November 2010

Youth has a natural disposition for innovation and change on which we can capitalize, as long as we are clear that successfully launching a new enterprise - however small - is a process of innovation.”

Carlos Borgomeo

Abstract

Youth’s natural disposition for innovation and change make young people well suited for entrepreneurship, provided the community can give youth the right support to overcome their challenges and improve their odds of success. A city’s economic development benefits from youth entrepreneurship in terms of employment creation, product and service innovation, market competition, community revitalization, and income generation. Youth entrepreneurs face greater challenges then adult entrepreneurs, and therefore would benefit from talent development programs to support them with skills, mentoring, networking, and access to resources in order to increase their rate of success. This article looks at the youth entrepreneurship programs available in Ottawa, examines how they rate, and identifies some opportunities for improvement in the delivery of programs.

Defining Youth Entrepreneurship

Entrepreneurship holds several definitions in the literature. For the purpose of this article, we use the definition of youth entrepreneurship defined by Francis Chigunta from the University of Oxford: “the practical application of enterprising qualities, such as initiative, innovation, creativity, and risk-taking into the work environment (either in self-employment or employment in small start-up firms), using the appropriate skills necessary for success in that environment and culture.”

Canadian youth entrepreneurs are those individuals less than 30 years of age that are typically motivated to begin an entrepreneurial venture due to a variety of factors, including a desire to:

  • be their own boss

  • obtain an alternative route for advancement from what is perceived to be a dead-end job

  • have more control over their own work and life

  • provide innovative or competitive products and services

  • prove they can do it

  • obtain additional income

Entrepreneurship is not the ideal solution for all youth. Luc Lalande, Director of Carleton University’s Innovation Transfer office, recently described to the author an 80-10-10 rule of entrepreneurship, which states that states that 80% of the population is content with and currently holds a traditional job; 10% of the population will be involved at a very early stage with entrepreneurial activities; and the final 10% of the population have the potential of choosing entrepreneurship as a career option, provided they receive the right encouragement, training and support from their environment. Youth entrepreneurship support programs and talent development programs are mainly geared toward the latter two segments, a 20% segment, with the intention of providing them the tools, techniques, and opportunities to improve their odds at success.

There exists a long-standing debate on whether entrepreneurship can be taught or if it is an innate ability. Howard H. Stevenson, Sarofirm-Rock Professor of Business Administration at Harvard Business School, explains teaching entrepreneurship with the following metaphor: “even if people have innate musical talent, you can’t necessarily teach them to become Beethoven. But if they have the innate talent, then they probably would benefit from piano lessons. There are some things that in fact you can help people learn. They can learn either at the school of hard knocks or by coming to class and building understanding.” By the same token, these individuals can learn by being engaged with youth entrepreneurship programs.

Role in Economic Development

Some benefits of youth entrepreneurship include:

  • creating employment

  • providing local goods and services to the community, thereby revitalizing it

  • raising the degree of competition in the market, ultimately creating better goods and services for the consumer

  • promoting innovation and resilience through experience-based learning

  • promoting a strong social and cultural identity

  • continuously creating and growing diverse employment opportunities different than the traditional fields available in a particular city

The client survey from the Ottawa Centre for Research and Innovation (OCRI) Entrepreneurship Centre indicates that 43% of their clients in 2008 had started a business or were still in business during that year, with almost half of the participants having been in business for over 2 years. The clients reported more than $166 million in new investment into their business and an estimated $247 million in total sales. The report also shows a net result of 2,996 jobs created, with an average of 3.5 new hires per business (excluding the founder). Of the clients surveyed, 29% were aged 30 years or younger, indicating that youth entrepreneurs are actively using entrepreneurship support available to them and are actively contributing to the local economy, at the very minimum, through income generation and employment creation.

Supporting Youth Entrepreneurs

Though youth and enterprise share many of the same characteristics, such as resourcefulness, initiative, drive, imagination, and ambition, youths have an increased number of challenges when compared to adult entrepreneurs, in terms of launching and running a new venture:

  • less access to capital, whether it be personal savings, investments from family and friends, or access to loans from financial institutes

  • less experience and a narrower range of experiences

  • lack of access to work space

  • less extensive network of contacts

  • reliance on simple tools or no equipment at all

These extra challenges faced by youth entrepreneurs should form the basis and design of youth entrepreneurship and talent development programs.

When designing these programs, it is first necessary to understand the unique needs of these individuals. Chigunta identifies three transitionary periods of a youth entrepreneur:

  1. Pre-Entrepreneurs: These are the youngest and greenest of the youth entrepreneurs. They are typically 15-19 years of age and have not yet gathered much experience. They are usually at an experiential stage, testing future career options. They require awareness of entrepreneurship and business startups as viable career options, and need to learn about the various entrepreneurship possibilities, including social enterprise, service-based startups, and technology-based ventures. Awareness at this stage, and earlier, is key to building a culture of entrepreneurism as a career choice rather then a hobby. The goal would be, over time, to have kids saying, “I want to be a doctor and start a social enterprise.” Or, “I want to be an engineer and I want to bring an innovative product to market.”

  2. Budding Entrepreneurs: These are the next-stage youth entrepreneurs. They are typically aged 20-24 years of age and have gained some capital, confidence, or experience to start an enterprise. Due to their limited resources, enterprises at this stage typically follow one of three routes: i) leading to success, ii) going out of business, or iii) becoming stuck in marginal activities. The challenge of support programs at this stage is to increase the enterprise’s rate of survival through targeted business development training, access to role models and mentors and access to finance and resources.

  3. Emergent Entrepreneurs: These entrepreneurs are at the prime stage of the transition. They are typically the most experienced of the youth entrepreneurs and have access to greater capital. Having launched their business, they now require tactical skills for growth, which are different than those required for starting a new venture. These entrepreneurs require targeted business development training, business counseling, mentors, and access to working capital and operational support.

Youth Entrepreneurship Support in Ottawa

A wide range of youth entrepreneurship programs and initiatives are available in Ottawa, ranging from middle school youth to adult entrepreneurs. The bulk of the programs available, both through academic and non-academic institutes, are at the university levels (Figure 1). The programs offer a mix of business competitions, entrepreneurship challenges, product and idea development programs, and networking and mentoring opportunities.

Figure 1. A Non-Exhaustive Survey of Entrepreneurship Programs Available in Ottawa (2009)

Image:november10_riahi1_300.png

Source: Daze, S., Sharma, M., Lalande, L., & Riahi, S. (2009, October 21). Draft Chart of Available Entrepreneurship Support in Ottawa. Ottawa, Ontario, Canada.

Understanding the different stages of youth entrepreneurs and their specific needs brings the question of how does Ottawa rate in its delivery of youth entrepreneurship support?

Comparing Ottawa’s youth entrepreneurship programs as a whole to the best practices of successful youth entrepreneurship programs presented by Chigunta, Ottawa scores well on the following criteria:

  • well-trained and properly supported staff

  • flexible operation styles

  • reliance on local business specialists

  • initiative based

  • mentoring

  • equity and diversity

  • government involvement

  • integrated packages

  • proper targeting and selection of clients

  • introducing commercial orientation to universities (such as the technology transfer offices)

Note that the judgement is based on the quantity and types of services offered, rather than the outputs of each program, which would require individual analyses of each program.

Opportunities for Improvement

The bulk of the support available in Ottawa is available to youth entrepreneurs in the “budding entrepreneur” phase. Less support is available to the pre-entrepreneur and the emergent entrepreneur, especially those emergent entrepreneurs that are no longer students. New graduates have less support and opportunities provided to them than their graduating counterparts, suggesting that age and education, rather than status of graduation, should be the eligibility factor of entering into some of the youth entrepreneurship programs.

It is also important to note that many of the available programs (especially the competitions) are heavily technology based, excluding a large number of students from entrepreneurial opportunities and also decreasing the promotion of entrepreneurship as a viable career option to a larger population segment.

A focus on peer networking (ambitious youths meeting other entrepreneurial youths) as well as traditional student-to-business-leader networking is beneficial in helping youth gather contacts, build confidence, and identify team members for their present and future ventures.

Improvements can be made in providing on-going support, beyond a program’s challenge, competition, or experience timeline. According to Chigunta, most programs worldwide, not just those in Ottawa, do not offer support beyond the one-year mark. Providing this consultation during the expansion phase of an enterprise can greatly benefit a youth’s growing venture.

Other areas for improvement include a focus on building long-term experience, rather than the short-term delivery of programs. Linking existing programs that are available through universities, not-for-profits, and private industries can create a long-term experience and act as a talent pool for the community. It could be a simple method for ambitious and talented youth to be identified and rise to the top, while simultaneously extending their experience, talent development, and networking in the Ottawa community.

An immediate improvement that could be enacted immediately is search engine optimization of the wide variety of programs available. At present, a Google search of “Ottawa entrepreneurship” shows only three of the 76 programs from Figure 1 in the first three pages of the results. Improving the accessibility of online information would ensure greater engagement of entrepreneurial youth.

Conclusion

Youth entrepreneurship is on the rise: the 2001 OECD survey shows high proportions of a developed countries’ population preferring self-employment. Youth entrepreneurship benefits an economy by creating jobs, increasing competitiveness, creating innovative goods and services, creating a strong community and cultural identity, and producing income. Ottawa has several programs that help support youth entrepreneurships, and has an active community, supported by universities, government, not-for-profits, and private industry. Several recommendations have been made to fill in blanks in Ottawa’s talent development portfolio. The best way to improve success rates of youth entrepreneurs is to provide quality support, skills, and resources to youth entrepreneurs so that they are better prepared when their time comes.

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