Why are governments around the world excited about entrepreneurship, you might ask? As new research from Stanford University highlights, it is a small group of entrepreneurs who create the majority of new jobs. Plus they are responsible for new innovation, industry renewal and new industry creation.
Australia is beginning to get some traction in the start-up space. We have a good track record of being one of the world’s best performers for the time it takes to actually set up a new business. But as Elizabeth Knight points out in an excellent piece today in The Age, Australia has a long way to go in order to build up a pipeline of funding and support for growing businesses.
So I believe it is time to widen the conversation from a focus on small business and start-ups to include entrepreneurship. We need to understand who are the true innovators and job creators and how we can supercharge their growth.
Here are some ways that we could get started. Let me know what you think and add your own ideas.
Five ways Australia can kick start entrepreneurship
1. Embark on entrepreneurship research
There is currently almost no research done on entrepreneurship - how it is changing and its link to job creation - in Australia. We need to begin longitudinal research into entrepreneurship, mapping the current ecosystem and identifying success, barriers and failure factors for high impact entrepreneurs. The research can inform strategy and policy.
2. Reclaim the word entrepreneurship
Make entrepreneurship a key part of industry policy with its own set of programs to heighten awareness of the role it plays in Australian business and society. Niches and fast growing groups to focus on are female entrepreneurs, student entrepreneurs and the over 50s.
Seek to increase Australia's connections to the global entrepreneur ecosystem to increase the interchange of knowledge, best practice and ideas.
3. Review existing programs aimed at small business
Entrepreneurial firms quickly outgrow small business programs which work on the assumption that once you are a certain size you don't need help. Not so. Many companies cannot make the transition from small to medium or local to global.
4. Look at tax incentives to encourage start-ups
Many countries have developed incentives to encourage investors to take equity positions in start-ups and to assist aspiring entrepreneurs build the business. They are also looking at removing barriers for entrepreneurs.
In Australia there is one major barrier that affects the ability of fast growing companies to attract staff. Under current rules employee share options are treated as income and taxed at the employees’ marginal tax rate. Basically this means that entrepreneurs cannot offer new employees a share of the company without someone (employer or the new employee) paying a big tax bill when the employee comes on board. Both sides of government have indicated that they are reviewing this legislation.
5. Rename and expand the Export Market Development Grant.
We are well into the Asian Century but it is alarming how few Australian companies export or even engage with Asia. Part of the problem is the huge expense to our entrepreneurs of exploring opportunities in Asia or anywhere else in the world. The EMDG program, which is the Federal Government’s principal financial assistance program for aspiring exporters, has recently been expanded. But it needs to be remodelled, refinanced, relaunched and plugged into global entrepreneurial ecosystems.