Youth Entrepreneurship creates employment opportunities for self-employed youth as well as the other young people they employ. These helps to bring ostracized youth back into the economic mainstream. With them holding a stable job, this helps to address some of the socio-psychological problems and delinquency that arises from joblessness.
Youth Entrepreneurship also helps youths to develop new skills and experiences and promote innovation and resilience in youth. As young entrepreneurs are particularly responsive to new economic opportunities and trends, they would be able to better adapt to the changing market.
Benefits of implementing these measures
Youth Entrepreneurship is an important tool in stimulating the region's economy. This is because each entrepreneur brings about benefits not only for himself but for the municipality, region or country as a whole. As they are Self-employed, they often have better work satisfaction. These businesses also create jobs for others as well. Youth Entrepreneurship can lead to development of more industries, especially in rural areas or regions disadvantaged by economic changes by encouraging the processing of local materials into finished goods for domestic consumption and export.
As Youths represents more than a fifth of the world's population, this will lead to income generation and increased economic growth with healthy competition that encourages higher quality products and thus, more goods and services.
2.2 Youth Entrepreneurship in the European Union
Small Business Act for Europe
Explain what is Small Business Act for Europe
The Small Business Act for Europe is a set of 10 principles which guides the design and implementation of policies both at EU and national level. This is essential to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment so as to allow these enterprises to unleash their full potential to create jobs and growth.
The act was endorsed politically by the EU Council of Ministers in December 2008 to ensure the full commitment of both the Commission and the Member States together with regular monitoring of its implementation with a review of it being done on February 2011.
Explain what the Small Business Act for Europe will bring about
The Small Business Act for Europe will bring about several changes that are designed to make businesses friendlier for SMEs. Many of these points are based around increasing the amount of aid given and the creation of an environment friendly to SMEs.
2.3 The key points of the Small Business Act for Europe
Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded
The 2007 Flash Eurobarometer[9] on entrepreneurial mind sets shows that 45% of Europeans would prefer to be self-employed, compared to 61% in the US. This is because people in Europe have a deep sited mentality that self-employment is not a viable job. Furthermore, the education system, do not focus enough on entrepreneurship skills that are needed.
As such, the "European SME Week" refers to several events that will take place throughout Europe. The aim is to promote the exchange of experience by giving young entrepreneurs the chance to learn from more experienced entrepreneurs. Each of the Member States are invited to develop entrepreneurial mind sets among the youths by introducing entrepreneurship as a component of the school curriculum and ensure that it is correctly reflected in teaching material so that the importance of entrepreneurship is correctly reflected. The education ministries would step up cooperation with the business community in order to develop a systematic strategy for entrepreneurship education.
Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance
Bankruptcies are the cause for 15% of all company closures. Over 700 000 SMEs are affected on average every year, and 2.8 million jobs are affected throughout Europe on an annual basis [11]. To make matters worse, the stigma of failure is still present and society underestimates the business potential of re-starters. Today, 47% of Europeans are reluctant to order from a previously failed business. At the same time, making a new start is complicated by lengthy bankruptcy proceedings.
By promoting a positive attitude in society and giving entrepreneurs a fresh start, it is hoped that re-starters will be treated on an equal footing with new start-ups, including in support schemes.
Facilitate SMEs' access to finance and develop a legal and business environment supportive to timely payments in commercial transactions
Raising the kind of capital needed can be a major challenge for young entrepreneurs. This is in spite of EU public support such as the Competitiveness and Innovation Framework Programme (CIP), which provides over €1 billion to support SMEs' access to financial aid. Risk aversion drives investors and banks away from SMEs.
Furthermore, many entrepreneurs require technical expertise on the advantages and disadvantages of different forms of finance. They also need help on how to best present their investment projects to potential financiers.
The European Union would be developing a financing programme that addresses the funding gap. Domestic funds ensure that the taxation of corporate profits encourages investment make full use of funding available in cohesion policy programmes.
2.3 Measures to encourage Youth Entrepreneurship in UK
Shell LiveWIRE
Explain what is Shell LiveWIRE
Shell LiveWIRE is an online support service and awards programme for young entrepreneurs in the UK. Since its creation in 1982 by Shell's Social Investment Programmes, Shell LiveWIRE has helped over 600,000 young people in the UK to explore starting their own business.
Now active in over 20 countries, Shell LiveWIRE has help young people around the world to explore enterprise and entrepreneurship and providing them with global networking opportunities. Shell LiveWIRE offers an independent service with no costs or strings attached so everyone can benefit.
Explain the measures implemented Shell LiveWire
Shell LiveWire provides a monthly award of £1,000 to 16-30yr olds in their first 12 months of trading with the most innovative new idea and an annual award of £10,000 to one of the recipients of the monthly reward judged to be the best in the given year. Shell awards £40,000 to innovative business ideas that tackle climate change.
Shell LiveWire also provides a discussion Forum where young entrepreneurs can get free help and advice from fellow Shell LiveWIRE members, business advisers and mentors.
They also help to promote their business and help them to connect with other young entrepreneurs around the world through their international Social Network. Free tools, resources and guides on starting and running business are made available in their Business Library.
Explain the importance for Shell LiveWire
Shell LiveWire helps to provide start-up funds to many youths who wish to become youth entrepreneurs in UK. As funding is difficult to get, many youths are reliant on these funds. By awarding innovative ideas, it provides an incentive to come up with better ideas and further improve them. As these start-ups often times have no contacts or reputation in the economy, Shell LiveWire helps to play the middleman and introduce them to prospective business partners. This way, young entrepreneurs would not be hard pressed to find people willing to work with them.
AdvantageNI
What is AdvantageNI
Advantage specialises in economic development and entrepreneurship for young people. Working with the public, private and not-for-profit sectors, they apply their expertise to promote youth entrepreneurship as a viable career option to young people. They have engaged with over 20,000 young people each year and can offer information, advice and guidance on starting, running and growing a business.
Advantage helps to connect youth enterprises at an international, national, regional and local level. Advantage draws upon and shares the best practice of enterprise professionals, academics and other partners to better aid the youths.
What are some of the help provided
Advantage provides extensive project design and management skills along with detailed knowledge and thorough understanding of the client's needs. As project managers, Advantage handles multi-agency partnerships and ensures support at every required level.
Benefits of AdvantageNI
As youths often lack the experience in management and negotiations, Advantage fills the gap by providing an experience and well-connected organization that can help them in their business. This way, SMEs can better focus on improving their products and services and not worry about the management issues until they are ready to take on the challenges.
2.4 What are the problems in Singapore's youth?
One of the main problems in Singapore is the lack of expertise support given to youth businesses. As starting a business in Singapore is expansive, most are depending on a larger company noticing them and providing them with the capital. Furthermore, only those who perform very well in school get to present their ideas to them. This means that there is a large amount of youths who would not even get the opportunity to show off their ideas.
Another problem is that Singaporeans does not like to take risk, and starting their own business is seen as extremely risky. The social and psychological stigma of failure is heavily engrained in the youths since primary school. As such, many prefer tried and tested means such as looking for a job rather than setting up their own business.
Identify the goals of promoting Youth Entrepreneurship in Singapore
To increase the amount of SMEs and developing the entrepreneurial mind sets among Singapore's young. The government would also need to promote better environment for businesses and remove the fear of failure.
Explain why the measures used in the European Union and Untied Kingdom is applicable in Singapore context.
The reasons for the usage of these two countries are because they are very similar to Singapore's situation. All three have a large amount of youths that wants to start their own businesses but are turned away by the environment, lack of funding and skills. Also, all three are developed countries with large companies that make it difficult for smaller business to thrive.
4. Conclusion
Base on the research findings, the other countries are already preparing the framework to encourage youth enterprises. They know what the youths need and are setting in place laws to cater to SMEs. On the other hand, Singapore has yet to develop a framework that encourages youths to take risk. The lack of support, coupled with the heavy social and psychological stigma means not many are willing to take the chance.
5. Recommendations
Based on my research I would like to make the following recommendations to solve the issue of promoting youth entrepreneurship.
Singapore should set in place laws that make it easier for start-ups to thrive. Following the example set by the Small Business Act for Europe, Singapore should make it easier for youths to gain access to funding and aid. Knowledge of entrepreneurship should be taught in schools so as to develop the mind-set needed. Finally, the government to remove the stigma of failure from the environment, this in turn would help to encourage more youths to take risk.
Organisations such as Shell LiveWire and Advantage should be formed so as to provide aid to youths. The current organisation, ACE start-ups only funds up to 500 people and the funding is given in portions. This means that only a selected few can receive the funding. Another problem is the lack of technical support given to these start-ups; many of them are preyed on by scams or fall to bad investment. More need to be done to curb these incidents.
As Singapore is a developed market, large companies litter the market. This means that it is very difficult for the smaller ones to break in to the market. The larger companies are able to provide more service and goods at sometimes lower price. This means that less people would want to approach the small businesses. SMEs also suffer from a lack of reputation and credibility when compared to a larger company. This means that they are often ignored in favour of the larger ones. As such, the Singapore government needs to find a way to better connect the SMEs to potential clients, allowing them room to grow.
