In his recent article Arab Spring, the Economy & Social Entrepreneurship, blogger Afif Tabsh comments on the interrelationship between high unemployment among educated youth and the political activism that led to the downfall of regimes across the Arab world.
Arab youth – like young people around the world– have been working hard to get college degrees based on the mantra that a better education leads to improved conditions in life. Then they graduate to find . . . What? The lucky ones find jobs in their areas of expertise, but most do not. Most become underemployed in jobs well below the level of their education and desired income, or they find no jobs at all.
As I stressed in my previous article, Philip’s Story – Part II, this is not a developing world phenomena. The problem is as poignant for youth in Egypt and Kenya as it is for young people in the United States. The parallels are not lost on youth, who are increasingly vocalizing a brothers-in-protest perspective. (Occupy Wall Street supports Egyptian protesters, for example. And as a Kenyan human rights friend posted on his Skype status, “Tunisia, Egypt, . . . Kenya?”)
While they are working to promote political change, young people still need to feed themselves and their families. The natural progression for unemployed youth who are smart and motivated is to create jobs for themselves through small business start-ups. In growing the small business, the entrepreneur provides sustenance not only for herself but, if done right, also creates jobs for others.
This is not a new idea, I know. Certainly it has been the song of many a political candidate and we will be hearing it ad nauseum in the U.S. presidential race. “I support small business. . . .”
So if the answer to youth unemployment is just to create more small businesses, what’s the problem? Just do it, right?
The problem, as any small business owner will tell you, is that creating a small business from scratch is hard. Many say that starting a successful small business requires a certain je ne sais quoi or “entrepreneurial spirit” – that special something that makes the small business go.
But in the developing world, many entrepreneurs are “entrepreneurs by necessity”. They may not have started their microenterprise or small business by choice, but because they had no other option to generate income. If given the chance, many of these business owners would jump at a “regular job.” Lacking business skills, training or support, the small business owner does his or her best, but usually is unable to turn the microenterprise into a true small business.
The microfinance movement has discovered this phenomenon. For the past 30 years, microfinance has done an incredible job elevating its borrowers, mostly women, to a level where they can feed themselves and their families, and perhaps send their kids to school or even build a house. However, most microenterprises have never progressed past the point of a single owner acting as the sole propulsion for the business. A woman who uses a microloan to finance a small vegetable stand, for example, likely will never hire others. Her children may become educated but will have no interest in working in mom’s vegetable stand. If she dies, the business likely will die with her.
But if this same woman is given training on how to start and run a business, things could be different. Perhaps she would not choose to operate a vegetable stand – at least not alongside 10 others operating the same business. Perhaps she would learn marketing and sales so as to expand her client base to include restaurants or in-home delivery. Or perhaps she would know financial planning, and be able to build adequate reserves and buy a truck to transport vegetables for herself and others from the farm to the market, thereby participating in more of the business value chain.
These business development services (BDS) need to be relevant and give the trainee skills that they can use and apply. In the United States, for example, there are many service centers that train small business wanna-bes on how to write a business plan. While having a plan is good, the notion that a full business plan is necessary for success of a business is an arbitrary barrier. (Surveys have shown that only 40% of Fortune 500 businesses had a business plan at start-up and 65% of those strayed significantly from the plan).
BDSs that focus heavily on writing a business plan are certainly doomed to fail in places like Timor-Leste, where half of all adults are illiterate. At Global Transitions & Development, LLC, we focus on training for basic skills that are elemental to success in any business endeavor and that can be used and applied right awy. Things like communication, organization, goal setting, financial planning, and marketing and sales, and customer service. Courses must be tailored to the educational level of the audience and must involve exercises that promote actual application.
In future articles, we will explore successful business development service (BDS) models and courses, and other ways to grow small businesses.
At GTD, of course, we also always have an eye to fighting corruption, which we feel is the second prong to addressing the youth unemployment problem. Economies will always flounder when they are being suppressed by corruption. More on fighting corruption here.