Entrepreneurship hinges on money and education: Report
The Ernst & Young report, Entrepreneurs speak out, is based on a survey of 1,001 entrepreneurs across G20 countries in the lead-up to the G20 Young Entrepreneurs Summit later this month.
The report was commissioned by the G20 Young Entrepreneurs Alliance, whose aim is to highlight the role played by entrepreneurs in the growth and competitiveness of G20 countries.
According to Maria Pinelli, global vice chair for strategic growth markets at Ernst & Young, the key to a global economic recovery is to support entrepreneurs, particularly young entrepreneurs.
“Entrepreneurs create jobs, build economies and support communities. There is a clear opportunity to support youth through entrepreneurship,” Pinelli says.
According to the report, there are five key factors to build a successful enterprise environment:
The idea of entrepreneurial failure as a stigma resonates in countries that do not have a strong entrepreneurship culture.
In other countries, failure is almost seen as a “badge of honour”, particularly in riskier sectors such as venture capital.
According to the report, the best approach for governments to foster a stronger entrepreneurship culture is to acknowledge entrepreneurs’ contribution to innovation and job creation.
Education and training
Of the entrepreneurs in G20 rapid growth markets, 80% believe students should follow specific training to become entrepreneurs.
“There should be more specific education programs dedicated to entrepreneurship to encourage young students to identify market opportunities and valid career options,” the report says.
“Entrepreneurship education should start as early as primary schools, to universities [and] business schools but also to professionals moving from corporate roles to their own ventures.”
Amir Nissen, founder of Student Entrepreneurs, says the benefit of a university degree is that it leads to the “implicit recognition” of entrepreneurship as a viable career for young people.
“[It becomes] as normal as becoming an accountant or lawyer. This is more important in Australia than, say, the US, where going it on your own is more common,” Nissen says.
Access to funding
According to the report, this continues to be the most significant challenge for the creation, survival and growth of successful start-ups.
The report reveals 80% of entrepreneurs believe governments have a major role in facilitating access to funding for young entrepreneurs.
“However, with… bank lending increasingly risk-averse, entrepreneurs are globally turning towards business angels, venture capital and private equity funding,” it says.
Serial entrepreneur Domenic Carosa, who heads up Future Capital Development Fund, says the fast-growing nature of today’s start-ups means they have no choice but to raise capital – fast.
According to Carosa, raising capital – as opposed to borrowing money – also indicates companies are beginning to understand the difference between “dumb money and smart money”.
“A lot of entrepreneurs are… looking for capital that can provide expertise as well,” Carosa says.
Regulation and taxation
While this area of business is believed to be making “good progress,” the entrepreneurs surveyed feel there is still room for improvement.
“Since the recession, it is more widely accepted… that governments have a substantial role to play in regulating, incentivising and directing private sector activity,” the report says.
“Many countries have made conditions easier in terms of the cost and ease of starting a business, and perceptions of progress about this are correspondingly positive.”
But Peter Strong, executive chairman of the Council of Small Business of Australia, says red tape remains a major issue for Australian small businesses.
“Over the last 20 years, many governments have basically ignored the needs of small business people and imposed more and more compliance demands,” Strong says.
“It has set small business people up for failure as the number of tasks is overwhelming.”
The entrepreneurs surveyed believe government agencies, incubators, universities and training programs have improved their level of support in the last five years.
But only 44% feel these programs are well coordinated. According to the report, there should be a greater focus on supporting young entrepreneurs and helping them to expand internationally.
The findings reflect recent comments made by Dr Fiona Wood, of the University of Sydney, who believes entrepreneurship in Australia suffers from a lack of collaboration.
“We need to collaborate as a nation rather than compete,” Wood told StartupSmart.