Don’t forget about young people – the future entrepreneurs

Joe Sarling     25th April 2011

A problem that is common to many countries in this post-recession austerity times is youth unemployment. Governments are targeting unemployment as a whole as the state is rolled back and the private sector is expected to pick up the slack. However, different demographics require significantly different approaches and young people are no different.

Within the UK, youth unemployment has hit a new high of close to one million people (or about 20%) while the US has fared slightly worse at just under one-in-four young people unemployed.

What is concerning is the potential for a lost generation of young people who are struggling to get into the labour market. While it is true that young people are not large contributors to GDP the effects of unemployment are often felt in the long run and are hidden by current statistics. Regardless of the burden on the welfare state that unemployment has, the future workforce will come from this demographic and the longer they are out of work not learning skills and gaining experience will be a detriment.

From a structural point of view, young people – especially those without degrees or substantial experience – are often the most vulnerable when an economy falters and companies have to downsize. Moreover, with a general rise in retirement ages older people will leave the workforce much later, potentially putting a strain on young people trying to enter the market.

Further cuts to the public sector will mean paid internships/work experience opportunities will be decreased. Unless we can encourage the private sector to boost internships/apprenticeships, young people will find it harder than ever to gain valuable experience.

A combination of policies is needed to combat this problem but one key measure should be to target and encourage young people to consider starting their own business.

In the UK, the current coalition government wants to increase the role of the private sector, decrease the size of the state and give local communities more power and influence. Part of this process is to encourage people to start a business of their own and certain support vehicles have been created to facilitate this, for example Start Up Britain. This service tries to link key big business and mentors with aspiring entrepreneurs in order to boost the growth of SMEs.

Whilst the rhetoric is absolutely correct, the execution is somewhat lacking. Young people need specific help and guidance to even consider such a ‘risky’ option let alone be able to draw up business plans, forecast cash flows and understand how a business is run.

There are some exciting developments around the world undertaken by Youth Business International (YBI) who are supporting young people in a range of countries to start up their own business. In 2010, YBI helped 7000 young people from around the world to start and grow their own business. Notable statistics included 761 young entrepreneurs aided in Canada, 661 in China, 15 in Kenya and 39 in Syria; all of which were undertaken during very challenging economic times.

It is no doubt that starting a business is perceived to be too risky and as a result a large number of young people do not even consider it. Young people, and the advisors around them, need to have the correct support and mentoring in order to give them the best possible chance to succeed. There are so many key benefits that starting a business of any size can have. It can create your own experience, help build networks and stimulate innovation let alone have the opportunity to create an income.

The time has never been better for governments to support young entrepreneurs. With an emphasis on the private sector generating economic growth and large youth unemployment figures, counties can harness the innovative thinking that young people have.

If we forget about young people in business then we run the risk of having a lost generation; this will certainly have profound effects on the economy over the coming decade.

Joe Sarling is currently working with charities and local authorities within the UK to develop schemes to get young people to consider starting a business – feel free to get in touch via his blog, http://commenttoday.wordpress.com