Saturday 18 November 2017

Richard Curran: Our entrepreneurs have right instincts but lack any formal training

Richard Curran
Richard Curran

Entrepreneurship has become a really big buzz word. As universities come under growing financial pressures to fund themselves, and political pressure to engage more with the business world, they too are getting in on the entrepreneurship act.

I am not just talking about the likes of DCU which was one of the first Irish universities to pioneer entrepreneurship studies, or the new €70m business school at Trinity College, which will include an innovation and entrepreneurship hub.

This is a worldwide phenomenon. Inevitably, some universities do it better than others. Before assessing the worth of entrepreneurship studies, you have to deal with the old chestnut of whether entrepreneurship can be taught at all.

This has been a long running debate, particularly in the US. If universities can give people the skills to be better managers, then of course they can help make better entrepreneurs. After all, the entrepreneur is the ultimate manager. They just might not be able to create an entrepreneur out of nothing.

In Ireland, we carry the notion that we are great at business and entrepreneurship in particular, but that is not borne out by the statistics. Some of it is cultural. Some of it is that in a small economy it is actually harder to build a successful business.

One of the common traits among Irish entrepreneurs is that many of them want to go no further than just setting up a business and becoming self-employed.

Not enough of them have the desire, appetite, ambition and training required to build a bigger business. This is especially true of women entrepreneurs in Ireland. We have lots of women who want to start up companies, but not enough of them make it through to the likes of the Enterprise Ireland fast growth programme.

A growing number of Irish start-ups involve "forced entrepreneurs" where the person sets up the company, because they don't have a job. This tends to lead to worse outcomes.

In the United States, recently found by Ernst & Young, yet again, to be the best place for entrepreneurs, universities are falling over each other to build entrepreneurship courses or build entrepreneurship elements into their MBA programmes.

As far back as 1986 the United States had 600 undergraduate courses in entrepreneurship. Today, there are around 5,000 courses across 2,600 colleges.

The Harvard Business School has found that around 50pc of its graduates become entrepreneurs within 15 years of finishing. The Stanford Graduate School of Business says that 18pc of last year's graduating class started their own companies.

If anything the relationship between academia and entrepreneurship is growing. Traditional MBA industries like finance are losing some steam, as business schools cater more for candidates who harbour entrepreneurial ambitions.

In Ireland, we are not nearly so far down the road, when it comes to an enterprise culture or the issue of formal education in this field. While universities are opening up to it more and more in Ireland, unfortunately, the recession has seriously dented many people's entrepreneurial ambitions.

A recent study, called Entrepreneurship In Ireland 2012, found that a decade ago early stage entrepreneurs accounted for 8.1pc of the adult population. By last year it had fallen to 6.1pc. Ten years ago, 11.3pc of adults regarded themselves as aspiring entrepreneurs, and that is now down to around 8pc.

Clearly, there are many supports available today, that simply didn't exist a few decades ago. Enterprise Ireland supported a record 97 new start-ups last year and expects them to employ over 1,600 new staff and generate €300m in sales. This year it expects to provide financial support to 95 start-ups.

The agency has set up a range of programmes such as start-ups from overseas and one especially aimed at female entrepreneurs.

If the supports available from the state are better than they have ever been, then what is the role of the universities in all of this? DCU's Ryan Academy offers a variety of courses and access to mentoring in very practical ways, across sectors ranging from farming, fast growth tech companies, to credit unions.

Trinity's new entrepreneurship centre will be located in the city centre and hopes to support the creation of 48 start-up companies by the end of next year.

One of the key problems for an Irish start-up is that it has to begin exporting relatively quickly, because of the small size of the domestic market.

Aside from hi-tech online businesses, this requires a big step up in management and money.

In Ireland we have good entrepreneurs who can trade and are good at sales, but they may fail because they lack the right formal business training. They have all the right instincts and ideas, but those are not enough. They may just need some good advice.

Academic courses can help here. They can help entrepreneurs avoid making major mistakes that can actually sink a business.

Of course there are obvious exceptions. A university might not have been able to teach Sean Quinn anything about building up his business empire. But then again, perhaps a course in risk analysis might have changed Quinn's views about CFDs or insurance claim provisioning.

Universities cannot make entrepreneurs. There is something in the personality, the genes or in the mind that is an integral part of their psychological makeup. But courses just might make them better entrepreneurs.

Being part of a formal educational set-up will also help them to meet other like-minded individuals, who may end up sharing ideas and working with them.

There is an interesting lesson in the randomness of entrepreneurial success in the story of one Stanford MBA graduate. In 2010 he entered an entrepreneurship class to build a travel recommendation website. After three months of testing, prototyping, insights from business leaders and professors, he concluded that the plan just wasn't feasible.

However, his research into the unviable idea, led him to look at the cruise market, where he pursued a new venture after he graduated. A year later, his new firm raised $1.65m and was bought out by TripAdvisor.

That is the thing about entrepreneurs, you never know where they are going to come from or where they will end up.

Irish Independent

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