There was an interesting piece in the FT last week by Jonathan Moules about making the UK’s student loans system available to entrepreneurs. The idea is being backed by Richard Branson and it proposes that the same low interest rates and long payback terms that UK undergraduates enjoy under the student loan system could also be available to entrepreneurs starting their own business.
I think it’s a fantastic idea and I really hope there is some reference to it in the budget this week. I also think it could be successfully used in any country that has a student loan system in place.
In both the US and UK, there is a big focus on increasing investment in small businesses and, while this a really important area that needs addressing, what about all the good ideas and people that never even make it that far?
This got me thinking more generally about the role of education in entrepreneurship. To my mind, the best way an entrepreneur can learn is to start their own business. But to do this you need to have some initial funding in place; and although it doesn’t need to be allot of money, it can still be a real challenge given that you are likely to be both young and inexperienced. The lucky ones can borrow some money from their family but for most people this is not an option.
Providing entrepreneurs with easy access to loans would be funding an invaluable education in one of the most exciting courses you could imagine! I believe this regardless of whether the venture succeeds or fails.
I actually started doing a Business Studies course at London University back in 1989. I found the course so uninspiring and academic that I left after a year. Instead I decided to do English Literature, a subject that I liked rather than one that I thought would be useful for my career.
I know things have improved since then, and have always been better in the US, but I’m still not sure you can really package up entrepreneurship into an academic course. There are many entrepreneurs out there who have been through university and college. However, I think the majority don’t do very well at college, often dropping out before the course is finished. Indeed my brother and Richard Branson were both expelled from the same school! In the US Bill Gates, Steve Jobs, Larry Ellison and Mark Zuckerberg alldropped out of college.
The correlation (or lack thereof) between academic success and entrepreneurship is a fascinating one. I believe there is a much more common correlation between entrepreneurial success and either setting up a business at a young age or being inspired and educated by an important early relationship. For me that relationship was with my father who sold us all on the wonders of being an entrepreneur from a very early age!
Any initiative that can ‘frame up’ the early years of being an entrepreneur into a form of subsidized education has to be good for the economy. And this could stretch further than student loans. Any investment a government makes to support higher education could also be applied to the early years of an entrepreneur’s journey. For example, the government could supplement a salary for 3-4 years making it easier for young and aspiring entrepreneurs to learn about running their own business and more attractive for companies to take people on. It could be like a new form of apprenticeship for today’s world. Internships have their place but they are generally for a much shorter amount of time and, because they are usually free, it undermines the credibility of the contract and usually leads to fairly low-level work. I’m talking about something that lasts for several years with set qualifying criteria, a reasonable salary and a clear description of what the person is going to be doing and some form of qualification level at the end of it.
I assume our governments subsidize education because they feel that the more educated we are the more likely we will be to make a positive contribution to the world. I also assume that an important part of this is the contribution to the economy in terms of job creation and tax revenues. I would bet that providing an ambitious person with stimulating and valuable experience, or giving them the means to set up their own business, would lead to an even greater contribution.
We are living in extraordinary times characterized by one of the worst recessions in history and a loss of faith in many of our largest institutions. Many countries are basically bankrupt; bankers are having to justify their value like never before; dictatorships are being overthrown; big companies can no longer outmuscle their smaller rivals and paper over the cracks with expensive advertising; manufacturing is virtually all being outsourced to Asia; even some of the oldest and most respected professions in the world like doctors and lawyers are in decline.
Technology has been a driving force behind these changes, as it will for the opportunities that have come out of it. Technology is bringing down the barriers to entry, leveling the playing field and giving us all a more powerful voice. But technology needs the individuals to drive it, the revolutionaries who can look at the world differently and embrace opportunities rather than fear change.
To my mind there are no greater agents of change than entrepreneurs. Let’s do everything in we can to nurture, support and empower them. Entrepreneurs are the business revolutionaries.