Background
Question:
Discuss about the Entrepreneurial Business Planning for Unemployment.
There is the increasing dependency ratios and ageing workforce in the developed countries and they are attracting towards the policy research and older workers in terms of the promotion of self-employment and business start-ups. In recent years, due to the socio-demographic changes, unemployment and aging population is becoming an issue of the inclusive entrepreneurship. Entrepreneurship focuses on the underprivileged group of population i.e. youth, women, ethics minorities, people with disabilities and seniors and add them in the entrepreneurial activities (Van Der Zwan, Verheul, Thurik & Grilo, 2013). Senior entrepreneurship comes under the inclusive entrepreneurship which has aim to ensure that all the people have equal opportunities and rights to start and manage their own business. There are various policies and initiatives to support this type of entrepreneurship. This report focuses on the identifying the entrepreneurial process. Along with this, report identifies those issues which have to face by entrepreneurs during the start-up of new venture. Based on the secondary research, report analyzes the interest and relevance of the selected topic in the life cycle of an entrepreneurial venture. For the discussion, topic ‘senior entrepreneurship’ is selected. This report is supported by the different reviews of literatures and secondary research (Maritz, 2015).
It is the common belief that entrepreneurship is the game of young people. But it is observed that the relative returns of entrepreneurship from the individual age are reducing and people in the older demographics are becoming entrepreneurs. They are increasing the incentives and opportunities in the senior age ranges to consider entrepreneurship. The senior entrepreneurship can be defined as the process in which people having the age 50 plus participate in the business start-ups (Maritz et al, 2015).
There are very researchers who researched on the topic of senior entrepreneurship. There is the lack of research investment on the senior entrepreneurship. However, there is one thing to gather the agreement in the recent research that senior entrepreneurship is an extremely diverse group in terms of motivations, intentions, entrepreneurial decision process, and evolved age. In other words, there are various factors affecting the senior entrepreneurship and those are typically different when people are the age of 5o’s or 60’s or at different stages of life courses. There are some points which must be considered while understanding the concept of senior entrepreneurship. There are some significant drivers of senior entrepreneurship (Kautonen, 2008).
Literature Review
The research identifies the possibilities and benefits associated with the senior entrepreneurship. The opinion of the literature is different about the impact of age on starting a successful venture. Some researchers consider the age as the important for the success of entrepreneurial process. On the other hand, some found it as the barriers or constraints to hamper the establishment of specific phenomenon. According to various studies, people age between age of 25 and 35 are individuals who attempt the creation of new firm. It is observed that self-employed people tend to remain in the work force for longer time as compared to those who are employed by others (Lévesque & Minniti, 2011). Due to this reason, the employment rate is decreasing continuously with the age. The percentage of older self-employed people is higher as compared to the younger people. There is one more fact regarding age in the entrepreneurship. According to the Kautonen (2014), age has direct impact on the entrepreneurial behavior. Based on this research, it is observed that the probability of the entrepreneurial behavior of self-employers improves with the age factor. Along with this, in terms of the performance of organization, older entrepreneurs have higher survival rate as compared to the younger founders (Tornikoski & Kautonen, 2009).
Senior entrepreneurship has presented an effective option to deal with the issue of shrinking workforce and aging population. There are findings that new ventures generate economic contributions created by the older people. There is a case of PRIME, in which authors found that company got economic success due to the entrepreneurship by the older people. There were substantial economic benefits associated with the senior entrepreneurship i.e. increased potential for innovation, job creation, improvement of technological adaptability etc. This type of entrepreneurship leads a good metrics of success for the organization. On the other hand, other study suggests that firm created by the senior entrepreneurs might not contribute to the economic success as ageing population can negatively impact on the employment creation. Age of the entrepreneurs is negatively related to the number of the employees in new venture (Manolova, Eunni & Gyoshev, 2008). According to the Minniti, (2011), there is the u-shaped relationship between age and choosing entrepreneurship. Further, another empirical analysis is done by Verheul and Van Stel (2007) on the total entrepreneurial activity along with diversity induces i.e. age, gender and education etc. They studied the impact of these entrepreneurial factors on the GDP in 36 countries. They identified that the contribution of entrepreneurship depends upon the level of economic development i.e. in the developing or less developed countries, higher educated and older entrepreneurs are important for the economic growth. The results also reveal that necessity entrepreneurs also have lower contribution in the economic growth (Meier & Werding, 2010).
Senior Entrepreneurship: Defining the Field
Being complexity in the senior entrepreneurship, there is important point of decision making process in the new business venture. Along with the potential benefits, there are some barriers associated with starting of new business venture in the senior entrepreneurship. Kautonen, Tornikoski and Kibler (2009) investigated the impact of attitude, perceived behavior and subjective norms on the formation of entrepreneurial intentions. It is founded that older persons are socially acceptable to become an entrepreneur at any age. Further, Levesque and Minniti (2006) studied some factors for the employment choice i.e. age, wealth and risk aversion which are crucial determinants for being an entrepreneur. By the research, they achieved a negative relationship between the entrepreneurial age and attitude that impact the decision towards entrepreneurship. So, majority of the research indicate that senior Entrepreneurship is that who are above fifty and are involved in creating business. Main identified barriers which have to face by older people in entrepreneurship are related to the energy, health and productivity as compared to young entrepreneurs. The authors concluded that the trend of senior entrepreneurship is increasing slowly and it has little chances of success (Bloom, Canning, & Fink, 2010).
After observing the literature on senior entrepreneurship, it is analyzed that there are some constraint associated with the self-employment and senior entrepreneurship. There are various factors seem to push back senior entrepreneurial intentions and motivation in the older people such as family and health issues, personal issues, opportunity cost of time, risk and perceived age norms etc (Verheul, Thurik, Hessels & Van der Zwan, 2010). On the other hand, some other authors consider that there are some factors such as professional experience, bigger experience, and larger amount of capital for investments and availability of time which support the senior entrepreneurship. In the above discussion of the report, it is described that senior entrepreneurship is becoming effective for the new ventures as compared to the young entrepreneurship. But, everything has some challenges and issues at the initial stage. Despite of the positive points, there are some challenges which have to face by the senior entrepreneurs while starting new business venture (Kautonen, Down & Minniti, 2014).
Challenges refer to the difficulties which have to face by senior entrepreneurs while wishing to participate in the business start-up activities. Some of those challenges are described below:
Lack of capital is considered as the main resource limitation in the entrepreneurship and for the senior entrepreneurship, it is not different. The cross-tabulation identifies that 46% of experienced entrepreneurs have to face issue due to the lack of financial capital and stops start-up activities. 73% of senior entrepreneurs have to deal with the issues of the lack of capital. While trying to establish a new business, entrepreneurs might struggle with the access of finance. Of course not, all the older people are able to save the money during their life cycle. Older people only have money in terms of their savings and pension allowance. Along with this, due to their age they have to face discrimination while applying for the credit in the regular banking system (Kautonen, Tornikoski & Kibler, 2011). Sometimes, they are asked to subscribe for additional insurance to cover the risk and insurance companies do not want to contract with the older people. Lack of the access of finance is considered as the major challenge in the senior entrepreneurship while older entrepreneurs want to start a new business (Welter, 2011).
Benefits and Limitations of Senior Entrepreneurship
Creating a new business needs a broad range of reinforcing and supportive policies. These policies include fiscal and monetary policies which are important for the stable macroeconomic environment. Along with this, there are structural policies to determine overall economic framework in which the business will operate such as tax design, financial markets, labor markets and bankruptcy laws. There is the considerable evidence that administrative and regulatory burden impose adversely impact on the senior entrepreneurial activities. There can be legal entry barriers that should be avoided by senior entrepreneurs to achieve benefits of the business. Employment regulations also restrict the flexibility of senior people in the new business venture. There can also challenges in terms entry and exist that cam discourage entrepreneurs in to enter in the market. When the entry of the firm include considerable risk, then it would be difficult to survive the business in the market (Kerr & Armstrong-Stassen, 2011).
This can be a significant barrier for the senior entrepreneurship. Experienced entrepreneurs has assumption that self-belief is not a barrier for the new business venture due to high level of self efficiency. But, self-belief can be considered as the barrier due to the lack of experience and lower level of self efficiency. Some people believe that government’s rules and regulations create barriers for the senior entrepreneurship which indicates that governments are not promoting the merit of senor entrepreneurship (Oosterbeek, Van Praag & Ijsselstein, 2010).
In the senior entrepreneurship, older entrepreneurs are already retired so they can find it more difficult to build up social networks again which they had during their careers. It is difficult for the entrepreneurs do rebuild the network to operate small home based business. Along with this, it can also be challenging for them to get essential human capital for the older entrepreneurs who are going start a new business in the different industry as compared to the previous employment. For this manner, social capital can be the major challenge for senior entrepreneurship due to the long- term retirement or unemployment.
In the senior entrepreneurship, the older entrepreneurs enter in the self-employment from the paid employment. Their new start business can be different from their previous occupation so generally they do not have high level of human capital. Along with this, they can also face specific number barriers as there can be the lack of entrepreneurship skills which are required for the success. Further, entrepreneurial skills may be outdated or they have lower level of digital literacy (Hairault, & Jean?Olivier, 2010).
Challenges Faced by Senior Entrepreneurs
Conclusion
This report focuses on the trends and challenges faced by the senior entrepreneurs while forming a new business joint venture. From the above discussion, it is analyzed that in current time, senior entrepreneurship is very effective in the business venture as compared to the young entrepreneurs. Senior entrepreneurship can be described as the people involved in their own business in the age of 50 to 60. Further, it is also observed that although senior entrepreneurship is effective and new trend but there are some challenges which have to face by the older people. It is not easy for them to form a new business in the different industry. It is analyzed that senior entrepreneurship sometimes contributes in the growth of economy. They have experience and self-efficiency to deal with the business risks while forming a new venture. But there are some challenges in this type of entrepreneurship i.e. lack of human capital, social capital, regulatory barriers, and lack of capital etc. Entrepreneurs have to face discrimination while applying for the credit in the regular banking system. Sometimes, administrative and regulatory burden impose adversely impact on the senior entrepreneurial activities. So, it is clear that senior entrepreneurship is essential for the business ventures and their requirements in terms of human and social capital should be fulfilled on the urgent basis.
References
Bloom, D. E., Canning, D., & Fink, G. (2010), Implications of population ageing for economic growth: Oxford Review of Economic Policy, 26(4), 583-612.
Hairault, & Jean?Olivier (2010), Distance to retirement and older workers ‘employment: The case for delaying the retirement age: Journal of the European Economic Association, (1542-4766), 8 (5), p. 1034
Kautonen, T., (2008), Understanding the older entrepreneur: Comparing third age and prime age entrepreneurs in Finland. International Journal of Business Science and Applied Management, 3(3), 3-13
Kautonen, T., Down, S., & Minniti, M. (2014), Ageing and entrepreneurial preferences: Small Business Economics, 42(3), 579-594
Kautonen, T., Tornikoski, E. T., & Kibler, E. (2011), Entrepreneurial intentions in the third age: The impact of perceived age norms. Small Business Economics, 37(2), 219-234
Kerr, G., & Armstrong-Stassen, M., (2011), The bridge to retirement older workers’ engagement in post-career entrepreneurship and wage-and-salary employment: Journal of Entrepreneurship, 20(1), 55-76
Lévesque, M., & Minniti, M. (2011), Age matters: how demographics influence aggregate entrepreneurship: Strategic Entrepreneurship Journal, 5(3), 269-284
Manolova, T. S., Eunni, R. V., & Gyoshev, B. S. (2008), Institutional environments for entrepreneurship: Evidence from emerging economies in Eastern Europe: Entrepreneurship Theory and Practice, 32(1), 203-218
Maritz, A. (2015), Senior entrepreneurship in australia: An exploratory approach: International Journal of Organizational Innovation, 7(3), 6
Maritz, P.A., Zolin, R., De Waal, G.A., Fisher, R., Perenyi, A., & Eager, B., (2015), Senior Entrepreneurship in Australia: Active Ageing and Extending Working Lives
Meier, V., & Werding, M., (2010), Ageing and the welfare state: securing sustainability: Oxford Review of Economic Policy, 26(4), 655-673
Oosterbeek, H., Van Praag, M., & Ijsselstein, A. (2010). The impact of entrepreneurship education on entrepreneurship skills and motivation. European Economic Review, 54(3), 442-454
Tornikoski, E. T., & Kautonen, T., (2009), Enterprise as sunset career? Entrepreneurial intentions in the ageing population: International Journal of Entrepreneurship and Small Business, 8(2), 278-291
Van Der Zwan, P., Verheul, I., Thurik, R., & Grilo, I. (2013), Entrepreneurial progress: Climbing the entrepreneurial ladder in Europe and the United States: Regional Studies, 47(5), 803-825
Verheul, I., Thurik, R., Hessels, J., & van der Zwan, P., (2010), Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs: EIM Research Reports, 201011, 1-24
Welter, F., (2011), Contextualizing entrepreneurship—conceptual challenges and ways forward: Entrepreneurship Theory and Practice, 35(1), 165-184
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