The European Single Market for Entrepreneurs

I had the privilege to meet a number of youth groups this week from around Europe and was amazed at the problems that they face in just starting a business.

In the UK, if you want to start a business, you have a number of options. The first and easiest is to be self employed by just registering with HMRC (government revenue, http://www.hmrc.gov.uk) which takes about 10 minutes online. Then you just keep them updated using the same online portal.

The second way is by starting a business, which again takes 10 minutes but you have to pay to register the company, this is through Companies House, http://www.companieshouse.gov.uk/ and costs around £15. Again you keep up to date online using the interface provided.

In both cases you provide final year accounts using a PDF submission process.

Across the EU, the average time to start a business is 13.3 days (2012 Figures). However, when you look at countries like Spain the average time in 2003 was 114 days and has now come down to 28 days. So things are changing fast. Poland currently takes 32 days, but it’s not about the time taken but the bureaucracy involved. (Take a look at this amazing comparison website http://www.doingbusiness.org/data/exploretopics/starting-a-business ) For young Entrepreneurs this is a major issue as a mistake at this stage may lead to major costs later on.

So what is the best practice?

Singapore has one of the best business setup environments in the world and its provides “A modernized business registration system should have all procedures online, requiring that permits applications should be online and transparent, allowing for general collateral when getting credit, requiring detailed disclosure for investors, taking all tax management and payments online, creating a single window for trade across borders, and creating a specialized court division to enforce contracts.”

Given that Entrepreneurs within Europe can move where they want to start, maintain or grow their business, we should be creating a system which allows clustering to occur to build these businesses. If you see that its best to be in Romania for bio-tech then “go and be part of this”, should be the moto.

Also given that the high growth high technology business can transfer assets within minutes from one business to another, most of which are virtual, the only thing stopping them moving to the best location is the bureaucracy involved in closing that business. Living in a global economy means we can move around, its better that way for large and small businesses. I must give credit to Francesco Maurelli for this.

So maybe we need a way to allow businesses to move around Europe just like our people, as we all know business is about people.

Leadership of Enterprising Groups

A large number of the attributes of a Non-Profit Organisation (NPO) can be directly applied and are applicable to the Peer Led Student Enterprise Groups (PLEG). Organizational theory review also shows a higher degree of complexity for non-profit organisations when compared to profit oriented businesses.

As for Mizell (2005) and Lubar (2005) emphasize the quality of management as key to volunteer retention as well as volunteer support. This is nonetheless emphasizing the fact that one of the key responsibility of the non-profit organisation is to factor in volunteers’ potential constraints and be proactive about them. Through this research they found that most of the volunteers expected the manager to practice participating leadership. It was highlighted that the management team of non-profits organizations should think about their leadership style, in order to have the volunteers feel more productive and that they belong to the organization.

According to Trachtenberg (2006), the key importance of values and belief for non-profit organisation is attracting quality volunteers is one of the most important objectives of the NPO; however, it is a task that is often overlooked or performed poorly by NPO managers and administrators Farmer & Fedor (1999). Volunteerism cannot be separated from the motives, values, and beliefs of the volunteer (Wilson, 2000). The three most important strategies that can be drawn from the research include (1) recruiting volunteers based on their interests, qualifications, and how well they fit with the organization; (2) offering training to support the learning and skills development of volunteers, and; (3) acknowledging directly to volunteers the vital role they play in the success of the organization as well as the contributions that they make in generating the capital needed to meet its mission and its goals.

Despite the growing contribution of the nonprofits to global economies, nonprofits operate in an increasingly competitive environment. Along the same line, Jay (2010) highlights non-profit sustainability necessity but throw an interesting light on the changing non-profit environment and the related risk associated. Nonprofit literature over the last few decades reflects attempts to examine the competitive environment in which NPOs operate and impact their functioning. Several researchers have used the Porter’s five forces model to capture the competitive intensity in the immediate environment. Whilst the parallels to Porter are striking, the system of relationships proposed for NPOs has not been subjected to empirical testing.

They observe that this trend towards marketization may pose risks for civil society because nonprofits may lose sight of their social Mission. Also, governments and entrepreneurial business initiatives nested within the NPO have provided other important sources of finance for NPOs. Substantial volatility across all these diverse revenue streams forces NPOs to become adept at multiple stakeholder management.

A NPO must ensure a flow of resources in order to sustain itself which is typically through earned income, governmental support and private donations. Researchers contributing to this stream of literature have suggested several strategies that can be adopted by NPOs to gain financial substantiality: commercially generated revenues (Lundström et al 1997); application of business principles to fundraising ; employing relationship marketing ; identity-based donations (focusing on the salience of the donors’ identity within the relationship) ; and within and cross sector strategic alliances . In addition to revenue enhancing strategies, researchers have suggested a number of strategies to reduce costs: increased volunteerism and its productivity and soliciting in-kind donations.

Institutional & Education Enterprise Requirements for Peer-Led Team Learning

There are numerous studies (Astin (1999) and Terenzini (1996) ) who highlight the advances of peer led learning within the educational institution, creating a strong evidence base for peer led student enterprise groups.

Astin, (1999) Proposes a student involvement theory whereby the High Education institution could use to measure ‘student involvement’ using a metric which refers to the quantity and quality of the physical and psychological energy that students invest in their experience whilst at the institution. This involvement may take many forms, such as absorption in academic work, participation in extracurricular activities, and interaction with faculty and other institutional personnel. According to the theory, the greater the student’s involvement in college, the greater will be the amount of student learning and personal development.

Terenzini (1996) states that, students’ out-of-class experiences appear to be far more influential in students’ academic and intellectual development than many faculty members and academic and student affairs administrators think

Slavin (1996) notes that the motivationalist critique of traditional classroom organization holds that the competitive grading and informal reward system of the classroom creates peer norms opposing academic efforts. Since one student’s success decreases the chances that others will succeed, students are likely to express norms that high achievement is for “nerds” or teachers’ pets. Such work restriction norms are familiar in industry, where the “rate buster” is scorned by his or her fellow workers Vroom (1969). However, by having students work together toward a common goal, they may be motivated to express norms favoring academic achievement, to reinforce one another for academic efforts.

As a learning pedagogical, Peer-Led Team Learning, whether project-based learning (PBL), game-based learning (GBL), Understanding by Design (UbD), or authentic literacy. Peer-Led Team Learning (PLTL) is a specific form of small group learning recognized by Project Kaleidoscope as best practice pedagogy (Varma Nelson et al 2004). PLTL was first developed by Woodward, Gosser,and Weiner (1993) as an integrated method that promoted discourse and creative problem solving Evaluation of the successful implementations of PLTL have suggested six critical components which fits well within our student led enterprise groups, especially within the further education sector:

  • Peer-Led Team Learning in integral to the course.
  • Peer-leaders are trained in leadership skills.
  • Faculty or Subject areas are involved.
  • Materials for workshops are challenging and promote collaborative effort.
  • Space and noise level acceptable for group discussion and work.
  • Peer-Led Team Learning is integrated into the institutional structure.

The institutional enterprise strategy will determine the characteristics of the Peer-Led group and the empowerment student are provided.

A Strategic Vision for Student Entrepreneurship

Entrepreneurship is undeniably a significant asset for students and young adults. More than hard skills as experience and technical knowledge, entrepreneurship has an intrinsic high dimension of creativity, self building, confidence and self realisation (Quality Assurance Agency 2012). A European Commission report on the effects and impact of entrepreneurship programmes in higher education stated: “Entrepreneurship education has a positive impact on the entrepreneurial mindset of young people, their intentions towards entrepreneurship, their employability and finally on their role in society and the economy.”(EC 2012)

Entrepreneurship as extra-curriculum activity might increasingly become critical for the professional development and students’ careers. As noted in High Fliers Research (2011), nearly two-thirds of recruiters warn that graduates who have had no previous work experience at all are unlikely to be successful during the selection process and have little or no chance of receiving a job offer for their organisations’ graduate programmes.

Sir Tim Wilson’s review of university-business collaboration stated “Networking between universities and the business community is a critical component of an efficient innovation ecosystem. There are several established networking tools at national and regional levels that create links between universities, business and research technology organisations. These mechanisms need to be constantly evaluated, reviewed and updated as media innovations change communications capability and expectation.” (Wilson 2012)

The National Association of College and University Entrepreneurs (NACUE) has the potential to be a major contributor to the development of entrepreneurialism amongst our student body. It deserves support from business sponsors, universities and government in promoting entrepreneurship. Such support should be conditional on NACUE retaining its close connectivity student entrepreneurial societies, and its active engagement in the Enterprise Alliance.” (Wilson 2012).

The World Economic Forum (2011) suggested four global challenges; Transform the Educational System, Build the Entrepreneurial Ecosystem, Strive for Effective Outcomes and Impact and Leverage Technology as an Enabler. The growth and advancement of entrepreneurship have been considered objectives for many EU and Member State policies over numerous years, and have grown in prominence over time. The European Commission and individual Member States have started to adopt a range of actions, including driving the build up of a more prominent culture of ‘entrepreneurial mindsets’ amongst European citizens, predominantly young people. This was partnered with the view that all students should have access to entrepreneurship education.

To make sure ‘entrepreneurship education’ does not become another extra-curricular ‘add on’ there needs to be certain changes that are made a necessity, and the following ‘actions’ are taken from McCoshan (2010) which will ensure they become an essential part of the curriculum:

  • Changes in teaching methods: greater use of experiential learning and a new coach/moderator role for teachers which helps students to become more independent and to take the initiative in their education;
  • Changes in the education context, which takes students out of the classroom into the local community and real businesses, and which establishes less hierarchical relationships within schools;
  • A key role for governments: only they can bring about the required step change in the spread and quality of entrepreneurship education.

Therefore, an ‘education in entrepreneurship’ needs to go through a conceptual shift from an education in ‘how to run a business’ to how to achieve competency in all areas of the curriculum and be able to apply entrepreneurial thinking into all those areas.

The UK Quality Assurance Agency (2012) for Higher Education has also published ‘guidance’ on the incorporation of Entrepreneurship in every teaching curriculum, qualifying this action as imperative. They acknowledged the need for entrepreneurship to enhance education across the curriculum (Quality Assurance Agency 2012).

Entrepreneurship as extra-curriculum activity might increasingly become critical for the professional development and students’ careers. As noted in High Fliers Research (2011):“Nearly two-thirds of recruiters warn that graduates who have had no previous work experience at all are unlikely to be successful during the selection process and have little or no chance of receiving a job offer for their organisations’ graduate programmes”.

The Royal Bank of Scotland Inspiring Enterprise report 2012 shows that across almost all industrialised countries, unemployment rates are highest among people just out of college, despite the international evidence that shows that young people have a lot of entrepreneurial potential. More awareness of entrepreneurship and engaging with entrepreneurship in education and training will inspire many young people (RBS 2012).

This is why the development of self help, peer led groups provides an important strategy for developing both employability and enterprise skills and should be incorporated into the national and every education institution enterprise strategy.

 

Finding a Social Entrepreneur

The development of social enterprise over the last few years has lead to a wider appeal and also an increase in students looking at enterprise as a career option. These students are looking at the problems within their society and developing innovative solutions to the problems of today. This will be one of the core legacies of this recession as the young have seen how corporate greed can and does lead to a range of social and ethical issues.

We can not rely on bankers to mess up the economy so we can create greater social entrepreneurs.

So what are the core characteristics and triggers for social enterprise and entrepreneurs ?

Social enterprise is not new, so there is much evidence into its impact and development.  (Zahra et al). So reviewing some of the literature we essential have three types of social entrepreneur.

  1. Social Bricoleur : who is focused on small scale local social needs
  2. Social Constructionist : who exploits opportunities and market failures in order to introduce reforms in “broader” social system
  3. Social Engineer : who recognizes systemic failures and addresses them by introducing revolutionary change

Once we understand these three types, the development of the civic, social system and revolutionary change means we can identify a number of personal characteristics or attributes which the social entrepreneurs should hold, (Brooks pp12)

  • Innovativeness
  • Achievement Orientation
  • Independence
  • Sense of control over destiny
  • Low risk-aversion
  • Tolerance for ambiguity
  • Community awareness and social concerns

The first six are standard entrepreneurial attributes which you can find in the majority of literature and also entrepreneur tests, with the the seven being the community  aspect which introduces the social aspect of the entrepreneur.

These characteristics allow a level of entrepreneurship to exists when triggered. These trigger points are important (e.g. Banking Crisis). There are five entrepreneur trigger points which (Brooks, pp9).

  • Environment
  • Resources
  • Perturbation / Displacement
  • Personal Traits
  • Preparation

The majority of universities now have greater support for social enterprise, through partnerships with UnLtd and charitable organizations. These help create the right environment and provide the much needed resources to develop the idea. The education preparation for social entrepreneurship has been embedded into our education system for many years. Within the HE sector, we can see great examples from RAG, ENACTUS to formal Volunteering.

The social entrepreneur provides an opportunity to work with a real local issue and develop an eco system which ensures  real role models and local engagement for a wider set of students throughout their degrees. This is important in developing and maintaining our local economies.

By understanding the trigger points for social enterprise, we can help develop the skills and personal characteristics within our education system for successful social entrepreneurs.

Talking About Entrepreneurship