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Published 26 September 2012 06:38, Updated 27 September 2012 06:40
Piecing it together ... The data does not support antiquated views that Australia is weak at entrepreneurship, or that there are too many barriers, such as poor access to venture capital, terrible intellectual property protection and unfavourable tax treatment.
For 10 years, the BRW Young Rich has provided much-needed heroes for aspiring entrepreneurs and its case studies are helping spark a resurgence of entrepreneurship.
But much more needs to be done to foster entrepreneurship and remove the barriers that dissuade young people from pursuing their own ventures and creating their own businesses.
“There has been almost culpable negligence about how Australia researches and understands entrepreneurship context and process,” says Kevin Hindle, one of the world’s foremost entrepreneurship researchers. “It’s a terrible shame that we ignore a tool [entrepreneurship] that can transform society.”
Under Hindle’s model, entrepreneurship is about much more than business and money. It turns inventions into innovations and creates jobs and financial or social wealth. It is fundamentally about solving complex problems and creating value across all walks of life.
Yet entrepreneurship is nearly always viewed as a slice of business and almost always reported only in business publications. “We need to start reading about successful entrepreneurs in places other than rich lists,” says Hindle.
Business schools may be the worst places to teach entrepreneurship. Consider a nurse who sees a healthcare problem, develops and implements a service to fix it, and creates better patient outcomes.
Surely she (or he) is as entrepreneurial as most business owners? Yet it is unlikely this nurse or other such healthcare workers will be exposed to entrepreneurship tools that help turn problems into opportunities, outside of formal business training.
The same could be said of a teacher who spots a problem in the way children are taught foreign languages, creates a successful new learning tool, helps kids and builds social wealth. This teacher, too, is highly entrepreneurial, yet unlikely to have been exposed to financial or social wealth creation concepts outside of business training. Keeping entrepreneurship within business is too limiting.
Perceptions need to change. “Australia has to move beyond always equating entrepreneurship with starting new ventures and creating wealth only for the owner and see it as a tool to help people all across society turn good ideas into real value,” Hindle says.
“When you think about entrepreneurship more broadly, you realise how slack our governments and universities have been in fostering entrepreneurship process, and the size and scale of the opportunity being wasted.”
Entrepreneurship is not always about starting a hot venture and making millions – but recognising young wealth creators, with plenty of gloss and glitz, has substantially raised the profile of entrepreneurship and encouraged more people to pursue business opportunities.
The 2011 Global Entrepreneurship Monitor (GEM) found high media attention on entrepreneurs in Australia had provided successful role models for aspiring business owners and was a factor in driving higher rates of entrepreneurship. A decade of Young Rich case studies has also built a better understanding of young business builders, which is especially important given Australia has an emerging, although still shallow, body of academic research on the topic.
Entrepreneurs, though, never look backwards. The key is assessing where Australia ranks now and where it needs to get to within a decade to be the world’s most entrepreneurial country. This goal might sound crazy to those convinced Australia is still an entrepreneurship backwater – a tiny boat compared with the US entrepreneurship vessel.
But this goal is well within reach if governments, industry, business and budding wealth creators shift their entrepreneurship perceptions.
The GEM report found this country’s entrepreneurship rate is now second only to the United States among developed countries. It estimated one in every 10 Australian adults, or 1.48 million early-stage entrepreneurs, were involved in starting and running new businesses in 2011.
Australia blitzed the US and the United Kingdom when it came to perceived business opportunities. And growth expectations of local entrepreneurs, and their perceptions of innovative activity, were second only to those in the US. This is a remarkable turnaround for a country that for decades was lumbered with the excesses of business criminals in the 1980s who tarnished the image of entrepreneurship.
One might quibble that GEM’s methodology does not adequately distinguish between entrepreneurs and small business owners, and that it measures entrepreneurial intentions and perceptions rather than sustained success. Yet other studies are replicating the core thrust of GEM’s findings.
The OECD’s 2012 Entrepreneurship at a Glance study found Australia had robust growth in business creation last year, with more ventures started after the GFC than before it. Many other advanced economies are still suffering from fewer businesses being created after the GFC.
Entrepreneurship rates in Australia are favourable to other OECD countries, given the high level of business creation and low barriers to entry in starting a venture, says the federal government’s 2011 Australian Innovation System Report. Access to finance, while still inadequate for early-stage ventures, is healthy overall.
The data does not support antiquated views that Australia is weak at entrepreneurship, or that there are too many barriers, such as poor access to venture capital, terrible intellectual property protection and unfavourable tax treatment. Even the view that our “tall poppy” syndrome cuts down entrepreneurs is not supported by GEM data, which shows entrepreneurs believe the community has a good regard for business creators – a finding disputed by some.
Atlassian co-founder and Young Rich member Mike Cannon-Brookes says: “We whinge a lot about the problems for entrepreneurs in this country but Australia is much easier to start and grow a business compared with most other countries. We have a good community of entrepreneurs these days and a good network of angel and venture capital investors. The hard part is not starting a business; it is being able to keep it growing.”
Future Capital co-founder Domenic Carosa says Australia is having a resurgence in entrepreneurship. “There are many more entrepreneurs and much more start-up activity than there was five years ago,” says Carosa, a successful entrepreneur whose investment firm is one of several new incubators that advise and invest in early-stage internet companies and back emerging entrepreneurs. “Lots of good things are happening for entrepreneurs but Australia still suffers from this tall poppy syndrome. In the US, you get a big pat on the back if your start-up does well; in Australia you often get a kick in the backside.”
It seems Australia is doing well in entrepreneurship despite a poor understanding of entrepreneurial process, or how to create the right conditions to encourage and sustain fast-growth ventures. Except for growing interest in social entrepreneurship, this country has not promoted entrepreneurship widely beyond business; it is not always taught well, or at all, in schools, TAFEs or universities and it is inadequately researched.
Federal and state governments still seem to confuse entrepreneurship with small business and the quest for better productivity growth always seems wedded to a bigger “top-down” supply of inventions, when what is needed is a “bottom-up”, or demand, response that fosters more entrepreneurs who can identify problems and opportunities, work with researchers to shape inventions, and commercialise them.
Australia has the potential to boost its current high entrepreneurship ranking to world’s best by developing a much bigger, diverse pool of budding entrepreneurs, encourage and help more of them to have a go and provide the right content for success by fixing parts of the tax system and aspects of access to capital.
BRW’s Young Rich issue is out tomorrow.
BRW asked several entrepreneurship experts and Young Rich members how Australia can become the world’s most entrepreneurial country by 2020. Here are 10 ideas: