Entrepreneurs establish companies and create jobs. They also translate identified problems and needs – often based on technical solutions – into high-value products and services. With global demographic changes, economic crises and high youth unemployment, the call for policies that foster entrepreneurship is growing louder. But how can we do this in a sustainable way? Here are five suggestions:
1. Create a way to measure entrepreneurial readiness
An index of this sort would help inform the development of entrepreneurship in a region, sector or entrepreneurial field. It can create transparency and establish clear criteria to measure levels of entrepreneurship. It could also encourage direct funding for entrepreneurs, education in entrepreneurship, or the development of an infrastructure that supports new businesses. Such a fact-driven policy approach could make it easier to measure impact and to adapt policies.
2. Consider the life cycle of an entrepreneur
Entrepreneurs are not born, they are raised and nurtured. That’s why we need new educational models that focus on risk-taking and problem-solving. To be effective, a policy must address different needs that arise throughout an entrepreneur’s life cycle. Young entrepreneurs need access to expertise while older entrepreneurs can benefit from youthful creativity and digital know-how. Start-up companies need support making it in the marketplace, while established companies need help transferring to the next generation of entrepreneurs or re-inventing their value propositions in maturing markets or declining industry sectors.
3. Find creative ways to provide finance
Accessing finance is one of the key challenges for entrepreneurs. Policies often require significant administrative effort, leading to slow approval procedures for entrepreneurs who need financial resources quickly and with limited risk. Innovative approaches, such as access to crowdfunding, have been hampered by regulation, creating more barriers than channels. Tax incentives for start-ups, profit from innovation and other best practices from around the world also reduce risk for entrepreneurs and contribute to the development of sustainable businesses.
4. Stay agile and cope with change
Until recently, social and financial security was perceived to be higher in wage-and-salary employment than in self-employment. This is changing. Entrepreneurship is starting to look less risky, especially in countries where economic meltdown has led to high levels of unemployment; young people are more aware of self-employment and start-ups as an alternative. The prospect of a long retirement and longer life is leading the older generation, too, into new business ventures. Policy-makers must be flexible if they are to accommodate different and changing needs.
5. Tap the wisdom of the private sector
Often, those who provide support to entrepreneurs have never worked in a for-profit environment. They aren’t aware of basic performance indicators, and this leads them to offer inappropriate advice and cause, finally, the failure of the entrepreneur. The right policies can make a difference, as long as they contribute to a deeper understanding of entrepreneurship and involve service providers who know how to develop sustainable businesses, and don’t feel they are just executing “another publicly funded programme”. Policies should aim for temporary public support that will create value – value for the economy and society – and create a fertile climate for entrepreneurs no matter how old they are, where they are and which industry they cater for.
This blog is part of a series of articles lending context to the World Economic Forum’s work in the field of European entrepreneurship. Click here to read Nicholas Davis’s introduction to the series.
For more articles on entrepreneurship in Europe, click here.
Author: Eva Diedrichs, Manager at AT Kearney and head of IMP³rove, the European Innovation Management Academy, on what policy-makers can do to foster entrepreneurship in a sustainable manner