Entrepreneurship is on the minds of the world's youngest workers. But that doesn't mean their startup dreams are becoming reality.
According to a July 2015 Global Entrepreneurship Monitor (GEM) report on youth entrepreneurship, younger individuals across five global regions are 1.6 times more likely to want to start their own business than their older counterparts. Those in the "youth" category, defined by GEM as adults ages 18 to 34, are turning to entrepreneurship as an answer to a slow job market and economy.
"A shortage of employment opportunities, especially amongst the youth, is a major problem in the world," Mike Herrington, executive director of GEM, said in a statement. "This has been exacerbated by the financial crisis and global economic downturn. Fostering effective entrepreneurial activity among the youth is seen as a critical development strategy in order to integrate them into the labor market and harness their potential to contribute to sustainable economic development."
But as it turns out, a strong entrepreneurial drive isn't enough to guarantee success: The GEM report found that although people over age 34 are starting fewer businesses than young entrepreneurs, the businesses they do own are 1.7 times more likely to be "mature," meaning they've survived beyond their first three and a half years. Youth-owned businesses are also typically one-person operations (73 percent of businesses run by entrepreneurs below age 24), which means these companies aren't providing many jobs for others. https://www.businessnewsdaily.com
When it comes to actually launching a business, the youth population tends to be more talk and less action. This is especially true in the "Europe culture countries" region, which includes the United States and Canada — 19 percent of youth expressed entrepreneurial intentions, but only 8 percent are actually engaged in entrepreneurial activity. Both percentages are much higher in the regions of South and East Asia, but fall into a similar ratio. In those regions, 52 percent want to start a business, but just 28 percent have actually done so.
So what's holding young entrepreneurs back from realizing their dreams? It's not a lack of education. Past GEM reports have found a strong link between general education and training, and entrepreneurial behavior, and youth in all regions of the world are more likely than older individuals to be educated. But Herrington said that much more needs to be done to create an environment that encourages youth entrepreneurship, especially with access to finance and IT infrastructure.
"Appropriate entrepreneurship support policies and programs will help actualize the intentions of the youth, who are currently bearing the brunt of a sluggish global economy," Herrington said.
Thomas Schøtt, an entrepreneurship professor at the University of Southern Denmark and lead author of the report, agreed: "We need to find ways to capitalize on the motivation of young people who are eager to start businesses but may lack the skills and networks to do so successfully," he said.