The missing link between entrepreneurial dreams and commercial reality
Young entrepreneurs are not getting the business education they deserve, argues Octopus Investments' George Whitehead
There can be no doubt the UK’s entrepreneurial ecosystem has received a significant boost in recent years – the media is currently alive with the buzz of Tech City, while entrepreneurs such as Mind Candy’s Michael Acton Smith have reached almost celebrity status.
Yet according to a recent report from the Global Entrepreneurship Monitor, the UK still lags behind France, Germany and the United States when it comes to start-up rates among young people. The annual assessment uncovered that one in seven young people in the US are in the early stages of starting a venture, compared to just one in 17 in the UK.
Higher education is failing enterprise
It seems to me this issue does not stem from a lack of aspiration or motivation from the UK’s younger generation, but rather a lack of practical support for those looking to build a business.
Evidence of this can be seen in recent figures from the Higher Education Statistics Authority (HESA). Its August 2013 study reveals students feel university does not provide the necessary skills to build a business. In response to the question, ‘How well did the higher education experience prepare you for being self-employed/setting up your own business?’, 38.4% replied ‘not at all’, while a further 26.2% responded ‘not very well’.
This is an issue that desperately needs to be addressed. Teenage wonders, such as the likes of Nick D’Aloisio, founder of Summly, are a rarity – the statistics suggest the majority of young people feel they lack the necessary support and skills to start their own business, let alone reach these dizzy heights of success.
It is true a number of initiatives are forming which are designed to encourage tech brilliance among children and teenagers.
The skills young entrepreneurs need
Government-funded STEM Clubs have been set up across many secondary schools, with the objective of boosting tech and engineering ability in young students, while the likes of CodeCademy and Raspberry Pi strive to boost the number of young skilled coders.
However, if we are to truly encourage entrepreneurship amongst a younger demographic, it is important to consider all industries and business areas – not just tech.
Financial skills and the ability to build and manage a strong team may seem far removed from the hype of Silicon Roundabout, but they are essential to starting and running a business.
Similarly, the ability to sell is crucial to virtually every type of work for an entrepreneur, yet lessons in selling are extremely rare. This failure to address key business skills stretches across the education system, even up to business school level, where entrepreneurship is seldom featured as a core module. An exception to this rule is London Business School, which works with ‘entrepreneurs in residence’ to create compulsory modules to improve the sales skills of their students.
Initiatives to change the landscape
The National Centre for Entrepreneurship in Education is trying to address the skills gap by bringing the UK into line with the US, which boasts institutions such as Stanford and MIT.
The Surrey Business School (SBS) is also trying to bridge the gap between entrepreneurship and academia. The institution is currently building a ‘business insights lab’, which will seek to help students develop the skills required to succeed in a fast-paced enterprise environment.
Most recently the Royal Society for the Encouragement of Arts (RSA) and the Royal Bank of Scotland (RBS) have argued that parents, teachers and enterprise support organisations need to work closely together to encourage young people in the UK to start businesses.
The Manifesto for Youth Enterprise lays out 15 key ‘principles’ designed to help more young people realise their entrepreneurial potential, including providing hands-on practical help to young students and embedding enterprise-related learning into the curriculum.
Time will tell how effective this initiative proves to be, but it is certainly promising to see that Lord Young, the prime minister’s advisor on enterprise, has shown his support.
Getting business experience first
I think it is also important to note that entrepreneurs do not need to step straight out of formal education into founding a company. Working for a fast growth start-up can be a fantastic next step and sites such as enternships.com specialise in listing work placements that boost entrepreneurial skills.
Career advisers at schools and universities need to encourage students to look beyond corporations to small and medium-sized enterprises, where they can gain on-the-ground experience of building a business before setting up on their own.
If we are to continue the drive to push the UK as an entrepreneurial hub, it is essential that we lay solid foundations for our talented youth. Energy, passion and drive are crucial to any aspiring business owner, but entrepreneurial dreams will remain just that if they are not supported by core business knowledge.
George Whitehead is venture partner manager at Octopus Investments. www.octopusinvestments.com