Dear Readers, we have been discussing for the past couple of weeks the role of an entrepreneur. An entrepreneur is someone who starts or accelerates a business but entrepreneurs contribute more than just that to an economy. The role of the entrepreneur is central to capitalist development, by providing new products, new production methods, new markets and new forms of organization, thereby acting as an agent of change. Indeed, the entrepreneur is someone who drives forward several factors that together stimulate economic growth thereby helping to address governments’ fiscal challenges and we can say that the success of a country’s entrepreneurship environment will be judged by the number of leading entrepreneurs that emerge from it and the successful businesses they create. These factors include testing innovative technology, offering opportunities for young people, alleviating poverty and making a positive impact on society. Another key factor, perhaps the most critical one in today’s economic climate, is job creation.
It is very crucial that a government has to encourage innovation and highlight the role of entrepreneurs in providing innovative products and increase visibility and emphasize the role of entrepreneurship in creating new jobs. Likewise, the entrepreneurs should contribute to improvement of their country’s culture by promoting their own success and to take account of the local entrepreneurial culture when making their decision to globalize.
A good general education system and a supportive overall training infrastructure within the economy clearly strengthen the entrepreneurial environment. However, it is the appetite for more targeted entrepreneurship education and training that is a most striking finding. This appetite is particularly strong in rapid-growth markets, where 80% of entrepreneurs think that students need to follow specific training to become entrepreneurs. However, deepening the current model of targeted education and training is not enough. Too often, entrepreneurship education and training is viewed as a sub discipline of business studies. This means that potential entrepreneurs in other fields, such as science and technology, are sometimes not being reached. Therefore, the targeted education and training needs to become associated with a wider range of disciplines.

Recommendation
Our recommendation for the governments is to consider non-traditional, community based education approaches that value real-life experiences. Provide training assistance for those moving from a corporate role to entrepreneurship; broaden the scope of university entrepreneurship education, change the perception of entrepreneurship as a career option from primary school onward. The role of a successful entrepreneur in promoting education is to inspire students by telling their own success story, engage in internship and experience schemes that match local businesses with young entrepreneurs, undertake specific, dedicated business start-up training when moving from a corporate role to entrepreneurship
Access to funding continues to be one of the most significant challenges for the creation, survival and growth of SMEs, particularly innovative ones. In one of our recent surveys and analysis we found a marked divergence between rapid-growth markets, where perceptions of access to funding improved from 2005–10, and mature markets, where entrepreneurs are finding it increasingly difficult to finance their growth. However, current funding options are generally still more limited in rapid-growth markets, despite their impressive economic surge in recent years. Our analysis showed that entrepreneurs increasingly need to be able to tap into a diverse range of funding sources as they grow. Funding instruments are developing and diversifying at different rates across the G20 countries. For a large majority of entrepreneurs interviewed (80%), governments have an important role to play in creating the right environment for access to funding for young entrepreneurs. Notably, credit guarantees are emerging as a strong lever to address declining bank credit. However, with several governments’ fiscal pressures mounting, and bank lending increasingly risk averse, entrepreneurs are turning toward business angels, venture capital (VC) and private equity (PE) funding. In addition, public stock markets dedicated to SMEs have been launched in 14 of the G20 countries, and have been attracting an increasing number of companies over the last five years.
Our recommendations for the governments is to explore credit guarantees and banking sector support, help business angels’ networks widen their scope and stimulate VC and avoid stifling PE activity with more regulations and for the entrepreneurs to open up to international markets as opportunities arise, use junior markets as a source of funding and turn to alternative funding sources, such as corporate financing and microfinance, to reasonably reduce risks.

Since the 2007–08 financial crisis, it has become much more widely accepted that governments have a very substantial role to play in regulating, incentivizing and directing private sector activity. This is also true for shaping the environment for entrepreneurs. Many countries have made significant improvements in recent years, in terms of the cost and ease of starting a business, and perceptions of progress about this are correspondingly positive. Clear leading practices are emerging —for example, as many as 11 economies had totally eliminated minimum capital requirements by 2010.
Nonetheless, there remain important areas for further improvement. The top regulatory public policy priority is that governments across the G20 need to do more to encourage innovation. Although another area in which progress is needed is labor markets, the picture is more nuanced within the G20. Notably, severance costs are much higher in the rapid-growth G20 markets compared with their mature market counterparts. In addition, there is scope for G20 countries to increase the efficiency of their incentives targeted at SMEs by increasing and improving the dialogue between governments and entrepreneurs. All stakeholders should be involved during the design phase, and it would be beneficial for quantitative and qualitative feedback loops from entrepreneurs to be incorporated into the process.
Incentives
Our recommendations for the governments is to concentrate incentives on improving innovation, design impactful, inclusive, stable and multimodal incentives, clearly targeted at entrepreneurs and measure the qualitative and quantitative impact of actual and potential incentives. For the entrepreneurs we recommend to identify the existing start-up incentives at all relevant administrative levels, e.g., regional, national and for their expansion projects, consider locating in a jurisdiction that provides appropriate incentives.

There is considerable potential for better coordination between government agencies, business incubators, university resources and training programs to unlock greater entrepreneurial activity.
For example, young entrepreneurs can find it difficult to globalize, and can benefit from the experience of government agencies and the private sector in receiving coordinated support. Many entrepreneurs, especially the younger ones, benefit from support that is tailored, efficient and well coordinated. There are substantial differences across countries in this regard, but one leading practice that has emerged is one-stop shops, which centralize the bureaucratic components of new business formation. In terms of specific elements within the overall coordinated support framework, one that stands out is incubators, which were judged by the entrepreneurs we surveyed as likely to have the highest future impact on the entrepreneurship environment. For the better coordinated support we recommend the governments to empower incubators as they are the most promising enablers, also to enhance tailored support for young entrepreneurs and simplify registration and taxation procedures with one-stop shop. For entrepreneurs, they need to look for centralized providers of regulatory and tax information and to avail themselves of coordinated incubator and mentoring support schemes.

Ernst & Young is the world leader in advising, guiding and recognizing entrepreneurs. Our global focus on entrepreneurship is a critical part of our history and of our future. Our identification with entrepreneurs and high-growth companies through programs such as the Entrepreneur Of The Year (EOY) and our Strategic Growth Forum (SGF) is a cornerstone of our brand identity. We were the first professional services organization to form a most globally integrated practice, Strategic Growth Markets, dedicated to the full spectrum of entrepreneurial, high-growth companies. We place a high value on advising entrepreneurial growth companies and providing the highest levels of attention, dedication, top talent and respect that many other professional services organizations have historically reserved only for their Fortune 50 clients. We have long recognized the potential of entrepreneurs. Over the past three decades, we have been working with entrepreneurs, adapting our experience, industry capabilities and resources to work for entrepreneurial, fast-growth companies.

Growing beyond
Global growth is the business issue of today. In Growing Beyond, we're exploring how companies can grow faster by expanding into new markets, finding new ways to innovate and taking new approaches to talent. It's an ongoing program to help you grow beyond your expectations. In these challenging economic times, opportunities still exist for growth. In Growing Beyond, we have tried to explore how companies can best exploit these opportunities — by expanding into new markets, finding new ways to innovate and taking new approaches to talent. You’ll gain practical insights into what you need to do to grow. I encourage you to join the debate at www.ey.com/growingbeyond.
This is my last article for this year and I sincerely would like to convey my thanks for reading our educational articles on key and hot topics globally and sending notes of appreciation from time to time which really encourages me and my team to take out time and share with you our knowledge and experiences.
On behalf of Ernst & Young I wish you all a very happy and prosperous New Year.


Ernst & Young Training
ey.training@kw.ey.com