Youth and entrepreneurship

Objectives
• Definition of (youth) entrepreneurship
• Types of (youth) entrepreneurship and young entrepreneurs
• Motivations of young people to engage in entrepreneurship
• Potential for youth entrepreneurship
• Barriers and incentives to enterprise start-ups by young people
• Administrative and regulatory framework
• Business assistance and support (BAS) and business development services (BDS
• Developments in youth entrepreneurship policy
 Definition of (youth) entrepreneurship
Youth entrepreneurship can be defined as self employment among youths.
Types of (youth) entrepreneurship and young
entrepreneurs
• Economic entrepreneurship
• Social entrepreneurship
• Public entrepreneurship

Economic entrepreneurship
For enterprises in the private sector (economic entrepreneurship), the main value or outcome is
wealth creation and profit generation, respectively, for those who own the enterprise.

Social entrepreneurship
Social entrepreneurship uses entrepreneurial activity to create social value; wealth creation is
just a means to an end and a way of measuring value creation. “For social entrepreneurs, social
mission-related impact becomes the central criterion, not wealth creation
……Continued

Public entrepreneurship.
Its objectives and motivations are not purely financially, but rather socially orientated.
Public entrepreneurship occurs within public institutions and organizations and is about
helping them become more responsive to their customers, clients and communities. This type
of entrepreneurship is increasingly attractive for young people, working as independent
consultants or collaborators on the efficiency of a public institution or on the expansion of its
services.
Categorization of young entrepreneurs
Pre-entrepreneurs (in the age of 15-19 years): This is the formative stage. These younger
youth are often in transition from the security of the home or education to the work place.

Budding entrepreneurs (in the age of 20-25 years): This is the growth stage. These youth are
likely to have gained some experience, skills and capital to enable them run their own
enterprises. They often face three enterprise pathways: 1) remaining stuck in marginal activities;
2) going out of business; and 3) running successful enterprises.

Emergent entrepreneurs (in the age of 26-29 years). This is the prime stage. With valuable
experiences in business, emergent entrepreneurs have a higher level of maturity than youth in
the lower age groups. Hence they are more likely to run more viable enterprises than younger
people
 Motivations of young people to engage in entrepreneurship
• Be their own boss

• Have more control over their own work and life

• Provide innovative or competitive products and services

• Lack of employment opportunities

• Obtain additional income

• Improvement of the standard of living

……..Continued
• To do something new

• To seek new challenge

• To connect your job/business with your passion/hobby

• To be respected
Barriers to enterprise start-ups by young people
• Few youth entrepreneurs posses basic business skills.

• Absence of Ideal Market conditions

• Limited access to finance by youth entrepreneurs

• General lack of introduction and adoption of enterprise education. In most education systems,
there is still a clear lack of practical and experiential learning as well as of teamwork learning.

• Age discrimination by suppliers or customers.

• Lack of support from family or friends.

…..Continued
• Unsupportive tax regimes. Unfavourable or complex tax systems can kill off new young
enterprises in the startup phase and during their critical first few years of business.
• Business registration procedures and costs. Business registration procedures and costs can
be a major obstacle for young people. These procedures are often associated with
bureaucracy, corruption and lack of transparency and this makes young people to easily lose
their entrepreneurial enthusiasm.
• Ineffective competition law. Ineffective competition law can also close markets to new
start-up businesses particularly young people who are outside local business networks.
Incentives to enterprise start-ups by young people

Provision of finance and funding. Youth enterprises can be promoted through the provision of
various types of finance and funding that can broadly be divided into various categories: Grants
and ‘free money’.

Improving the administrative and regulatory environment for start-up finance. To reduce
complexity and to simplify the administration, financial institutions could streamline their
administrative procedures. This would also reduce the processing time of loan applications.
Information and counselling on access to finance and funding. Advice, counselling and
mentoring can assist them in the preparation of business plans, in calculating the amount
of capital they will need and in securing conventional debt (banking).

Supportive taxation regulations and rates. The young entrepreneur should be exempted from
taxation in the first two years of business.
……Continued
Facilitating and streamlining business registration procedures and lowering costs .Young
entrepreneurs should be able to complete all registration procedures at one location for a fixed
fee. All the necessary forms, documentation and assistance – and in many cases Internet access
and online information – is provided at the location.

Consideration of young entrepreneurs when changing business regulations. Frequent

changes of the business regulations need to be avoided. Government should announce or
inform young entrepreneurs early enough on such changes.

Provide information, counselling and assistance on regulatory issues. The provision of

information and assistance on regulatory issues that affects the start-up process is particularly
crucial for young entrepreneurs
Business assistance and support (BAS) and
business development services (BDS)
Key deficiencies and constraints affecting young people in the area of business assistance and
support:

Lack of business connections: Business contacts, suppliers, suitable partners and networks.
Entrepreneurial isolation, not knowing anyone in the business and the absence of business networks is a
common obstacle to start-ups by young people.

Lack of knowledge of available business support services. Young peoples, are not aware of the variety
of public (and private) business support services.

Lack of trained counsellors, development workers and adequate support agencies. There are very
few enterprise agencies or centers which provide business advice, training, guidance and special access to
finance exclusively to young people.

Lack of mentoring capacities. Insufficient mentoring programs that match experienced entrepreneurs,
business leaders and business professionals with young entrepreneurs
…….Continued
Lack of workspace and ICT infrastructure. Without access to affordable, well-located
workspace and ICT equipment, young entrepreneurs have severe difficulties to set up and run
their business.

Lack of exchange networks, forums and meeting places. Besides mentoring, the
communication and exchange of experiences and ideas between entrepreneurs in general and
young entrepreneurs in particular are important.

Lack of other business development services. In many countries there is an overall lack of
particular business support for young entrepreneurs seeking to expand and further develop their
enterprise.
Improving business support and assistance for
young people

Research on business assistance and support. Surveys focusing on the perceptions of

young people and young entrepreneurs are probably the best way to capture the
deficiencies and constraints in this area.

Provision of business skills training, guidance and counselling services. Enterprise support
agencies and NGOs should provide sufficient and accessible on the-job training on start-up
issues.

Mentor support and business coaching. Formal or informal mentoring is probably the most
beneficial service and support that can be offered to a young entrepreneur.
.
…..Continued
• Provision of working infrastructure. Providing or sharing any kind of basic service
equipment (computers, cars etc.) can already be a valuable support for young entrepreneurs.

• Promotion of enterprise integration and business linkages. Trade fairs and exhibition
enables young people to present their product and services and to find clients, business
partners and networks
Developments in youth entrepreneurship policy

Youth entrepreneurship policy refers to policy measures taken to foster entrepreneurial

activity of young people aimed at the pre-start-up, start-up and post-start-up phases of the
entrepreneurial process.
Designed and delivered to address the areas of motivation, opportunity and skills with the main
objective of encouraging more young people to start an entrepreneurial undertaking or venture
and at the same time to improve young peoples’ general employability.

Youth Entrepreneurship and employment policies.

This involves formulation of a broad national youth (employment) policy, of which
entrepreneurship is the only one element.
Entrepreneurship and SME policies .SME policies focus on firms (predominantly already
existing SMEs), entrepreneurship policy focuses more on individuals (entrepreneurs) being at
different stages of the entrepreneurial process. “Thus entrepreneurship policy is broader in
context, starting with measures to stimulate an entrepreneurial culture, and to create widespread
promotion of entrepreneurship as an employment choice.
 Types of entrepreneurship policies
SME Policy Extension. Measures are ‘added on’ to existing SME programs and services.

Niche Entrepreneurship Policy .This involves stimulating particular segments of the

population, young women, minorities.

New Firm Creation Policy. Policies favoring reduced barriers to business entry and exit.

Holistic (or generic) Entrepreneurship Policy

Guidelines on the development and delivery of youth
entrepreneurship policies.
Develop an individual, tailor-made approach. Initiatives and policies promoting youth
entrepreneurship should focus on the main factors that facilitate and stimulate, or hinder and
impede, the entrepreneurial activity of young people.

Invest in research, benchmarking and testing. Primary research is urgently required to get a
better understanding of the specific problems and needs of young individuals and entrepreneurs
in different countries.

Carry out detailed evaluations and impact assessments. Objective and accurate impact
assessment and evaluation of introduced programs and initiatives are important when
developing youth entrepreneurship policies.

Balance speed with scale of impact and cost of implementation. The most expensive
interventions are not necessarily the most effective investment for a particular country.
……Continued

Mobilize, activate and involve all major stakeholders. Identifying and mobilizing all key
stakeholders in this field, defining their particular roles and involving them in an integrated and
result-orientated YE policy is vital and necessary.

Focus on enterprise education .Enterprise education is at the heart of any YE policy.

Identifying and filling the gaps in this field should be the prime task for every government and
country.

Close the gap between national policy and grass-root, regional and local initiatives.