Lord Young calls for universities to embrace entrepreneurship

About 18 months ago I was in the middle of gathering evidence for my second report on small firms, “Growing your Business”, when I met the chief executive of the Association of Business Schools. At first I could not see its relevance to my report until I idly asked him how many members the association had and he replied 138. I then realised that we had both a problem and an opportunity.

To appreciate why you have to look at the effect that the internet has had on business over the last 15 or 20 years. We are all aware of the effect it has had on social relationships, of Twitter and Facebook and all the other social media sites which have so transformed the way people interact. Over the same period the internet had an equal if not greater effect on business. The barriers to entry to form a new company are now so low that you can literally start a new business on a few thousand pounds and a smartphone, as many hundreds do, week in and week out, using a Start Up Loan – a government initiative providing funding, mentoring and support to entrepreneurs.

There are more than 5m companies in the UK today and of them more than 19 out of 20 employ fewer than 10 people. While technology was making it so much easier for many to start a new company it was also enabling large companies to do more with fewer people. Today large companies number under 1 per cent of ventures and employ about a third of the workforce. Although the UK rate of unemployment compares well with that of the EU, it is still difficult for young people to find their first job. Surveys show that more and more are seeking to work for themselves, not out of desperation but of desire. Indeed the RSA Action and Research Centre – recently reported a survey that showed that 82 per cent of self-employed people were happy to work for themselves and did not wish to return to working for someone else.

Yet when I looked at the business schools I found that they were in the main taking school leavers (about 70 per cent of their student population came straight from school) to work for large employers, which in itself was a very difficult employment market. I realised that here was an opportunity to help create many more entrepreneurs. Happily, so did the association and its members. We have now created the Small Business Charter – I hope, in time, a Royal Charter – and the first 20 members have already been announced, with many more to come over the next year. The Charter members are business schools that have undertaken to place their students with local SMEs for work experience, to encourage the management of the local SMEs to use the business school and to encourage entrepreneurs among their students by setting up incubator units. A student with work experience in a small firm is likely to be attractive to other small firms and much more employable after graduation...[click here to read more]