UK supports youth entrepreneurship
Supporting youth entrepreneurship in the UK.
Help young enthusiastic people start their own businesses.
The competition is only open to people between 18-34 years-old and resident in UK, Ireland, Sweden, Denmark or the Netherlands. Does this apply to you
Country of residence of entrepreneur
Tell us about your personal background. Why are you passionate about this issue? Making an idea a reality takes innovation, dedication and strong leadership. Do you have the necessary entrepreneurial skills to realize your vision?
For the past several years I have been working in the field of identifying private investment for social good. Passionate about making a difference in communities around the world I have considerable experience in raising awareness and funds for the benefit of developing countries. Since the economic recession and the knock-on effects such as the introduction of university fees in the UK I have felt a desire to encourage the same kind of response in the UK.
This social venture builds on specific skills that I have already developed and knowledge already acquired: planning and research; creative thinking; organisation and decision making; financial management; marketing and business management.
I have been researching the subject for several months in order to assess the scale of the issue, analyse how to reach potential beneficiaries and develop a financial model that works for the beneficiary, the consumer and the organisation in the long run. The formal organisational structure is almost complete, thus formal registration can begin in due course.
About Your Organization
UK supports young entrepreneurs
United Kingdom, XX
Country where this project is creating social impact
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The Need: What problem are you trying to solve?
With youth unemployment at its highest level since records began with 23.1% of 16-24 year olds unemployed (ONS 2011), they are already beginning to be referred to as 'the lost generation' and experts warn of dire consequences. This is an issue which should concern us all. The direct cost of youth unemployment is substantial: the Prince’s Trust has put a figure at £4.7 billion a year after taking into account productivity loss and the cost of benefits.
The Government recognises the need for youth entrepreneurship and has recently announced a new Work for Yourself Programme.
By stimulating youth entrepreneurship we will not only tackle the rising cost of unemployment benefits, but also increase productivity and job creation around the UK.
The Solution: What is your solution? Be specific!
This project models itself upon Kiva.org and aims to leverage public support online for people aged 18-30 years to start and develop their own business thorugh a microloan.
The applicants can be from any background and need not be unemployed to qualify (entrepreneurship also opens up new opportunities for others, and start-ups may require additional funding to further develop). Each approved youth applicant will be invited to upload their business plan and the public will be able to donate. Lenders can browse the loan requests online (see Kiva.org as example) and chose to lend upwards of £50. Total funds will be leveraged to make a microcredit loan to a young person to start or develop their business. Loans will be repaid and lenders can then further lend their funds, donate to the organisation or withdraw funds.
Additional services such as business development tools for applicants and networks of local business mentors will be developed as the organisation develops.
The Model: Walk us through a specific example of how your solution makes a difference; include your primary activities
Through each online lender risking an individually affordable amount, the organisation will pool resources in order to leverage support to make a bigger difference across the UK.
Activities: Initially a web platform with suitable financial capabilities will be developed and marketed. Potential beneficiaries will be sought through working with a number of partner organisations such as the Prince’s Trust, National Students Union, City Colleges/Schools, vocational institutions, careers services, Jobcentre Plus, CBI and other community-driven non-profits etc. Beneficiaries will be sought from around the country to provide a balance of geographical coverage.
Average size of loans: The median amount of finance used at start-up is just over £15,000 (2004 data). The main purposes of loans are to fund: premises, working capital, motor vehicles, equipment.
The Marketplace: Who are your peers and competitors? Identify others also working to address the needs you are and what differentiates you from them. What challenges could these players pose to your success or growth?
Peers: Kiva.org – invests in developing countries and recently launched in the USA; YES (Youth Entrepreneurship and Sustainability) – encourages youth employment around the world
Competitors: Fair Finance – only in London, older target group; Prince's Trust – provides entrepreneurial advice for young people but does not make loans; Bright Ideas Trust – provide advice and funding for 16-30 year olds in London who are not already in employment, education or training.
This model will work closely with partners such as the above to create a meaningful solution for young people. This project clearly addresses the financing need, but additional elements such as the development of business and marketing skills will rely on external partners in the beginning.
Select the stage that best applies to your business
Operating for less than a year
This Entry is about (Issues)
What is the social impact you have had to date and how you measure it?
No impact to date.
Economic and social impact will be monitored closely from start-up phase:
- Repayment rates and long term survival rates
- 3-year measurement of increase in standard of living (wage/economic)
- Creating additional employment opportunities
- Access to other standard financial loans (preparing borrowers to enter mainstream credit system)
Indirect impact such as the knock-on effect of poverty reduction in the communities in which the SMEs and sole traders operate will be analysed.
What barriers might hinder the success of your business? How do you plan to overcome them?
1) The scale of lenders required will be a barrier to fulfilling lending requests. Marketing will be key to ensuring that the British public lends. Engaging with traditional funders (companies, trusts/foundations) will help fulfil loan requests in the first year.
2) The repayment model is critical and default rates need to be kept low. Using expert advice from organisations such as CAPS will be sought. The organisation should also be confident that entrepreneurs are who they say they are and determine any proper licensing and credentials required for the loan to make an impact.
How does your model address financial, social, and environmental sustainability?
Based on using several funding avenues consecutively:
1. Loan amounts include a 2% (tbc) excess to cover administrative expenses made when transferring funds
2. Funds repaid include a 5% APR (tbc)
3. Optional donations can be made by lenders on top of their loan amount or loan amount can be invested in the organisation upon repayment
4. External traditional funders to fill operational gaps: Trusts/Foundations, Corporates, Individuals
The project relies on an increasing number of young people requesting loans. Awareness of the service will be created through:
1. Working alongside organisations targeting young people
2. Stimulating by word of mouth
3. Targeted marketing
One of the project’s aims is to create investment across the UK → income generation for young people and their communities (job creation, reinvestment in deprived communities etc). A gender balance will also be sought within the lending portfolio.
The project is an online platform, using online banking to leverage loans to young people. Environmental factors will be included within business plans so that lenders are made aware of any positive or negative effects.
Awareness & learning
How do you see social entrepreneurship contributing to the improvement of developing countries?
Social entrepreneurship in western markets is a way of creating value that has profit, people and planet at its core. It can take the form of leveraging western market support for ethical products and services and deliver real financial and environmental value to the base. This value chain can often create real benefits for developing countries.
In addition, through increased revenue for the base it can break cycle of poverty that hinders many communities in developing countries. It ultimately enables parents to be able to send their children to school, to afford quality health care and create futures for themselves and their communities .
In developing countries social entrepreneurship can be a sustainable solution to problems of neglected externalities, such as simultaneous market and government failure.
What aspects of your stay in Uganda as part of the competition do you think you will find most challenging and rewarding?
The most rewarding will be to work alongside local young Ugandans and learn how products can create real benefits for everyone involved in the business. It will likely help stimulate new ideas for this business and undoubtedly fuel my passion for internationally focused projects in the future.
I believe that in every challenge lies a solution, so I look forward to feeling fully challenged throughout the trip!