Countries aiming to reform the educational systems often give importance to introducing entrepreneurship in curriculums to encourage young people branch out in business when they complete their education. It is often difficult to define the elements of entrepreneurship but it generally means the ability to take business risks to make financial gains.
The EU has programmes aimed at encouraging young people to consider becoming entrepreneurs by rewarding creativity, marketing skills and ability to manage finances. But there is a wide reality gap between participating in a school-sponsored entrepreneurship programme and the tough world of business.
The challenges facing young entrepreneurs are addressed by EU studies containing clear recommendations to help young people set up their own business. The latest report is the result of a consultation process involving the Chamber of Commerce, Enterprise and Industry and student organisation Aegee-Valletta.
Availability of finance is often a critical success factor for any young person trying to earn a living by selling a product or service. MEP Miriam Dalli proposed the “creation of a local crowdfunding platform to help start-ups gain access to finance outside traditional channels”.
Some entrepreneurs are often misinformed about the type of finance commercial banks can provide. Venture capital and seed capital to kickstart a project are not facilities normally available.
The reason is very simple: the financing of new projects led by people with lots of enthusiasm but little experience often presents too much of a risk to banks that have a conservative lending policy. Following the bank failures of the past seven years, regulation has become tougher and it can easily discourage banks from taking high risks on their books.
Crowdfunding, whereby one can borrow money from an informal network of people who are prepared to share in the risk of a new venture in return for adequate reward, is often mentioned as the new way of obtaining finance.
One thing is certain: no one parts with his hard-earned cash if the returns are not guaranteed in some way. Crowdfunding is not built on the concepts of altruism or charity. The harsh world of business invariably links risk with reward – the higher the risk one is prepared to take with his money, the higher the reward that is demanded.
A more viable and proven source of finance for young entrepreneurs is that of the ‘business angels’ system. For many years, successful businesses have put aside part of their profits to encourage young people to come up with ideas on how to develop a creative project into a successful business venture.
Business angels often provide mentorship, business contacts, advice and seed capital to young people to help them navigate in the complex world of business. Some of these ventures turn out to be successful businesses in their own right. Sadly, many others fail and one just hopes that the young people involved in the failed projects will, at least, have gained experience that will see them become more successful in future.
The debate among educators and business leaders on whether one is born or made an entrepreneur is eternal.
It certainly helps to promote from an early age the value of self-reliance and the skill of taking risks and be compensated by adequate rewards.
A well-tailored entrepreneurship programme that involves business leaders, educators and youth organisations can help to promote an entrepreneurial mindset in our young people.