Jon Hooper: Avenues open up for entrepreneurs

In both rapid-growth and mature economies, the number of small business start-ups has increased since the global financial crisis. Photo / Thinkstock

The rising numbers and influence of entrepreneurs is among six global megatrends identified as the "big, transformative forces" capable of disrupting and reshaping the world in the next 15 years.

Megatrends 2015, a global survey released by EY last week, shows entrepreneurs are becoming more powerful as an economic force, particularly among millennials (those born between 1984 and 1996).

EY cites figures from a survey, by consultants Universum, of 16,000 millennials from 42 countries, where 70 per cent of respondents viewed themselves as entrepreneurs.

In both rapid-growth and mature economies, the number of small business start-ups has increased since the global financial crisis, driven partly by an average 13 per cent youth unemployment rate across G20 countries.

Another key driver in the US has been the boom in entrepreneurial education. More than 5000 entrepreneurship courses are now offered across the country compared with only 100 in 1975.

What's needed now in most G20 countries is a more supportive environment to underpin entrepreneurial growth, including better financing alternatives, mentoring, tax incentives, a reduction in red tape and restrictive immigration policies.

As always, access to funding is still the biggest hurdle in both launching and scaling entrepreneurial businesses. But smart Governments are looking beyond traditional venture capital to a more targeted approach. Some are offering tax incentives to private sector investors to focus more on start-ups.

Other funding platforms, such as crowdfunding and microfinance, are gaining traction for seed and early-stage companies, particularly in developing and rapid-growth economies. The Megatrends 2015 report predicts the crowdfunding market in developing countries - US$5 billion ($6.5 billion) in 2012 - could rise to US$96 billion by 2025.

Similarly, the global microfinance market, aimed at small enterprises, is expected to grow 19 per cent annually for the next five years, rising from US$5.7 billion last year to nearly US$14 billion in 2019.

Megatrends also notes the most recent EY World Entrepreneur Of The Year winners have come from rapid-growth markets such as India, Kenya, Singapore and China.

The growth of their businesses is due, in part, to growing consumer power in these regions and opportunities for "frugal innovation" - offering lower-cost products and services tailored to unmet and local market needs. The other key finding from the survey is that the face of entrepreneurship is increasingly young and female, the survey says.

A World Economic Forum report in October last year estimated it would take women another 80 years (four generations) to achieve global gender equality in the workforce.

EY's global chief executive Mark Weinberger led the charge at Davos, saying businesses, nations and economies cannot afford to wait until 2095 to fully engage the talent represented by women.

So what might all of this mean for New Zealand?

At a recent Entrepreneur Of The Year alumni function in Auckland, Economic Development Minister Steven Joyce offered entrepreneurs, for the first time, a coveted seat at the table when policy affecting their businesses is being made.

The detail has yet to be finalised but in future, when ministers are considering policies of interest to entrepreneurs, alumni will have the opportunity to critique and comment on what's proposed. And, better still, it's a two-way street. Entrepreneurs now have a direct channel to government for suggesting new policies that would improve their business environments.

Alongside this - and to help bridge the gap between entrepreneurs, the Government and tertiary institutions - alumni will liaise with business faculties at universities to ensure a better fit between the skills requirements of their businesses and the type of graduates the universities are producing.

Alumni have also committed to assist the Government with new, but yet-to-be-identified entrepreneurial initiatives in South Auckland. These will focus on helping youngsters see entrepreneurship as a serious and viable career option, and give them the basic tools for getting started.

Consistent with global trends, the numbers and the influence of entrepreneurs in New Zealand are both on the rise.

The stage is set. Entrepreneurs now have a seat at the table and it's now up to them to make it happen.

Jon Hooper is an EY partner and NZ Entrepreneur Of The Year leader.