The perception of entrepreneurial opportunities and the capacity to exploit them are strongly associated with social norms that encourage venturing, such as the availability of risk capital, access to developing technologies, a quality diverse entrepreneurship education system and a sound professional infrastructure. This has considerable implications for the UK entrepreneurial economy.
Entrepreneurship education, at all levels, could very effectively prepare and train students to start and manage new businesses. This type of education is strong and getting stronger in business schools across the country, but it needs to proliferate outside of the business domain. Very few students undertake business subjects, and not every business school student is required to or chooses to take up an entrepreneurship course. Thus the number of people exposed to higher-level entrepreneurship education is relatively small in the UK. It is critical therefore that entrepreneurship education is expanded.
Engineering and other technology graduates have the capability to generate innovations that may be the basis for high-growth companies. They need to learn techniques for discerning whether or not such innovations have commercial potential. As such, universities need to encourage the integration of their degree requirements between entrepreneurship/management and engineering/technology.
There are often many hurdles to such collaboration, however, including issues of funding; credit allocations; faculty teaching loads; scheduling conflicts, and the lack of available facilities. While a handful of schools are facing and overcoming these issues, there is a real need to see more active collaboration on university campuses.
There also needs to be a more concentrated effort to introduce entrepreneurship and basic economic principles at the primary and secondary levels. At the primary level, these concepts could be integrated throughout the curriculum. At the secondary level, entrepreneurship skills and basic economic principles could be offered as stand-alone courses. Many people enter the workforce without a college education and have no responsibility for exposure to entrepreneurship training.
While not every school graduate has the capacity or desire for higher education, almost everybody has the potential to start a new business. The average high school graduate may not start a fast-growth, high-technology company, but he or she can start a landscaping business, a retail business or some other venture that will employ other people and contribute to economic adaptation. As such, it is critical to provide at least the basic instruction to ensure that these future entrepreneurs have the understanding of and a certain level of proficiency in the skills necessary to implement and manage a business.
To avoid problems of duplication, various national experts recommend the establishment of a ‘clearinghouse’ for government programmes. A clearinghouse, perhaps web-based, could provide an efficient means for entrepreneurs to gain knowledge of specific programmes and to access those programmes.
In addition, there is also the need to simplify compliance pressures on entrepreneurial firms. Simplifying compliance requirements would improve entrepreneurial efficiency at the most critical times in the venture’s life. Many new ventures report having a difficult time staying on top of all the reporting requirements. Furthermore, reducing the required paperwork would reduce manpower constraints on new ventures, thereby increasing their chances of surviving the early years.
There is also a reported ‘Gap’ in Seed Stage Financing. If the gap exists, it may be more pronounced in different industries, different geographic regions, or for distinct groups of entrepreneurs. The substantial amount of funding provided through informal channels, orders of magnitude greater than that provided by formal venture capital investments and hitherto unknown and unappreciated, suggests some mechanisms for filling the gap may have developed without recognition.
There may not be a gap in the availability of such capital but, rather, in the entrepreneur’s knowledge of where it resides and how to tap it. Experts may be split over whether a gap exists in seed capital because of the fact that many entrepreneurs choose not to endure the time, cost and bureaucracy involved in the search and seizure of such capital.
Increasing the visibility of entrepreneurs by highlighting their story could prove to be an attractive method of encouraging others to pursue their own entrepreneurial opportunities. It reflects widespread acceptance of entrepreneurship as a career option in the UK.
In the absence of a more comprehensive, long-term research programme on the entrepreneurial process, government policies in the UK regarding new and growth companies will continue to fluctuate in reaction to political whims and pressures from special interest groups. It is essential, therefore, that an increased understanding of the principles underlying entrepreneurship is secured in order to ensure that a sustained growth in the entrepreneurial sector is secured.
Friday, 20 March 2009
Tuesday, 3 March 2009
What Is Entrepreneurship?
There is no universally accepted definition of entrepreneurship, but a definition supplied by Eugene Luczkiw, Director of the Institute of Enterprise Education, aptly describes enterprise and its link with education:
"to facilitate development of enterprising individuals who possess a positive, flexible and adaptable disposition towards change seeing it as normal and an opportunity rather than a problem. To see change in this way an enterprising individual has a security borne of self-confidence and is at ease when dealing with insecurity, risks, difficulties and the unknown.
An enterprising individual has the capacity to initiate creative ideas, develop them, and see them through into action in a determined way. An enterprising individual is able, even anxious to take responsibility, and is an effective communicator, negotiator, influencer, planner and organiser. They are active, confident, purposeful: not passive, uncertain and dependent."
Entrepreneurship and the extent of entrepreneurial activity within the UK has only just started to command attention over recent years. With regards to employment and the workforce at large, the emphasis had been on assigning much resources to attracting inward investment –large companies with the capability of employing a vast amount of people at one time.
Repetitive failures on behalf of government to successfully secure foreign investors over the past few years (let's face it, who can compete with the tiny wages paid in the Far East and Eastern Europe) has only served to confirm doubts about the viability and the 'economic sense' in attaching as much importance to achieving inward investment.
I have long argued for a substantial re-addressing of the existing balance between: resources awarded to encouraging the growth and development of indigenous businesses; and resources awarded to attracting employers from overseas to invest in our infrastructure and, more specifically, our workforce.
The prime argument behind this is that the latter is essentially a short-term solution to the problems of the UK economy. It is also damaging as it often proves insensitive to the culture and environment of the local area, and eventually causes a severe unemployment situation – this is particularly dire when the vast majority of the working population of the area were employed by the company who had set up in the area only a few years ago.
Early indications show that the former is increasingly 'catching up' with the latter, if only in the 'discussion' sense for the time being.
The future of entrepreneurship lies with our young population. If a strong and sustainable entrepreneurial culture is to exist, it is essential that it is fostered at the earliest possible stage. If more emphasis is placed on teaching the basic principles of entrepreneurship, thereby encouraging people to develop commercial awareness and attaching a more outward-looking view, we would be in a better position to encourage a greater percentage of business start-ups and expansions.
So in the strong tradition of my company, Entrepreneur Secrets, what would I advise would-be entrepreneurs to do? This is where I come into my own –to give people ideas to just 'go out and do'. And here is a great example that I've actually been working on since 2006! It involves the biggest industry in the world – the food industry – and the fact that it has been on the threshold of a great change for two years, in Europe at least. And with it will bring great opportunities for those who will be ready for these changes.
Agriculture has been one of the flagship areas of European collaboration since the early days of the European Community. In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods. The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.
This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of 'mountains' and 'lakes' of surplus food and drink. The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world. European leaders were alarmed at the high cost of the CAP as early as 1967, but, despite this, radical reform began only in the 1990s.
The aim has been to break the link between subsidies and production, to diversify the rural economy and to respond to consumer demands for safe food, and high standards of animal welfare and environmental protection. There are some French arguments for saving the CAP which sound respectable. Jacques Delors, a former head of the European Commission, put it best when he said he would not sacrifice the French countryside on the altar of world trade. The beauty of France and the glories of its food and wine are indeed splendid, and help make the country the world's most popular tourist destination.
But the idea that the CAP is all about helping rustic smallholders to keep making rare cheeses has very little to do with reality. In fact, 80% of the EU's farm subsidies go to the 20% of the Union's farmers with the biggest farms. Because EU subsidies are linked to production, they encourage ugly, intensive, industrial farming. The people the CAP helps most are big businessmen with vast fields of sugar beet in northern France or miles of bright-yellow oil-seed rape in southern England.
The key reform proposed by the European Commission is to cut the link between farm subsidies and production. The same amount of taxpayers' money would continue to pour into the European countryside, but under the Commission's proposals it would increasingly be directed towards environmental protection and rural development, and away from intensive farming.
Those who think farming is dead and that there is no money in it need to think again. The almost mass exodus from the countryside means that farms are now exchanging hands for relatively little money but, if run properly, could soon turn into goldmines under the new subsidy regime. Farms which concentrate early on goals that ordinary people genuinely support, such as beautifying the countryside, will do particularly well. This is because more money would be spent on these activities as the Commission caps the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.
In addition, biofuels could provide a major income for Britain’s arable farmers. Even without demand for the 'green' fuel, recent falls in output – thanks to drought and low stocks – will keep prices high. Prices will rise by between 20% and 50% by 2016. Production in the US, which mainly uses domestic corn, is expected to jump by 50% in 2007 – and to double by 2016. Meanwhile in Brazil, currently the world's fastest growing ethanol producer, biofuel output is set to hit 44bn litres over the next 10 years, 145% more than in 2006.
The idea of picking up a cheap farm which prices are still low is an attractive proposition, and one that should be considered carefully before farm prices go the same way as house prices over a ten-year period.
"to facilitate development of enterprising individuals who possess a positive, flexible and adaptable disposition towards change seeing it as normal and an opportunity rather than a problem. To see change in this way an enterprising individual has a security borne of self-confidence and is at ease when dealing with insecurity, risks, difficulties and the unknown.
An enterprising individual has the capacity to initiate creative ideas, develop them, and see them through into action in a determined way. An enterprising individual is able, even anxious to take responsibility, and is an effective communicator, negotiator, influencer, planner and organiser. They are active, confident, purposeful: not passive, uncertain and dependent."
Entrepreneurship and the extent of entrepreneurial activity within the UK has only just started to command attention over recent years. With regards to employment and the workforce at large, the emphasis had been on assigning much resources to attracting inward investment –large companies with the capability of employing a vast amount of people at one time.
Repetitive failures on behalf of government to successfully secure foreign investors over the past few years (let's face it, who can compete with the tiny wages paid in the Far East and Eastern Europe) has only served to confirm doubts about the viability and the 'economic sense' in attaching as much importance to achieving inward investment.
I have long argued for a substantial re-addressing of the existing balance between: resources awarded to encouraging the growth and development of indigenous businesses; and resources awarded to attracting employers from overseas to invest in our infrastructure and, more specifically, our workforce.
The prime argument behind this is that the latter is essentially a short-term solution to the problems of the UK economy. It is also damaging as it often proves insensitive to the culture and environment of the local area, and eventually causes a severe unemployment situation – this is particularly dire when the vast majority of the working population of the area were employed by the company who had set up in the area only a few years ago.
Early indications show that the former is increasingly 'catching up' with the latter, if only in the 'discussion' sense for the time being.
The future of entrepreneurship lies with our young population. If a strong and sustainable entrepreneurial culture is to exist, it is essential that it is fostered at the earliest possible stage. If more emphasis is placed on teaching the basic principles of entrepreneurship, thereby encouraging people to develop commercial awareness and attaching a more outward-looking view, we would be in a better position to encourage a greater percentage of business start-ups and expansions.
So in the strong tradition of my company, Entrepreneur Secrets, what would I advise would-be entrepreneurs to do? This is where I come into my own –to give people ideas to just 'go out and do'. And here is a great example that I've actually been working on since 2006! It involves the biggest industry in the world – the food industry – and the fact that it has been on the threshold of a great change for two years, in Europe at least. And with it will bring great opportunities for those who will be ready for these changes.
Agriculture has been one of the flagship areas of European collaboration since the early days of the European Community. In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods. The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.
This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of 'mountains' and 'lakes' of surplus food and drink. The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world. European leaders were alarmed at the high cost of the CAP as early as 1967, but, despite this, radical reform began only in the 1990s.
The aim has been to break the link between subsidies and production, to diversify the rural economy and to respond to consumer demands for safe food, and high standards of animal welfare and environmental protection. There are some French arguments for saving the CAP which sound respectable. Jacques Delors, a former head of the European Commission, put it best when he said he would not sacrifice the French countryside on the altar of world trade. The beauty of France and the glories of its food and wine are indeed splendid, and help make the country the world's most popular tourist destination.
But the idea that the CAP is all about helping rustic smallholders to keep making rare cheeses has very little to do with reality. In fact, 80% of the EU's farm subsidies go to the 20% of the Union's farmers with the biggest farms. Because EU subsidies are linked to production, they encourage ugly, intensive, industrial farming. The people the CAP helps most are big businessmen with vast fields of sugar beet in northern France or miles of bright-yellow oil-seed rape in southern England.
The key reform proposed by the European Commission is to cut the link between farm subsidies and production. The same amount of taxpayers' money would continue to pour into the European countryside, but under the Commission's proposals it would increasingly be directed towards environmental protection and rural development, and away from intensive farming.
Those who think farming is dead and that there is no money in it need to think again. The almost mass exodus from the countryside means that farms are now exchanging hands for relatively little money but, if run properly, could soon turn into goldmines under the new subsidy regime. Farms which concentrate early on goals that ordinary people genuinely support, such as beautifying the countryside, will do particularly well. This is because more money would be spent on these activities as the Commission caps the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.
In addition, biofuels could provide a major income for Britain’s arable farmers. Even without demand for the 'green' fuel, recent falls in output – thanks to drought and low stocks – will keep prices high. Prices will rise by between 20% and 50% by 2016. Production in the US, which mainly uses domestic corn, is expected to jump by 50% in 2007 – and to double by 2016. Meanwhile in Brazil, currently the world's fastest growing ethanol producer, biofuel output is set to hit 44bn litres over the next 10 years, 145% more than in 2006.
The idea of picking up a cheap farm which prices are still low is an attractive proposition, and one that should be considered carefully before farm prices go the same way as house prices over a ten-year period.
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