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The creators of an inflatable incubator for premature babies, a biodegradable tent and a medical device to simplify kidney dialysis are some of this year’s finalists in the Launchpad Competition, organised by the Royal Academy of Engineering to honour innovations and the inventors behind them. The contest seeks to identify clever ideas that not only have strong business potential, but also could have a positive impact on society, and there is a twist: it is only open to 16-25-year-olds.
The UK is the most entrepreneurial country in Europe, says the Global Entrepreneurship Index, which ranks the UK fourth in the world after the US, Canada and Australia. UK entrepreneurs’ greatest strength, the index notes, is their ability “to provide unique products or services”.
Research by Enterprise Nation, an organisation providing support and advice for start-ups, showed a 70 per cent increase in the number of company founders aged 35 or under between 2006 and 2013.
The same research showed more than half of young people aged 16-25 want to start their own business. Many cannot wait to finish their studies. An estimated 80,000 university students in the UK run their own business or joint venture, according to Santander.
And why should they not? There has never been a better time, with a revolution in digital communications creating easier methods to raise finance and to market and sell goods and services. Lower corporation taxes and tax breaks are allowing wealth creators to plough more of their returns back into their businesses. Young entrepreneurs are at the perfect point in life to start a business: they are likely to have fewer financial burdens such as mortgages and family expenses and they often have a higher propensity to take risks, hence are more likely to innovate.
It is vital that established businesses support them and encourage more students to become entrepreneurs. In doing so, we will help create opportunity, stimulate social mobility and instil confidence.
It is also good for our economic wellbeing as we emerge from the worst financial crisis since the second world war. Britain’s fastest growing small companies created two in every three jobs and generated almost 40 per cent of the UK’s economic growth in 2013, according to the Centre for Economic and Business Research. Some of these companies will grow to become “unicorns”, the start-ups that defy the odds to achieve billion dollar-valuations, such as Uber, Airbnb and Snapchat.
The government offers some help. It is cutting taxes and red tape and its Start-Up Loans programme, set up to provide growth finance for young entrepreneurs, has been extended with a new target to lend to 75,000 small and medium-sized businesses.
But young entrepreneurs and innovators need more than cash and tax breaks. They need mentoring, advice and role models. They need nurturing from a very young age.
Richard Branson says he believes entrepreneurs struggle with formal education and suggests that traditional schooling can be anathema to being an entrepreneur. Setting up a business entails trying new things out and making mistakes, yet “making mistakes flies against the expectations of traditional schooling”.
I am not suggesting we do away with traditional schools, even if some people would say entrepreneurship is not something that can be taught in them. Leadership, persistence and innovation cannot be instilled through exams.
However, I do believe that there is an opportunity for businesses to work with schools to create programmes that complement the curriculum. Successful entrepreneurial ventures can and should provide know-how by directly engaging with children and teenagers on a practical level, rather than through textbooks.
Young Enterprise, a leading enterprise and financial education charity, is already doing this. Its Fiver Challenge programme encourages children aged 5 to 11 to set up a mini-business to provide products or services to their local communities.
The scheme provides £5 in start-up capital for children who want to learn skills such as financial literacy, teamwork, problem solving and, of course, enterprise.
The Aldridge Foundation helps to sponsor entrepreneur academies and colleges in areas of Britain where start-up opportunities are limited. It encourages an entrepreneurial mindset among students, teaches them to engage with their communities and promotes active citizenship.
These charitable endeavours deserve our support. And we should go further, by offering children the opportunity to meet us so they will regard business leaders and entrepreneurs as role models, and believe setting up a business to be a goal within their reach.
The potential rewards are immense: stronger, more sustainable job and wealth creation; social justice and mobility; and more rounded young people, better prepared for the challenges of life.
Alex Chesterman is founder and chief executive of Zoopla Property Group