Scotland’s business activity rate for young people is highest in UK

We need all kinds of businesses - from the tech start-up with unicorn aspirations targeting global markets to lifestyle businesses, generating additional family revenue from commercialising a passion or hobby. Starting businesses becomes a habit, today’s small scale trader can become tomorrow’s world beating serial entrepreneur.

Becoming a founder isn’t yet seen as a ‘legitimate’ career choice for young people, although that is changing. Scotland’s business activity rate for young people at 9.7% is the highest in the UK. Testament to the great work of Young Enterprise Scotland, the Princes Trust, Converge Challenge and Young Edge amongst others.

READ MORE: Ivan McKee: Does Scottish Government 'get' business?

The recently launched Entrepreneurial Campuses, encouraging students to start a business, will add to this. But we need to do more, making being a founder an aspiration, and giving those who impart careers advice to young people the skills to point them in this direction. The mechanics of running a business also needs to be mainstreamed in education. The difference between being self-employed and starting a limited company, how to fill in a VAT return or hire someone should be a part of the curriculum if we are serious about becoming a start-up nation.

Entrepreneurs can be born at any age. I started my first business at 40, a consequence of corporate restructuring and opportunities leveraged through business networks. Mid-career can be a very effective time to take that step. Leveraging industry experienced gained working for established businesses, wider networks and experience of managing staff and customers can be the recipe for high growth start-ups.

Providing advice and support on that option for those leaving a workplace – either voluntary or involuntary – should be an explicit part of our redundancy support offering. And working with experienced entrepreneurs post-exit to identify opportunities for their next start-up enables recycling of capital and expertise.

The gender gap in business start-ups has remained significant and stubborn at about 45% and even more concerning is the shockingly low levels of investment capital that women-led businesses secure. Ana Stewart’s recently published review addresses the deeper seated cultural and societal barriers to women founders, the well considered measures proposed will remove barriers facing all founders.

While barriers are also faced by ethnic minority groups the business activity rate at 12.4% is much higher than the Scottish average. The factors that drive that are many but it aligns with recent work by the FSB highlighting the value of increased immigration to our economy.

The mechanics of starting a business need to be easier. Even simple necessities like opening a bank account can be a barrier, a process that should take days can take months.

EU regulations enshrining the right to a bank account for all citizens is something we should embrace, encouraging the financial services sector to play their part supporting the wider economy. Recent concerning reports of banks shutting down accounts for allegedly political reasons haven’t helped in that regard.

Enshrining shorter payment terms, 30 days or less, in legislation would also go a long way to supporting SME cash flows and de-risking their journey.

Making government more entrepreneurial would also help. CivTech, the government agency that leverages public sector procurement to provide business opportunities to SMEs with imaginative solutions to public sector technology challenges, is a great example.

It is a world-leading initiative, now with a global network keen to learn from Scotland’s successes in the rapidly growing global GovTech industry and recently announced a welcome tie-up with the TechScaler network initiated by Mark Logan’s work. CivTech brings the bureaucracy of government – often the antithesis of the risk-taking culture entrepreneurs thrive in – closer to the start-up community.

Being innovative, challenging accepted norms, looking for ways to drive continuous improvement, making mistakes and learning from them and celebrating success are all part of that culture. Intrepreneurship – behaving like an entrepreneur inside a larger organisation – should be encouraged, recognising the value and perspective that public sector employees who have previously ran businesses bring to their work.

Scotland has a long history of successful entrepreneurs, many of whom have made significant impact on the global stage, but for too many of our people the very idea of starting a business is seen as something that’s not for them.

To truly become a start-up nation that attitude needs to change. Everyone should at least once in their life give some though to starting their own business, and government should ensure the mechanisms are in place to make that journey as easy as possible.

Ivan McKee is a former business and trade minister in the Scottish Government