Entrepreneurship and Early School Leavers · Presentation Title | Presentation Subtitle 20 Self-Employment as a proxy for Entrepreneurship (Source OECD Labour Force Stats/ Non-agricultural)

503718-LLP-1-2009-1-PT-GRUNDTVIG-GMP

Presentation Title | Presentation Subtitle

1

Entrepreneurship

and

Early School Leavers

Dr John Byrne

Dublin Institute of Technology



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A QUICK REMINDER…

CESSIT

CREATIVITY ENTREPRENEURSHIP



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Part 1

Recognising and Fostering

Entrepreneurial Potential

in

ESLs



4

Research Study by CESSIT in Summer 2009:

Earlier Session:

Survey of Educationalists and Trainees

Assessment of Hard and Soft skill-set requirements for Trainers in

Entrepreneurship



5

0,00

1,00

2,00

3,00

4,00

5,00

General know ledge

Specif ic know ledge

Didactics

Psychology

Social w ork

PC/ICT skills

General overview of labour market

Foreign languages

Developing other

Impact and influence

Leadership and team coordination

Self-confidence

Communication

Customer orientation

Planning and organising one’s w ork

Proactive approach

Stress resiliency

Creativity

New educator Average educator Skilled educator

From previous-session –

Competence Model for Entrepreneurship Educators

The general competency model

of educators shows differences

in required minimal levels of

various hard skills and soft

skills among new educators,

average educators and skilled

educators. It also illustrates the

development of separate skills

during the educator’s career.



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Trainers‟ Ranking of Desirable „Hard‟ Skills for

Educators in Entrepreneurship

• Primary University Degrees, in the case of educators

• Above-standard level of General Knowledge

• Above-standard level of Didactic and PC/ICT skills.

However,

• In the case of Psychology, Social and Specific Business-

related Knowledge, a lower level of competence was regarded as

sufficient for the average Entrepreneurship Educator.



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The Educator competence model...

The CESSIT programme places a strong emphasis on a creativity-based approach

to encouraging entrepreneurship among ESLs

Self-directed skills (Leadership, Stress-resiliency, Work Planning) scored highly

o Skills in relation to objective psychological and sociological assessment of

individual trainees (as opposed to development) were not emphasised by the

trainers themselves.

- redress the balance?



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An exercise for Trainers (and ESLs!)….

A little more on the nature of Entrepreneurship



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From Jiří‟s session, what words or phrases do we use to

describe entrepreneurship?



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Exercise 1: Can we answer the Question -

What do Entrepreneurs do for a living….?

Are entrepreneurs randomly distributed among the population

or are we more likely to find them in certain professions or

jobs?

To think about: Examples for tomorrow’s Workshop Session?



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To assist our understanding of ‘Entrepreneurship’…

Definitions depend on the viewpoint we take –

The following framework may help!



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Entrepreneurship in 3-dimensions –

What words or phrases from our exercise fit where?

Outcomes of entrepreneurship

Behaviours required of entrepreneurs Processes undertaken by entrepreneurs



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Entrepreneurship as an ‘outcome’…

“… the introduction of an economic activity that leads to a change in the

marketplace”

“…resulting in the creation, enhancement, realisation or renewal of value for

participants and stakeholders”



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Entrepreneurship as a ‘process’…

“…the process by which individuals - either on their own or inside organisations - pursue opportunities without particular regard to the resources they currently control”

“…the process of creating something new of value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and having the resulting rewards of monetary and personal satisfaction and independence"



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Entrepreneurship as a ‘behaviour’…*

“… the ability and willingness of individuals, on their own, in teams and within and outside existing organisations to perceive and create new economic opportunities and to introduce their ideas to markets, in the face of uncertainty…”

“Thinking, reasoning and acting that is opportunity based, holistic approach and leadership balanced”

“… using specialised judgement to deal with novel and complex problems”

“the capacity for envisaging and sustaining new combinations, new products or processes, new markets or sources of supply”

!



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Behaviour is (usually) a consequence of Attitude…

Trait/

Attitude Behaviour Process Outcome



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Personality-based approaches…

…for identifying and fostering enterprising attitudes and

thereby encouraging enterprising behaviour in Early School Leavers

Use of these approach needs to be based on some kind of assessment

of the individual

(……unless everyone has psychologucally everything it takes to be a

successful entrepreneur!?)



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We need some independent metric for

Entrepreneurship…

…self-employment (other than in the agricultural sector) seems to be

the metric of choice (for OECD, inter al)



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Some surprising (depressing?) facts and figures…



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Self-Employment as a proxy for Entrepreneurship (Source OECD Labour Force Stats/ Non-agricultural)

Country Fem Male Ratio (F/M)

Australia

Austria

Belgium

Canada

Czech Republic

Germany

Denmark

Spain

Finland

France

United Kingdom

Greece

Hungary

Ireland

Iceland

Italy

Japan

Korea

Mexico

Netherlands

Norway

New Zealand

Poland

Portugal

Slovak Republic

Sweden

Turkey

United States

8.8% 14.8%

5.4% 9.7%

9.7% 17.3%

7.9% 9.5%

9.6% 20.3%

6.2% 12.2%

3.7% 10.4%

11.3% 18.5%

6.3% 12.3%

4.9% 8.3%

6.4% 14.9%

17.5% 31.4%

8.1% 15.1%

5.8% 18.2%

6.8% 20.5%

15.4% 28.0%

6.7% 10.7%

20.4% 29.5%

27.4% 27.1%

7.4% 11.8%

2.9% 6.8%

10.1% 20.7%

8.3% 15.2%

13.3% 21.2%

4.7% 12.1%

4.5% 12.3%

8.9% 27.1%

5.4% 7.2%

0.595

0.563

0.561

0.831

0.476

0.510

0.351

0.611

0.511

0.595

0.430

0.555

0.539

0.316

0.329

0.550

0.632

0.694

1.010

0.622

0.423

0.490

0.547

0.628

0.388

0.370

0.330

0.741

Average 9.1% 16.5%

0.543



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Employment Status Transtion Matrix (Source: OECD Employment Statistics)

Year t

Non-

employment

Wage/Salary

employment

Self-

employment

Share of

Year t total

Non-

employment

75.8% 21.2%

3.0% 18.0%

Wage/Salary

employment

6.2% 91.3% 2.5% 72.5%

Self-

employment

6.3% 21.8% 71.9% 9.5%

Year (t+1)



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Entrepreneurial behaviour appears to be…

1) …Confined to a minority

(i.e. only about 1 in 6 of the adult population are likely to be consistently

involved in entrepreneurial activity)

2) …Relatively enduring throughout an individual’s working life

(i.e. a trait, a lifelong interest or a vocation)



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Identifying entrepreneurial tendency in individuals

Let’s start with ourselves… Exercise 2



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The key predictors for Entrepreneurial Success ….

What would we look for in ESLs?



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General Entrepreneurial Tendency Questionnaire

Take a few minutes to complete it …

Afterwards, I’ll show you how to score yourselves

In the Workshop tomorrow, we can discuss how you scored, as a

group) as potential entrepreneurs!

Then, I’ll return the questionnaires and you can see how you

scored individually



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The key predictors for Entrepreneurial Success ….

High Need for Achievement

High capacity for Moderate/Calculated Risk-Taking

High Need for Autonomy/Independence

High Drive and Determination

High Creative Tendency



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Need for Achievement: Q(1+6+10+15+19+24+28+33+37+42+46+51)

(Global Average: 9)

Moderate/Calculated Risk-Taking: Q(2+9+18+20+27+36+29+38+45+47+54+11)

(Global Average: 8)

Need for Autonomy/Independence: Q (3+12+21+30+39+48)

(Global Average 4)

Drive and Determination: Q(4+7+13+16+22+25+31+34+40+43+49+52)

(Global Average: 8)

Creative Tendency: Q(5+8+14+17+23+26+32+35+41+44+50+53)

(Global Average: 8)



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From research conducted in Ireland…shortfall in entrepreneurial

skills mainly in the area of risk-handling!

Entrepreneurs are calculated risk takers -

They tend to..

…influence the odds in their favour through information

…minimize risk when they have a choice

…share risk with others

…use expertise of others to improve their chances of success



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Fostering entrepreneurial tendencies in ESLs

Priorities:

1) Align training programmes with entrepreneurial modes of learning.

2) Develop systems for early identification of entrepreneurial potential in ESLs

3) Provide training in deficient areas

(decision-making/ risk assessment/ business planning/ creativity)

4) Develop peer-group and support networks among those with lower entrepreneurial tendencies



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So, what are entrepreneurial modes of learning?



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1) Conventional versus entrepreneurial modes of learning Source: Gibb (1998)

Conventional approach Entrepreneurial approachContents-oriented Process-oriented Teacher-oriented Student-oriented Teacher is the expert Teacher is the facilitator 'Know what‟ 'Know how and who' Passive student (receiving knowledge) Active student (generating

knowledge) Emotional detachment Emotional involvement Programmed sessions Flexible sessions Imposed learning objectives Negotiated learning objectives Concept theory emphasis Practical relevance of theory Subject/functional focus Problem/multidisciplinary focus Fear mistakes Learn from mistakes Teacher is infallible (one-sided learning) Teacher learns (two-sided

learning) Limited exchange Interactive learning



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Skill-sets possessed by successful entrepreneurs

•Identifying and exploiting business opportunities

•Finding the resources required to exploit opportunities

•Adding value

•Networking

•‘Knowing how’ and ‘knowing who’

•Creating capital (financial, social, artistic, etc)

•Managing risk associated with innovation

•Maintaining self-belief



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Providing support in complimentary skill areas

Vocational Theory…



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Providing support in complimentary skill area:

Vocational Approach

To try yourself and use with ESLs

https://www.cpp.com/products/strong/index.aspx

Holland Vocational Assessment/ Strong Interest Index (1993)

Realist

Investigative

Artistic (Creative)

Social

Enterprising (Entrepreneurial)✔

Conventional

Career-choice is combination of 2 or 3 contiguous vertices

(e.g. Engineering is RI-typology)Support required in

A,S,E & C-related skill-sets

R

A

I

E S

C

CESSIT

CESSIT CESSIT

CESSIT

CESSIT








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Invention and entrepreneurship

• Less than 4% of new businesses are truly original

• Not having an original business idea is not a barrier to start-up as there are many ways of generating ideas

• Entrepreneurs require creative abilities – it is a complementary skill

• Other entrepreneurial skills (e.g. risk-assessment/ excellent communications) need to be fostered



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If I was asked what career/ profession was

most typically entrepreneurial in nature…

Hint:

Very few are inventors (requires a different trait-set

e.g. more interest in the problem than the solution!)



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Going back to the question: What do

Entrepreneurs do for a living….?

The answer is – Salespersons are the classic entrepreneurs!



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Conclusion:

• Further research required:

• Should systematic means for identifying entrepreneurial

potential in ESLs be a priority?

• Do Trainers need to invest more time imparting enterprise-

specific hard skills to potential entrepreneurs (e.g. Business Planning)?

• Is providing access for entrepreneurs to complimentary skill

bases critical to success? (e.g. CESSIT/ Creativity)



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Part 2

Business Planning



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Activity for ESLs :

TAKING A JOURNEY INTO THE UNKNOWN

What are the Key Questions?



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TAKING A JOURNEY INTO THE UNKNOWN

Key Questions:

Where is my destination?

What route will I take?

What delays/challenges could I meet and what options will I have?

How will I know when I get there?

(From an entrepreneurial standpoint: “What will success look like?”)

Entrepreneurs should have answers to the above questions –

certainly, potential investors will ask them!



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Exercise

Can you:

Identify what you would consider to be the major life event or work

achievements that you have experienced and list the qualities, skills, and

attributes that you used and what experience, skills, and values you gained

from it?

Identify what you have greatest passion for?

Identify what future career/life direction you intend taking?



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A business plan should also answer the questions…

What are my personal strengths / weaknesses ?

What are the strengths / weaknesses / opportunities / threats for

the business ?

What are my 3 year goals ?

What is my unique selling proposition ?



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WHAT IS A BUSINESS PLAN ?

The Framework that brings ideas together

It provides checkpoints and scenarios

It is a formal document

It addresses long-term and short-term decision making

It is vital to attracting investment



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Who should write it?

Prepared by the entrepreneur with:

accountant

marketing consultant

legal services

operations expert



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Why Do Entrepreneurs Need a Business Plan ?

For themselves (primarily)

as a sounding board

to clarify thinking

to justify thinking

to focus on potential risks

For investors

For lenders

For support agencies

‘Failing to plan is planning to fail’



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VIEWPOINT OF INVESTORS

How much money do you want? When?

Equity stake / ownership?

Expected return on investment?

Timing?

Exit strategy?

Quality/commitment of management?



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VIEWPOINT OF LENDERS

Security

Ability to repay loan

Collateral

Schedule of payments

Owners‟ equity

Credit history



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BUSINESS PLAN STRUCTURE

Title Page (use a photo of your

product)

Executive Summary

Table of Contents (with page numbers)

Promoters / Management

Product / Service

Target Market

Marketing

Operations

Finance

Appendices



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Just a few words about the most important page…

EXECUTIVE SUMMARY

Executive Summary is selling your plan

Average reading time for 1st read is 30 seconds

Key highlights to main body of plan (written last)

Maximum of two pages

Bullet point format is easier to sell (use paragraphs if not bullet points)

Must capture the reader‟s attention



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Score the business plan elements on a scale from 1 to 10, with 10

being the best possible rating.

Scores are subjective. Determine a value based on group‟s

perception of the quality and content of the business plan.



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The management plan depicts a level of skill and experience for a

successful operation. Management has never owned nor operated their own business and employees

are inexperienced (1)

Look at:

Mission Statement

Legal structure of the entity

Organizational chart

Job descriptions, duties and responsibilities

Compensation methods

Background and experiences

operational experience

managerial experience

Support services (external advisors and specialists)



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54

All managers and employees

have experience in this business (10)



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55

The plan shows that the company has the ability to control the

delivery and quality of the product or service.

The venture will depend solely on outside contractors (1)

Suppliers are established

source of needed materials

reliable delivery

best price/quality

Understand the production process in detail

production capacity

Packaging

Facility requirements are met

land

premises

equipment

labour



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56

We have the resources we need in-house that are needed for

distribution (10)



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57

The plan describes a potential market

Customers exist only on paper (1)

There is tangible evidence of market demand

Surveys conducted

Market tests

Demographic research

Target market

Size Education

Location Gender

Age Buying habits

Income Lifestyle



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58

The venture knows its market and has firm commitments from

customers (10)



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59

My plan clearly shows a competitive edge over my rival’s

The product is no better than that of existing competitors‟ (1)

Price

Quality

Service and guarantees

Appearance

Ease of purchase (location, parking, online, credit)

Customers understand the benefit of product or service

Long-term benefits (not a fad)



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60

The product or service is unique and there is market

demand (10)



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61

The plan contains realistic financial projections

Financial statements indicate an annual rate of return of 1% (1)

Reasonable assumptions

Ratio analysis

Personal investment

Personal financial statements included

Credit worthy

Most likely, pessimistic and optimistic scenarios

Seasonal fluctuations



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The plan offers a credible high rate of return in a short

period of time (10)



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63

The plan lays out a clear, well-conceived, workable

strategy for getting the business up and running No real strategy exists--except in the Entrepreneur‟s head (1)

The business plan lays out a workable business strategy

The business plan is polished and professional

My oral presentation is polished and professional

Resumes are included for managers

Business documentation

Employer identification number

Fictitious name registered

Partnership agreement

Articles of incorporation

Contracts and leases

Permits and licenses



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64

The plan communicates a vision for the business and why it will

succeed to potential lenders and investors in a clear, concise

fashion (10)



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Grading the Business Plan

There are six questions each worth 10 points.

50 - 60 High potential for success

40 - 50 Needs work, but loan is probable

30 - 40 Review deficiencies, workable

Under 30 Not viable (at this time!)

Documents

Entrepreneurship and Early School Leavers · Presentation Title | Presentation Subtitle 20 Self-Employment as a proxy for Entrepreneurship (Source OECD Labour Force Stats/ Non-agricultural)