By: Scott Gerber
March 5, 2012
How entrepreneurship can fix young America
Our government is being strangled by partisan politics. Youth employment is at a 60-year low. Student loan debt is approaching $1 trillion (and default rates are rising quickly).
Yet young Americans are far more optimistic about our country's future than the pundits would have you believe - and they are demonstrating that optimism through entrepreneurship. According to a 2011 survey, 23% of young people started a business as a result of being unemployed. Fifteen percent started a business in college. And let's not forget our veterans, who are twice as likely as other Americans to own businesses.
So why are so few pundits and politicians building on that entrepreneurial energy as a solution to joblessness and economic malaise? The fact is, it's high time we funneled our collective energy toward rebuilding an entrepreneurial America.
This is not an abstract endeavor. My own organization, the Young Entrepreneur Council, and partners like Junior Achievement, Babson College, Codecademy, Venture for America, and College Hunks Hauling Junk, have identified a handful of tried-and-true approaches that are already successfully fostering business creation by young people all over America. I've summed up in five broad strategies that we believe need to be adopted to accelerate this vital movement.
1. Integrate Academia and the Real World
In a 2011 survey, 88% of young people said that entrepreneurship education is vitally important given the new economy--and yet 74% of college students had no access to entrepreneurship resources on campus. And when resources were available, most students felt they were woefully inadequate.
This is not acceptable--in the 21st century, entrepreneurial thinking isn't just for entrepreneurs. Adaptability, creativity and financial literacy are core skills for American employees and so-called intrapreneurs -innovators within larger organizations - as well. They're also critical assets to our communities: Junior Achievement and the Aspen Institute found that youth-entrepreneurship programs positively impacted dropout rates and community engagement, not to mention the development of risk-taking and opportunity recognition. But most employers today think high school and college graduates are seriously deficient in skills like leadership and innovation, and we face a steep shortfall of graduates majoring in science, technology, engineering or mathematics.
If we actually want to change the way Americans work, then parents, K-12 schools, community colleges, four-year colleges and entrepreneurship-focused nonprofits must meet these challenges head-on. Junior Achievement, Babson, Cogswell College, the National Association for Community College Entrepreneurship (NACCE) and the Network for Teaching Entrepreneurship (NFTE), among others, are leading the way.
2. Eliminate Government Barriers
Even our deadlocked Congress has found bi-partisan compromises in entrepreneurship-related legislation, including reforms to the patent process and student loan relief. But gridlock is preventing truly decisive action. From increasing states' self-employment assistance programs to removing regulations prohibiting startups from openly crowdsourcing capital, we need the U.S. government to do better.
As Americans, we must demand a boldly pro-growth agenda. To start with, let's pass the Youth Entrepreneurship Act, which would defer or forgive student loan debt for young entrepreneurs using the precedent set by the Income-Based Repayment program. And let's pass the VET Act of 2011, so our returning vets can use GI benefits to start businesses.
An overwhelming 88% of young people feel the government does not support them. It is our duty to hold our representatives accountable. We can begin by asking them to stop handicapping the youth-owned startups of tomorrow.
3. Invest in and Mentor Young Entrepreneurs
Initiatives Startup America Partnership and Dell's Entrepreneur-in-Residence (disclosure: I've worked with both organizations) program are models for the private sector. Business leaders can team up with accelerators, venture funds, campus groups, regional leadership and nonprofits to mentor, finance, and train the next generation of entrepreneurs.
Or they can help pave the way for the next public software engineering school, as Union Square Ventures VC Fred Wilson did in New York. Franchisors can extend special financing to youth and veterans--after all, direct economic output in the franchise sector is projected to grow 5 percent in 2012, and employment, 2.1 percent. And we need to openly encourage our young people to work in startups, which generate all net new jobs--so those companies grow, and young people thrive
Finally, we all need to start creating common-sense avenues for financial support. Microloan financiers like Kiva are easing global unemployment throughout the developing world--why not here? And frankly, improving access to capital doesn't necessarily start with banks--having non-financial support doubles the likelihood that a young entrepreneur will be approved for a commercial loan.
4. Teach Technology Inside and Outside the Classroom
The Web has revolutionized the way we do business, creating a far more level playing field for young entrepreneurs--provided they have the skill set to take advantage of it.
One study found that small-to-medium businesses with strong Web presences grew twice as fast as those with only a minimal presence (or none at all) and created twice the number of jobs. We need to prepare all young people for this reality through sustainable technology programs that work in tandem with academics. In the classroom, this means teaching hands-on software engineering, not just computing basics--the Bureau of Labor Statistics is projecting an employment increase for software engineers of 32 percent by 2018. Outside the classroom, companies like Codecademy can fill gaps in K-12 and college education by creating peer-to-peer platforms where aspiring coders learn by doing.
5. Foster Entrepreneurship at the Regional Level
Not all solutions fit all communities. For example, cities facing economic decline need to create resource-rich networks so young entrepreneurs can cut through red tape at the local level instead of departing en masse. The Idea Village in New Orleans has sustained more than 1,000 jobs and $83 million in revenue by retaining and supporting the city's entrepreneurs.
Underserved regions must develop ecosystems in which idea exchange, growth, and financial support are readily available. From Silicon Prairie to New Orleans, entrepreneurs are bridging gaps between local government, investors and backyard entrepreneurs. These hyper-local networks provide the momentum Americans need to get new businesses off the ground immediately.
It's Time to Fix Young America
I am only touching on some of the solutions working right now. There are leaders in every sector--government, education, nonprofit and private--who can add to this list as we approach the 2012 elections. If we really want to shift the national conversation for good, then we need to lay all solutions on the table for our decision makers to see.
Importantly, this is not about making life easier for Millennials. It's about ensuring that, when they become the 30-, 40- and 50-something leaders of tomorrow, they will have the capacity and ability to lead America forward.