ENCOURAGING GREATER ENTREPRENEURSHIP IN A POST COVID-19 ECONOMY
As this column has suggested time and time again over the last three months of lockdown, entrepreneurs should be at the heart of any post Covid-19 economic recovery plan developed by both the Welsh and UK Governments.
Research has consistently shown that firms less than five years old create all net jobs within an economy, especially at a time of recession when larger firms are shedding tens of thousands of their employees.
They are agile, innovative and will drive the creativity and energy needed to transform an economy that will be struggling to find its way after the Covid-19 pandemic. They are also the glue that keep communities together and, as we have seen during the last twelve weeks, have been able to pivot their businesses to continue to support their customers locally.
So what should be done to ensure that our economic recovery is being driven by those talented individuals who take the risk and spot the opportunity to start their new business? More importantly, how do we encourage more people, even in these difficult times, to take that step to work for themselves?
First of all, there is a real need to encourage a greater interest in entrepreneurship, especially as research has shown that more people consider starting a business when they are exposed to existing entrepreneurs that are growing their businesses, particularly in certain groups such as women and people in low income groups who have less contact with high growth entrepreneurs.
Equally as important is the encouragement of local role models to help inspire a new generation of entrepreneurial talent, acting as a catalyst in promoting entrepreneurship as a positive career choice not only for young people but also for all parts of society.
So one of the first priorities should be the creation of a strong campaign to demonstrate that Wales is the best place to start and grow a firm, utilising the best entrepreneurial talent we have amongst our business community to do so.
Another key issue is that of enterprise education. With a general acceptance that most entrepreneurs are largely made and not born, there are different ways in which entrepreneurial skills can be developed across the population.
In terms of formal education, a critical part of creating a vibrant entrepreneurial climate in any economy is to have a strong and cohesive enterprise education system that goes from primary school to universities and beyond.
To do this, there needs to be greater co-ordination of enterprise education effectively across Wales, drawing on best practice from across the World and involving stakeholders from across the educational system. Ensuring that our children are enterprising and innovative is critical given the environment they will face over the next few years.
In particular, universities need to fulfil their enormous potential in developing the entrepreneurs of the future especially as there were only 334 graduate enterprises created from a population of 132,000 students based in Welsh higher education in 2018-19 (or 0.3 per cent of the student population). Increasing that to having only one in every hundred students starting a business would create an additional 1000 new businesses every year.
With the Welsh Government stating that it intends to make Wales “the best place in the UK for the number of graduate businesses” and little job prospects for many young people graduating this summer, there could be a real opportunity to create a graduate enterprise programme that could provide the initial support needed to set up a business.
Entrepreneurship also need to become more diverse. Currently, the average entrepreneur tends to be white, male and aged between 25 and 34 years of age and with the start-up rate at only 60 per cent of the UK average, Wales needs to encourage entrepreneurs from all sectors of society to make the most of the entrepreneurial potential that exists in its population.
Indeed, the mainstreaming of enterprise support by the Welsh Government has meant that there has been less of a focus on encouraging entrepreneurship amongst under-represented groups such as young people, women, over 50s, ethnic minorities and the unemployed. Concentrating on these groups by providing specific advice and support could boost overall levels of entrepreneurship.
For example, if the entrepreneurial activity rate for women in Wales was the same as for men, there would be an extra 5000 female-owned start-ups annually and whilst the Welsh Government has launched its “Supporting Entrepreneurial Women in Wales”, it has yet to implement many of the recommendations from the report.
As we look to emerge from the economic downturn caused by this pandemic, entrepreneurs will not only be creating jobs when large firms are losing them but, more importantly, they will set the agenda for a “new normal” where the focus of their businesses will be on tackling some of the critical issues of our time.
As the UK and Welsh Governments are developing their post Covid 19 strategy for the economy, there will be many different and competing priorities from the business sector.
However, if Wales is to relaunch itself as a successful economy, then supporting the further development of those entrepreneurs in all parts of the nation and from all parts of society that can make a real difference must be a priority for our politicians and policymakers.