New business setup is hard

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By Knowledge Hub

How’s this for an entrepreneurship-education outcome? According to research from New York University, the proportion of high school students saying they’d like to start a business declined throughout a summer program.

But that’s not a failure — not at all. I’ll explain.

Before the Citi Foundation funded the BizCamp program, 91% of the participants indicated they would like to own a business. But then they learned how long it takes to run one — many of them realized they were too busy. And then there’s the risk: “I’d rather work for a company versus become an entrepreneur and try to start from the bottom because it takes a lot of hard work, and it’s also work that might not pay off, and I’m not that big of a risk taker,” one student told the researchers.

After completing the program, the % of students who said they’d like to start a business was down to 85%. Any decline in entrepreneurial ambitions might be seen as cause for alarm, considering the acute need for new business starts. For the first time in 30 years, business closings are outpacing business openings in the U.S.

But reality checks are a good thing. Investors, educational institutions, and taxpayers want to see more than just many new businesses. They want to see healthy new businesses. Changing what young people know about and expect from starting a company before they start can avert early miscalculations and more efficiently allocate limited resources.

The research also shows that the two-week, 9-to-5 camp changed students’ thinking about starting businesses in other ways. It made them less likely to see their youth and lack of money as severe obstacles to entrepreneurship, and it clearly fired some of them up. “By the end of the program, significantly more students indicated that they were likely to start a business in the next year,” the researchers found. “Approximately two-fifths of students (38%) reported it was likely that they would start a business in the next year, compared to one-quarter (25%) of students at the beginning of BizCamp.”

Lowering perceived barriers to business formation and spurring action is a big deal. Real market, economic, and social benefits exist to put slightly fewer but better-prepared and more motivated entrepreneurs into the business pipeline.

It’s also important to remember that business creation isn’t the only beneficial outcome of entrepreneurship education. Entrepreneurship is a critical twenty-first-century workforce skill and is linked to higher academic attainment.

Research, including this NYU report, reinforces that learning about entrepreneurship ignites an entrepreneurial mindset in young people. They begin to think and act like entrepreneurs in all aspects of their lives. They communicate better. They persist through failure. They become flexible and adaptable when facing obstacles. They take intelligent risks. They turn into problem solvers and opportunity finders.

That’s important to the job-skills conversation, for example, because skills such as communication, flexibility, and persistence are in high demand by employers.

Bill J. Bonnstetter, chairman of Target Training International, researched more than 17,000 working adults and “serial” entrepreneurs and drew similar conclusions. In writing about his study, Bonnstetter noted, “In contrast to fleeting notions (of) entrepreneurial success…this research indicates entrepreneurially successful people are successful for a reason — that many highly display certain personal skills. And…it should be pointed out that these…attributes are not inherent. They can be learned and developed, especially early in life, and further honed throughout an entrepreneur’s career.”

Entrepreneurial thinkers, in other words, can be great employees even if they don’t start businesses. They can be so-called intrapreneurs (those who innovate and create change inside organizations) or social entrepreneurs who improve social and government institutions.

Maybe the most important takeaway from the current research on entrepreneurship is the need to invest in and scale entrepreneurial education. If it’s possible to change how young people think about starting businesses and spark the entrepreneurship mindset through a brief summer program, imagine what a real school-based commitment to entrepreneurship education would do.

Europe has figured it out. One of the European Union’s eight critical competencies for lifelong learning is a “sense of initiative and entrepreneurship.” Similar efforts are being made in other parts of the world. However, in the United States, teaching entrepreneurship has been left mainly to colleges and nonprofits like mine, the Network for Teaching Entrepreneurship (NFTE).

While we think we’ve done a fantastic job teaching entrepreneurship to more than 600,000 young people around the world since 1987, it’s time to make it part of our national education and economic strategy.

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