While foreign direct investment is crucial to Ireland’s economy, the Action Plan for Jobs 2013, coupled with a national entrepreneurship policy, has placed the need to stimulate an entrepreneurial economy high on the Government’s agenda.
At a macro level, entrepreneurs were responsible for 85 per cent of job creation within the EU between 2002 and 2010. From a local perspective, 67 per cent of all new job creation comes from businesses in the first five years of existence.
In 2012 alone, the EY Entrepreneur Of The Year Alumni in Ireland created 12,600 new jobs – a clear indication of the need to support home-grown entrepreneurs and nurture a generation of job makers.
In response to the Government’s call for submissions to develop a national entrepreneurship policy, EY identified five areas, fundamental to a robust entrepreneurial ecosystem, which requires intervention.
Creating an entrepreneurial culture
The recent results of the Global Entrepreneurship Monitor revealed that only 45 per cent of the Irish adult population are in favour of entrepreneurship as a career choice and a mere 8 per cent have aspirations to set up their own businesses.
We could pin the blame on the economic climate for inhibiting the popularity of entrepreneurship as a career choice; however, 84 per cent of entrepreneurs believe the most effective way to improve attitudes towards entrepreneurship is to highlight their role in creating jobs and driving economic growth. Improved communication around entrepreneurs’ success stories is a key factor in driving this awareness.
Four in 10 Irish adults believe they have the ability to start a business and a further 26 per cent believe there are opportunities to start a business in the coming six months. What stands in the way for 41 per cent of these “could-be” entrepreneurs is the fear of failure. Silicon Valley is steeped in a culture where failure is seen as an opportunity to learn and improve. Reframing failure as a prerequisite to success needs to be instilled from an early age and this is where education plays a poignant role.
Education and training
While the entrepreneurial "nature vs nurture" debate is a contentious one, more than half of the entrepreneurs surveyed in the recent EY G20 Entrepreneurship Barometer believe that the majority of skills needed to effectively run a business can be taught.
Equipping our school-going population with enterprise skills is essential to developing a job-making generation. From primary through to secondary level, curricula should be centred on non-traditional approaches that value real-life experiences, develop problem- solving skills and encourage students to get their hands dirty. Jerry Kennelly's Junior Entrepreneur Programme, for example, incorporates mentoring from local entrepreneurs as well as projects to complement the existing curriculum at a primary level.
At third level, programmes should take a multi-disciplinary approach to support the entrepreneurial ideas that emerge outside of business faculties. This year, EY Entrepreneur Of The Year launched the EOY University initiative (EOYU), working with our nine universities on the island of Ireland to bring entrepreneurs into our colleges to candidly discuss what it takes to build a business and differentiate one’s self in the market.
Access to funding and mentoring
Access to funding continues to be the most significant challenge for entrepreneurial companies, particularly with the lack of credit availability from banks. Government together with industry should look beyond the banking sector and consider non-traditional funding mechanisms.
The Department for Jobs, Enterprise and Innovation currently offers a Credit Guarantee Scheme for entrepreneurs, offering funding in the range of €10,000 to €1 million. Venture capital (VC) is an area in which Ireland trails behind. To encourage VC funding, a collaborative process between government, entrepreneurs and business angel networks needs to be initiated.
Capital without mentorship is lost capital – funding needs to be combined with high-quality mentoring to ensure a measured approach to sustainable growth. The Canadian Youth Business Foundation, for example, offers fledgling entrepreneurs financial support up to $15,000 combined with access to a personal mentor for two years.
Government should consider incentivising investment in entrepreneurial businesses to make this a symbiotic process and encourage more established companies and entrepreneurs to play a part in growing the next generation of entrepreneurial companies.
Regulation and Taxation
Unsurprisingly, tax cuts and regulatory simplification top the entrepreneurial wish list. Entrepreneurs believe that governments have a substantial role to play in regulating, incentivising and directing private sector activity.
Recent strides to remove obstacles to job creation should be applauded and initiatives such as the JobsPlus scheme are certainly a step in the right direction. However, despite the limited room to manoeuvre in raising further tax, government must resist the temptation to increase employment-related taxes in the Budget as that would significantly impact recent gains on cost competitiveness and undoubtedly reduce current employment levels with financial and social consequences.
EY Entrepreneur Of The Year provides a collective voice for the entrepreneurial community to engage with government in developing proactive regulation and taxation policies that benefit the State and the entrepreneurial community. This type of collaborative engagement is critical to enabling entrepreneurial activity.
Co-ordinated Support
Coordinated support creates the foundation for entrepreneurial success and a robust entrepreneurial ecosystem needs strong links between a range of stakeholders, including government, industry, academia and investors.
The statistics from the EY Entrepreneur Of The Year Alumni community bear testament to the ability entrepreneurs have to bring Ireland back to economic prosperity. Collectively, the EY Entrepreneur Of The Year Alumni employ 140,000 individuals and, last year, generated more than €15 billion in turnover.
Since becoming part of the programme, 45 per cent of our entrepreneurs now work or collaborate together. Working together, government, industry and academia have the potential to build an environment where entrepreneurship can thrive.
Frank of Keeffe is partner in charge of the EY Entrepreneur of the Year programme in Ireland
