Three Stage Transitional Phase in Youth Entrepreneurship
Nurturing and Building Youth Entrepreneurship has got to be a long term developmental program with strategic focus and policy framework at the National Government level identifying specific areas and programs to nurture and build awareness of amongst the Youth, train and enhance their skills required for starting business enterprise. This calls for including Youth Entrepreneurship building as a regular curriculum at high school and University levels throughout the country. Secondly there has to be a common YE program involving all NGOs, Societies and Communities to create an environment and culture that is conducive to Youth Entrepreneurship. The effort of building YE does not stop with this.
There has got to be sustained campaign in media and other forms of communication to show to the Youth some of the successful role models that they can emulate. Besides Government has got to set up the required framework and policies to provide assistance required for Young Entrepreneurs to start businesses. Besides training Youth and equipping them with Business skills, there is a need to provide guidance, mentoring as well as provide assistance in start up financing and help them market themselves by providing them the opportunities at various trade forums. These are but a few of the action plans that are outlined here to help kick start Youth Entrepreneurship development strategy and programs.
In the long run the effort in this direction has to be sustained with the same enthusiasm and many more action plans involving various other agencies and fields have got to be built into the programs.
To help build Entrepreneurship awareness programs as a part of Education, it helps to understand how
the Youth Entrepreneurship develops and progresses in the early years. Chigunta has proposed a three stage transitional phase in Youth Entrepreneurship. Of course the stages can vary depending upon local environment and cultural factors in different countries.
1. Pre-Entrepreneurs: The onset of this stage starts at 15 years up to 19 years. This is the stage when the youth is leaving home and starts identifying himself as an individual. His thoughts and ideas about his future and career start forming at this stage. Entrepreneurial attitudes are formed naturally or as a result of awareness programs and honed from this stage onwards.
2. Budding entrepreneurs: This stage lasts from 20-25 years. During this period the youth would have tried their hand at some kind of work or tried to start and run a small business. Whether they manage to succeed or burn their fingers, they will have acquired the practical knowhow and pitfalls of Entrepreneurship and the outside world.
3. Emergent entrepreneurs: Youth between the ages of 26 to 29 years fall into this category. By this time they would have had the necessary experience, made mistakes and realised what it takes to manage a business. They are more likely to be grounded, realistic and ready to prepare and start their enterprise on more mature and sure footage with good lot of preparation and wisdom.
The above classification can help us understand the growing up trends amongst the youth and help us design policies and programs more effectively. Providing the right input at the right time helps the Youth assimilate the necessary information in a better way and use it effectively.
Access to Finance – Barrier to Youth Entrepreneurship Development
When countries are focused on creating and nurturing an environment conducive to Youth Entrepreneurship, it becomes imperative to study the current situation, identify the pitfalls and shortcomings and design new strategies to overcome and remove the obstacles and make the path easier and clear for the youth to pursue. The other area of importance happens to be to educate and empower the youth with the required knowledge, skills and training to enable them to become successful entrepreneurs.
When an interest in pursuing a new enterprise or becoming self-employed has been generated in a young individual, he or she is likely to attend various courses and equip themselves with the required skill sets and knowledge to start the business. Identifying a good and viable business opportunity and proposition too can happen with a bit of market research and mentoring by the experienced entrepreneurs. When it comes to start the action towards setting up the business enterprise, the next set of barriers or obstacles will need to be surmounted. These barriers are mainly to do with financing options and documentation
requirements. As the youth are inexperienced, they are unable to cope up with the requirements and find it difficult to get going smoothly.
Personal Savings; Borrowings from Family and Friends
In most cases the youth do not have any avenues for saving money and accumulating the margin money needed for business. They are often required to raise the initial capital through the support of family and friends. In such cases the amount of funds that can be put together would be meagre and not sufficient to get going. Very often the youth would have to repay the education loan taken for funding their studies and hence will already be in debt servicing mode leaving no possibilities for saving any money.
Such youth are not considered to be safe and are perceived to be potential risk by the bankers.
Even if the youth has a very good business opportunity, the required technical knowledge and other capabilities to make it a success, financing the business becomes a major hurdle.
Borrowing From FI & Banks
The next option for the youth to finance their business venture is to approach banks and financial institutions to raise the required capital in the form of loan.
Borrowing from Commercial Financial institution calls for providing personal securities and
guarantees. Normally youth will not be in a position to provide such securities and will not have the personal credibility to be eligible for securing loans easily.
In most cases youth lack the knowledge of debt financing, working capital management and the overall impact of financial management. It is quite possible that their financial estimates could be way off the mark. They can get carried away and plan a higher estimate or under estimate the capital requirement due to in experience.
Banks and financial institutions as well as the other funding agencies are found to be very strict and conservative in processing the applications, ascertaining eligibility of the borrower and tend to be very stringent in their approach to funding the Youth in their first venture.
Time taken to obtain financial support and to complete the required documentation can cause a lot of delay. If the time taken to process runs into a couple of months, the business plans of the Young Entrepreneur will definitely get affected.
Lack of knowledge of legal procedures to start an enterprise and the required licenses, permits etc cause in-ordinate delays in documentation when it comes to loan processing by the banks.
Overall, the youth find it very difficult to access finances for their start up ventures. Sometimes such difficulties can kill the entrepreneurial spirit or one could end up losing the business opportunity due to inordinate delays in arranging funding to kick start the business. This is the area where the Governments can get involved and help make it easier by providing solutions through special seed funding agencies, micro financing organisations and similar such networks that can back up the first time ventures of Young Entrepreneurs.
YE- Youth Entrepreneur