithuania Municipal Council and Municipal Committees Administration (regional departments) Municipal youth council Regional LiJOT Youth organisations Business sector Regional institutions National and regional youth initiatives Implementation in partnership The National Youth Affair Co-ordinator Association
- 27. Good practice principles 1. Select beneficiaries carefully and tailor the support provision to the needs of youth – Extensive support should be low cost and offered widely – Intensive support should be competitive or filtered to select recipients that are motivated and most likely to succeed 2. Promote creativity and innovation – Seek (even low level) innovation in supported business projects 3. Recognise that different policy interventions complement and reinforce each other – Offer combined access to finance, training, mentoring, and networking – Ensure education, economic and labour policies are co-ordinated and complementary – Identify gaps and synergies across stakeholders
- 28. Good practice principles, con’t. 4. Consider adapting mainstream programmes as an alternative to youth-specific actions 5. Engage youth and youth organisations in the design and implementation – Communicate with youth through appropriate channels – Consult youth organisations in policy design – Leverage stakeholder knowledge and experience 6. Appraise and evaluate, make adjustments when design or implementation can be improved – Identify intervention needs, targets and expected impacts – Evaluate results and adjust the approach – Seek employability as well as venture creation outcomes – Measure long-term as well as short-term impacts
- 29. Thank you!
Editor's Notes
- Lack of awareness of potential for entrepreneurship among role models results in a lack of encouragement or even negative social attitudes Education and training programmes generally do not do enough to nurture entrepreneurial attitudes and skills Lack of prior work and entrepreneurship experience is a major determinant to business start-up and entrepreneurship performance Fewer financial resources and difficulty obtaining external finance, including debt finance, hampers business start-up Limited business networks and business-related social capital have consequences for business start-up and obtaining legitimacy Market barriers, including a bias in financial markets away from supporting youth-owned businesses and ‘discrimination’ in product markets
- We saw in the first presentation in this session that young people are enthusiastic about entrepreneurship. This enthusiasm needs to be supported. Important role models (e.g. parents, teachers) for youth play an important role in shaping their attitudes. It is important that they are informed about the potential of entrepreneurship and are supportive of self-employment as one option in the labour market. Policy makers need to create a positive environment towards entrepreneurship, especially for youth. Many entrepreneurs fail at first and evidence shows that youth entrepreneurs have lower survival rates (e.g. van Praag, 2000). It is important that a bankruptcy does not have lasting legal consequences. Moreover, it is important that there is a cultural acceptance of business failure. Promoting and celebrating success stories, particularly for young people can help inspire other youth. It is important to celebrate both those who have been extremely successful and those who are more typical so that youth can relate to the role model. Include young entrepreneurs in media campaigns related to entrepreneurship. Ensure that information on business start-up is easily accessible and understandable for youth. Make this information available on the web, through schools and at employment centres.
- Entrepreneurship skills are a transversal skill. They can be beneficial to all since many employers value these skills. Entrepreneurship skills and entrepreneurship experience can make an individual more employable. It is therefore important that entrepreneurship education be included at all levels of education. While it should deliver tangible skills, entrepreneurship education should also focus on developing entrepreneurial mind sets; a way of thinking. Current pedagogies focus on active learning and experiential learning. Students can acquire skills and experience through simulations and idea or business plan competitions. While it is important to provide basic entrepreneurship education and training to all youth, those with the potential to develop a sustainable business should have access to more intensive individual support. This includes unemployed youth.
- Access to finance is often identified as a significant barrier to business creation for young entrepreneurs. In addressing this challenge, policy makers should start by providing financial literacy education to all youth. This will help them in self-employment and in life more generally. It is important that youth understand financial concepts, basic financial products, the role of different actors in financial markets and where to get further information. Further, young entrepreneurs need to understand how to stretch their money since they are most likely to get loans and investments from friends and family. Provide training on bootstrapping methods. Policy makers should also ensure that youth can access existing microcredit and loan guarantee schemes. This could be accomplished by ensuring that a certain proportion of finance is provided to youth, or by setting up youth-specific schemes when there is sufficient demand. Financial products can be tailored for youth, allowing longer grace periods and lower collateral requirements. Entrepreneurship training should be available to those who receive finance. Financial institutions should partner with training organisations to offer training that will increase their chances of success. Encourage alternative financial mechanisms to complement traditional financial approaches (subsidised loans and grants), e.g. guarantees, crowdfunding, peer-to-peer lending, business angel investment
- This project aims to help the unbankable youth in business start-up. It provides microfinance and various business development services, including coaching. It is funded by Scottish Enterprise and European Regional Development Fund and is delivered by a public partnership with a non-governmental organisation. Delivered by volunteers. Participants received help with development of business plan; coaching to pitch project; start-up grants up to ￡1 000 and start-up loans up to ￡35 000. They can also access workshops, mentoring, ad hoc advice and consultation. In 2004-2005, the impact was 155 additional start-ups (controlling for deadweight and displacement) and 416 started sooner or on a larger scale In 2011, 620 young people started 581 businesses. For every GBP 1 spent, generated GBP 17 of additional net sales was generated.
- The Entrepreneurship Promotion Fund was established by the Ministry of Social Security and Labour, the Ministry of Finance and INVEGA, which is the agency responsible for SME development. The programme provides microcredit, up to a maximum of EUR 25 000 to start-up entrepreneurs and self-employed people who have operated a business for less than one year. Microcredit is provided as part of a package of complementary support including free training, business counselling and additional financial support through interest rate subsidies and partial employee subsidies (for those start-ups that create jobs). The programme also offers guarantees of up to 80% of the value of the loan. The EPF programme is managed by INVEGA in co-operation with the Lithuania Central Credit Union (LCCU), which acts as the financial intermediary. The loans are granted by credit unions and the LCCU partners with 15 training providers to deliver free training and business advisory services to loan recipients.
- Any policy action should start with an assessment of the size of the target group and the problem face. This will help determine the appropriate scope and scale of action needed. Policy makers should set targets and expected impacts before launching any activity. This will help them measure the impact that the policy actions have. Targets should be clear and measurable. Ongoing monitoring should be undertaken to measure take-up and implementation. Ex post evaluation should examine the impact made, measured against the initial targets. Policy makers should seek to support projects that are innovative, even if at a low level. This will help reduce displacement in the marketplace. Selection of beneficiaries is a critical issue because policy makers need to minimise deadweight loss. Extensive supports should be low cost. Intensive supports are most costly and therefore should be provided with a competitive mechanism to minimise the risk of loss.
- Any policy action should start with an assessment of the size of the target group and the problem face. This will help determine the appropriate scope and scale of action needed. Policy makers should set targets and expected impacts before launching any activity. This will help them measure the impact that the policy actions have. Targets should be clear and measurable. Ongoing monitoring should be undertaken to measure take-up and implementation. Ex post evaluation should examine the impact made, measured against the initial targets. Policy makers should seek to support projects that are innovative, even if at a low level. This will help reduce displacement in the marketplace. Selection of beneficiaries is a critical issue because policy makers need to minimise deadweight loss. Extensive supports should be low cost. Intensive supports are most costly and therefore should be provided with a competitive mechanism to minimise the risk of loss.