Wanted: business guardian angels

What makes an entrepreneur? Are entrepreneurs born or are they made through specific circumstances in their lives? Why is the entrepreneurial spirit in Malta less evident than it is in the rest of Europe? At a time when creating employment has become the top priority for most EU leaders, it is important to understand what gives some people the stimulus to go it alone and create wealth for themselves, rather than work for others.

A recent survey conducted by the European Commission about entrepreneurship among EU citizens has come up with some sobering results. It seems that 45 per cent of EU citizens would like to be self-employed, while in fact only 10 to 20 per cent work for themselves. In the case of Malta only about 33 per cent would like to be self-employed while most of the rest prefer to stack an imaginary windfall inheritance in a bank where, more likely than not, it will be eroded by inflation.

Andrew Oswald of Warwick University and David Balnchflower, a former member of the UK's monetary policy committee, have conducted a very interesting study on entrepreneurialism. Their main conclusion is that becoming an entrepreneur is more likely to depend on opportunity than on any inherited character trait. Even more interesting, they found that contrary to the prevalent popular belief, self-employed people tend to lead happier lives.

According to Oswald and Warwick, what matters most in making people decide to be self-employed, is the availability of capital. People who unexpectedly inherit a substantial amount of money are more likely to become entrepreneurs, especially if this happens when they are relatively young.

Equally revealing is the finding that a family background also has a strong influence on entrepreneurship. People with at least one parent being self-employed are two or three times more likely to be self-employed themselves.

So why are the Maltese less inclined to embrace entrepreneurialism, and can anything be done to change this trend? It may well be connected with the fact that we are an over-populated island where for many decades securing a reliable means of living was no easy task. Setting up one's own business with all the risks that it involves in an island where for "every bone there are a hundred dogs", is indeed a risk too many for most of us. Some prefer a badly paid public sector job for life which can then be supplemented by long hours of equally badly paid part-time work.

While teaching entrepreneurial skills in schools is a laudable strategy, we need to do more to help budding entrepreneurs find the capital that they need to put their energy, ambition, confidence, patience and fearlessness to good use. It is often wrongly presumed that this is a function for banks to fulfil.

Commercial banks are not in the business of providing venture capital and, much less, seed capital: 50 per cent of all seed capital investments fail to give any return, 30 per cent will at best break even, while only 20 per cent give a significant return.

We need to emulate countries like the US where successful retired business people set up "guardian angel clubs" to assist budding entrepreneurs to find seed capital and free management expertise to help launch them as successful enterprises. These clubs also help these young people to tap in the social and business networks that are so essential to penetrate markets.

We have good number of successful retiring baby boomers who have made a name for themselves in the past four decades leading very successful businesses. Now is the time for these people to plough back some of the expertise and capital they acquired into the community that has helped them to be so successful. This "enlightened philanthropy" can help us achieve the inter-generational solidarity that we so badly need if we are to realise our vision of a fair society in the next two decades.

The various organisations representing business interests should take the lead in setting up business guardian angel clubs to promote entrepreneurialism in a tangible way. The government can do its part too by encouraging the overall prevalence of new enterprises by lowering business start-up taxes and introducing efficient regulation.

jcassarwhite@yahoo.com