Last week we released a new report with Youth Business International (YBI) revealing the enormous potential for good in young entrepreneurs. Compared to older generations, young people see entrepreneurship as a way of changing the world.
Tomorrow’s Entrepreneurs looks at the differences between entrepreneurial behaviors of those over and under 35. Based on extensive polling of UK business owners, the report uncovers how they operate their businesses and what sets them apart.
One key finding is a generational gulf in attitudes on the purpose of businesses, with entrepreneurs under 35 more than twice as likely to say their business’s primary aim is to solve a social or environmental problem (39% vs 18%) and also more likely to say their business focuses on promoting diversity and social good, even if that comes at the expense of profit (41% vs 25%).
We found that trying to solve environmental or social problems was not incompatible with pursuing growth though. In fact, the more a business turns over the more likely they are to agree that their business’s primary aim was to tackle a social or environmental problem, with close to half (47%) of entrepreneurs turning over £1m+ each year agreeing.
As Anita Tiessen, CEO of Youth Business International says: “The findings of this research show what we know to be true through our daily conversations with our global network – the next generation of entrepreneurs want to change the face of business for the better.”
The report also highlights the ways in which young entrepreneurs are doing business differently. For example, they are more likely to do most of their business online, have mentors and attend business networking events than older business owners. Business owners under the age of 35 actively seek out external sources of information for the best way to run their business in a way their older counterparts don’t, listening to podcasts,% utilizing social media and turning to accelerators or incubators.
We know that over half people aged 14 to 25 in the UK have started or want to start a business. However, while talent is evenly distributed, opportunities aren’t, with our report finding that young entrepreneurs are three times as likely to be privately educated. Of those surveyed for the report, business owners under 35 were more likely to say they had help through personal connections to get their business running than older entrepreneurs (45% vs 38%) and were more likely to have raised finance from family and friends, making it increasingly challenging for those from less affluent backgrounds to be able to fulfill their entrepreneurial ambitions.
We make three recommendations to help close the gap.
First, we call on the Government to bring back the Enterprise Allowance Scheme and ensure the amount is returned to a level that is more than unemployment benefit to help young entrepreneurs start their own businesses. The first iteration of the Enterprise Allowance was introduced under Margaret Thatcher and was the brainchild of the indomitable Lord Young. Despite its success it got scrapped, partially resurrected in a watered down form as the New Entrepreneurs Allowance, and then scrapped again. We think it’s time to bring back the original.
Second, to incentivize the most ambitious and innovative young entrepreneurs, we call for the broader use of Challenge Prizes and Advanced Market Commitments to give young people, who are trying to innovate solutions to big problems, more certainty that their work will become profitable and attract more investors to pro-social companies. What’s true of fighting pandemics, is true of fighting other other big challenges.
Third, we call for support systems for young entrepreneurs to open doors for them – providing them with information about how to set up and run a business, linking them up with mentors, and ensuring they have opportunities to network with people who could support their businesses, especially potential investors.
There are many great organizations already doing this, including YBI with its mission to equip disadvantaged young people around the world to build the skills, confidence and connections they need to beat the odds and become successful business owners. But we should do more, with the government partnering with (not crowding out) private organizations and charities already doing great work.
As Sophie Ukor, serial entrepreneur and founder of Violet Simon, who has been supported by Hatch Enterprise says: “Supporting entrepreneurs, especially now, during the cost of living crisis is so important for the future diversity of our business communities and society at large. I moved to the UK and gave up my network and my connections and resources to be here. I know that the work I am doing is worthwhile, but we need adequate funding and more networking opportunities to be able to make the impact we know we can.”
Many young entrepreneurs have their sights set on the world’s biggest challenges. If many of these ambitions are to be realized we need to make sure that the best ideas are funded – not just the best connected. In the words of Tiessen: “At a time when we are facing so many social, environmental and economic challenges we cannot afford to ignore the enormous potential of this next generation of business founders and it’s vital that we give them greater access to finance, information and tailored support that reflects the changing face of entrepreneurship.”