Youth unemployment continues to scar countries. If policy-makers and businesses work together to help young people develop an entrepreneurial mindset, real progress remains possible, says EY’s Maria Pinelli.
“It is vital for governments to understand the specific challenges facing entrepreneurs and collaborate to solve problems.” — Maria Pinelli, Global Vice-Chair of Strategic Growth Markets, EY
With businesses reluctant to invest and economies continuing to contract, governments are unable to prevent increased joblessness from taking root in societies the world over.
To move toward a more positive future, governments must harness the skills and energy of one of the world’s key engines of growth: entrepreneurs.
Earlier this year, we conducted a survey of more than 1,500 entrepreneurs from across the G20 countries, a sample that included 1,000 entrepreneurs aged 40 and under. Through our research, young entrepreneurs identified five key priorities for action:
1. Expand choice of funding alternatives
Access to funding remains difficult, particularly for those seeking to develop a new type of product or service. While traditional funding such as business angels, private equity and venture capital remain more limited for entrepreneurs, there is a higher demand for non-traditional funding, such as crowd-funding and microfinance, especially amongst female entrepreneurs.
2. Increase mentoring and broader support
The lack of mentoring and subsequent failure rate means there is a greater chance those who don’t succeed will find themselves one of the jobless in the future. This means developing stronger support ecosystems, with respondents suggesting:
- Business incubators
- Government start-up programs
- Entrepreneur clubs and associations
3. Change the culture to tolerate failure
Respondents also cited a need to change public perception of entrepreneurship and change culture to tolerate failure. Having a supportive entrepreneurial culture that embraces small and medium enterprises (SMEs) will have a positive effect on their future growth. This can be done in several ways:
- Governments need to promote entrepreneurs as crucial job creators
- Society in general needs to be more tolerant of failure and recognize entrepreneurs as men and women who provide innovative products
- Schools and universities can help as students look to make career choices
Young entrepreneurs also highlight the need for success stories and role models.
4. Target and speed up incentives
Young entrepreneurs report an urgent need for government-backed initiatives across areas such as funding, support services and education.
Our analysis of government leading practices across the G20 identified more than 200 government-backed initiatives designed to boost SMEs, such as improvements in tax incentives and innovation incentives.
5. Reduce red tape and excessive taxation
Governments need to reduce red tape and excessive taxation, creating a simpler, SME-friendly business environment. With entrepreneurs struggling to come to grips with tax and regulation designed for older, more established business, 33% believe the development of a single government agency to help new business with regulation would help the most.
It is vital for governments to understand the specific challenges facing entrepreneurs and collaborate to solve problems, address legislative and cultural barriers to success, and together shape the future of entrepreneurship.