Conference summary: Inclusive entrepreneurship
Transcript of Conference summary: Inclusive entrepreneurship
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Employers' Group
Inclusive entrepreneurship Obstacles and opportunities for job creation
19 November 2012
European Economic and Social Committee
Brussels
Conference
Summary
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Opening speech
Koos Richelle, Director General, DG Employment, Social affairs and Inclusion, European
Commission
Koos Richelle stressed the importance of entrepreneurship for job creation, as was
recognised by the Commission in its Employment Package in April 2012.
He underlined that support for business creation by disadvantaged and underrepresented
groups thus deserved greater attention. The conference would be part of the
Commission's efforts to promote inclusive entrepreneurship. It focuses especially on
strengthening the legal framework, making access to finance easier and developing an
entrepreneurial culture.
The objectives of the conference are:
- To encourage Member States and regions to use ESF resources for the promotion of
inclusive entrepreneurship;
- To listen to problems of entrepreneurs and give them the occasion to present good
practices as an inspiration on how to promote inclusive entrepreneurship.
He invited the participants to listen to each other’s experiences, not only the good ones
but also the experiences of failure.
The complete text of Mr Richelle's speech is available on the conference webpage.
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Session 1 Obstacles for business creation: entrepreneurs' testimonies
Facilitator: Patrick Sapy, Director, microStart
Aida Ben Amara is a Tunisian woman who has lived in Italy since 1995. She arrived in
Rome to study and the early days were very hard. In order to make ends meet, she also
worked for an auto parts company – but the company went bankrupt. She was exhausted,
living in poverty, on the point to drop everything and leave. Instead, she decided to
become an entrepreneur, despite the difficulty in obtaining a loan ("Because I was a
young migrant, nobody listened to me"). In 2001, despite some difficulties to make male
workers accept that their boss is a woman, she took over her former company –and its
debts- and she still runs it successfully. Decision-makers should support youth
entrepreneurship and understand that the future belongs to youth!
Victor Navarro is from Spain, but spent a few
years in the USA. This experience taught him not
to be afraid of failure ("If you fail once, try again
and again"). He is now running his third business,
with 5 employees and 11 volunteers, getting
rebates (cash-back) for social causes and linking
in the process vendors, clients and social
enterprises/causes. 12 years ago it was quite
easy to find financing in Spain but today it's
extremely difficult to convince the banks, in addition to even more complex
administrative work. For him, the keys to success are: perseverance (especially in this
difficult period, which is also full of opportunities, "remember: bad things are never
forever!"), enthusiasm, a clear goal and having lots of different contacts. Steps for new
businesses: (1) mentoring & training; (2) building trust; (3) financing; (4) follow-up. The
main goal / dream of any entrepreneur is the freedom to make a change (in addition to
earning money).
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Horia Paraian is a Romanian entrepreneur who
started a small business back in 2000, in the field
of car maintenance and technical inspections.
Currently he has 3 employees and hopes to get to
5 in a few years. He still remembers fondly his
first micro-loan of USD 12 000, without which it
would have been impossible to open the
business. This credit was provided against real
estate guarantees. Currently the situation is
dramatic in Romania. Entrepreneurship is seen
as the only way out of the crisis for many people.
Marek Zabek is from Podkarpackie, a rural area
of Poland. Since 2002 he has worked as a financial
intermediary for micro-credit organisations,
helping small enterprises from Podkarpackie area.
The impulse for his business idea was to see that
a lot of money was coming into Poland in the final
pre-accession period to help entrepreneurship,
but most of that money was going into cities.
Therefore, he started a business to help small
entrepreneurs in rural areas get access to finance
(often micro-loans are the only financial help
start-up enterprises can get). Micro-credit generally helps improve economic
competitiveness of deprived regions. The most crucial issue today is trust: how to rebuild
it?
José Compagnon is a member of the French travellers'
community. A person with disabilities, he spent long
periods of time as unemployed. He underlined the
importance of the assistance from the micro-finance
institution ADIE, which provided him not only with
financial support to start his small business, but helped
also to sort out the necessary papers and provided
counselling and advice.
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Aida Ben Amara also stressed the importance of the help she received from "Risorsa
Donna" Foundation. Not only did the Foundation act as guarantor for her EUR 20,000
micro-credit, but it also provided her with moral support and training. Ms Ben Amara paid
her loan back in 2 ½ years instead of 5, in order to help other women entrepreneurs take
advantage of the help given by "Risorsa Donna". Other entrepreneurs were also in
agreement about the difficulty to obtain funding in the current economic climate and
Victor Navarro provided an example of best practices from Spain: an unemployed person
can request the payment of unemployment benefits in a lump sum (instead of receiving it
in monthly instalments) if he/she opens a business.
Despite the difficulties, all panellists were in agreement – they would start again as
entrepreneurs, because of the satisfaction to run their own businesses, to have control of
their working lives, to create something. The advice given to potential young
entrepreneurs was: be courageous, it's a long and winding road, but it can bring great
satisfaction. It is important to have patience, to have a clear vision of what you want to
achieve and to gain customer trust through hard work and honesty. In addition to
financial help, training and networking are also important – and local associations of
entrepreneurs can often provide a mentor for the younger colleagues.
Session 2 Systemic views on obstacles and enablers of inclusive entrepreneurship
Facilitator: Martin Jung, Director, Evers & Jung
Martin Jung introduced the debate on obstacles and enablers of inclusive
entrepreneurship as a multi-dimensional issue, together with the appropriate funding
requirement:
- The client support (high funding requirement): clients need various types of support
(access to finance or business development support);
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- The legal framework (low funding requirement): we do not always have suitable legal
forms, administrative and tax requirements must be simplified, and social security
schemes adapted to especially new types of entrepreneurs and self-employment.
- The entrepreneurial culture (medium funding requirement) raises the issue of
entrepreneurship awareness (not only for inclusive entrepreneurship but also for
intrapreneurship), entrepreneurship education and the diversity of entrepreneurs profiles
(including the promotion of role models). In a mid and long term perspective this may
have the biggest impact to make Europe more entrepreneurial.
An integrated strategy is needed, especially while preparing the new EU funding period
(2014-2020). It is particularly relevant to analyse whether instruments for targeted groups
are necessary and how ‘mainstream’ instruments can address the diversity in a better
way.
Jonathan Potter presented the OECD draft annual
report. The OECD objective is to produce a report
which would be used as a reference in the area of
inclusive entrepreneurship. It is a part of the
cooperation agreement between the OECD and the
European Commission on inclusive entrepreneurship,
which also includes the publishing of policy briefs on
specific topics (such as youth entrepreneurship) and
of capacity building seminars for the managing
authorities of the European Social Fund in this area.
Promoting inclusive entrepreneurship has a crucial
role to play to reach the Europe 2020 target of an
employment rate of 75%. The report identifies the barriers to business creation (in
particular access to finance and skills).
Young people face well-known obstacles, such as little savings and difficulty accessing
finance, lack of entrepreneurship education and training, lack of prior work and
entrepreneurship experience, lack of role models and business networks.
Women are generally less comfortable in finding financial support and they lack prior
entrepreneurship and management experiences. They suffer from traditional gender
norms and some taxation systems which support traditional family models, and their
network of contacts is usually narrower that men's one.
Finally, about 50 % of Europeans think they do not have the skills to become
entrepreneurs. For this reason, training programmes for skills development must be
developed.
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Marcella Corsi raised the European problem with
tapping the potential of female entrepreneurs. Few
start-up businesses are created by women, and when
they do it, they tend to focus on segregated areas, and
not engage in high-tech companies.
Three measures need to be tackled:
Promote an entrepreneurial culture among
women, to fight stereotypes;
Support (financial and training oriented);
Provide incubators for women: in Europe, the
EuroChambres women’s network gave a strong
impetus in this direction.
Many public projects exist, such as the agency for female entrepreneurs in Germany.
Women still suffer from a triple burden (job, childcare and housework), which they often
find difficult to reconcile with entrepreneurial activities.
Diana Filip from JA-YE Europe
highlighted the essential role of
entrepreneurship education to give
young people the enthusiasm to create
a job. An important policy development
is the support from business to bring
mentorship to the classroom. The
partnership between teachers and the
business world works as a powerful
enabler for young entrepreneurs. It is
now acknowledged that young people
who receive an entrepreneurial education at school are performing better in their future
career, whether they work as self-employed or employee. Experiences in Canada showed
that pupils who received an entrepreneurial education better understand the risk of
failure. Europe needs an entrepreneurial ecosystem which fosters young people to create
fast growing innovative companies. Europe should also support cross-border joint
ventures, creating more synergies between groups of young people from different
countries.
A question was raised on the possibility to integrate the informal sector in the OECD
report. Figures are by definition difficult to gather for undeclared work, yet schemes such
as freelance work are a reality for many Europeans.
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Another suggestion was for the OECD to consider hybrid forms of enterprise such as the
phenomenon of part-time self-employed and of similar forms of work arrangement.
Statistics have difficulties to reflect this situation.
The issue of policies for previously excluded people could be addressed from two
different angles: the economic objective of creating growth, and the social inclusion
objective of assisting people to move off from unemployment. It is in line with the
objectives of the cooperatives, which are currently more concerned to maintain jobs than
to create new jobs, and to address the issue of senior entrepreneurship for redundant
workers. The Commission-OECD policy brief to be issued is focused on senior
entrepreneurship.
Session 3 Sharing good practice – parallel workshops
A) Access to finance and business development services
Facilitator: Klaas Molenaar, Professor in Financial Inclusion and New Entrepreneurship,
The Hague University of Applied Sciences (The Netherlands)
The workshop consisted of three presentations,
focussing on the effectiveness, difficulties and successes
of programmes in France, Belgium and Estonia as well as
Italy, Lithuania and Germany. In his introduction, Klaas
Molenaar noted that the issue of access to finance
affects segments with rather different characteristics and
objectives, ranging from unemployed persons just
seeking additional ‘survival’ income to medium
entrepreneurs. He stressed the need to have a clear idea
on whether the objectives of the programme focus on
entrepreneurship itself or more broadly on social
inclusion objectives, as there are trade-offs between the
two objectives and important implications for
programme design. He also noted the substantial increase in diversity in society in recent
years, driven notably by globalisation, which results not only in the existence of a varied
range of actors with different personal characteristics, but also in a much faster evolution
in the labour market, leading to much more frequent changes in status
(employed/unemployed/self-employed etc.) and to the emergence of hybrid figures (e.g.
intermittent, part-time or combined entrepreneurs). He also noted the importance of
drawing the necessary [policy] conclusions from the distinction between being ‘credit-
worthy’, ‘bank worthy’ and ‘grant-worthy’.
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The presentations by Safia Tami and Astrid de Visscher examined the experience of
Créajeunes in France, a substantial programme supported through the European Social
Fund which provided inspiration and experience also for the DreamStart programme
being launched by MicroStart in Belgium (the first Dreamstart session is to begin in April
2013). The Créajeunes programme was launched by ADIE in 2008 on 6 sites and now
includes sites in 19 cities, including the overseas territories of France. The target group is
young people aged 18-32 and having a business project requiring financing of up to 25
000 euros. Reasons for launching the programme were, among others, that a study had
revealed that more than 50% of young people would like to start their own business,
while another aim of the project was also to provide a societal answer to the riots that
had involved some suburbs in France.
Safia Tami insisted on the importance of training and personal coaching as success factors
and on the need for individualised mentoring. She also stressed the educational value, in
a broader sense, of features of the programme such as the need to present a draft
business plan/ idea before a jury. The composition of the jury was also very important and
often resulted in considerable help and knowledge transfer to the young people, as jury
members frequently became involved on a personal basis. The skills gained in the
programme are very useful even if the business launched proves unsuccessful, as it
increases employability.
Since the beginning of the programme in 2008, 3 700 young individuals from 18 to 32
years old have participated in Creajeunes, among which more than 1 000 in 2012. Most of
them stem from a precarious or disadvantaged background (70% unemployed, and almost
55% have either qualifications below baccalaureate level or no qualifications at all).
Almost half of participants (47%) were women.
As for the success rate, 10 months after having benefitted from the programme, 31% of
beneficiaries had created their business and among them 38% had obtained a micro loan
from ADIE. Among those who did not eventually create a business, 21% found
employment.
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While the experience from Créajeunes was
considered successful under most respects,
the presentation by Anne Jürgensson, based
on a 2010 evaluation study, provided a more
mixed assessment of an entrepreneurship
programme in Estonia offering a business
start-up subsidy for the unemployed. The
programme is run by the unemployment
Insurance Fund and consists of three
elements:
Entrepreneurship training (if experience is not sufficient);
A subsidy of up to 4 474 euros;
Mentoring services (6 meetings of a mentor club) for a limited number of start-up
entrepreneurs.
While the evaluation is a mid-term one and therefore final results will be coming later, it
is expected that 70% of beneficiaries are still running an entrepreneurial activity two years
after receiving the support. However, so far very few entrepreneurs who had started their
companies since 2008 earned enough to pay themselves a full salary. In other words,
beneficiaries are out of unemployment but not out of poverty. Part of the grantees
already accepted a paid job while still trying to continue with their business.
Success in entrepreneurship was found to have been hindered by excessive optimism,
unrealistic plans, lack of financial resources, and insufficient knowledge in marketing. It
was found that the programme was highly relevant, in particular since the start of the
crisis, but that the practical organisation of the programme could be improved. Given the
positive impact of business training, the provision of support services should be
enhanced. The target group should remain limited. The results also highlighted the
important non-material benefits of entrepreneurship, but contrary to the Créajeunes
experience, there are some doubts about the improvement in employability as many
Estonian employers seem to be wary of employees with an entrepreneurship record.
Stefanie Lämmermann from DMI (Deutsches
Mikrofinanz Institut) presented the COPIE manual
on "Designing microfinance operations under the
European Social Fund". She recalled some basic
principles of effective microcredit operations –
low loan amounts, easy accessibility, a personal
relationship with borrowers, and quick and
simple disbursement mechanisms and the
different types/objectives of microcredit (social
microcredit, individual microcredit, and business
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microcredit). She then compared the experience of programmes supported by the ESF
and run in three different areas – Lithuania, Germany, and Calabria (Southern Italy) with
unemployment rates respectively of 16%, 6% and 20%. As of November 2012 the
programme disbursed respectively 350, 10 000 and 1 000 microloans. Overall, success
factors were found to be thorough ex-ante evaluation, policy change (from a logic of
grants to one on revolving funds), a proper setting of amounts and terms, a good link
between financial and non-financial services, and a favourable general environment for
enterprise (for example, avoiding excessive bureaucracy, including rules that, as in
Lithuania, result in beneficiaries losing access to benefits when accessing the programme).
Policy responsiveness required effective cooperation between all actors and effective
evaluation was a key success factor. As for the crucial question of the proper amount and
interest rates, the best results seem to derive from median interest rates as rates that are
too low reduce the amounts that can be financed, risk distorting the market and generate
bad incentives, but high rates undermine sustainability of the borrowers’ businesses.
Interest rates charged varied between 0% (Calabria) and 9.49 % (top of the range in
Lithuania).
B) Legal and institutional framework
Facilitator: Maria Nowak, ADIE International (France)
Iain Willox presented a communication on "Getting the institutional framework right:
the COPIE tool kit".
COPIE (the Community of Practice on Inclusive
Entrepreneurship) is a learning network whose goal is the
transformation of the policy environment so that
"entrepreneurship becomes a natural choice for people from
all walks of life".
The COPIE toolkit for inclusive entrepreneurship (more
information on www.cop-ie.eu) is a ready-for-use toolbox to
help policy makers and regional and national ESF/ERDF
Managing Authorities to develop and deliver useful inclusive
entrepreneurship support.
The toolkit helps figure out the variety of support resources that are needed to create an
integrated system rather than individual projects. It can be applied in three stages: (1) a
diagnostic tool to map the strengths and weaknesses of existing regional or national
entrepreneurship structures; (2) the design of inclusive entrepreneurship policies by using
a joint action planning methodology which promotes active stakeholder engagement and
(3) implementation of effective support interventions in key priority areas of
entrepreneurship support.
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Jenny Charlier (ESF Agency in Wallonia) provided a
practical example about the application of the COPIE tool
kit. It was a new methodology for her agency, challenging,
requiring a good preparation of the COPIE sessions and
meetings. To answer the questions proposed by COPIE's
questionnaire, the first need was to set up a network of
stakeholders. For her agency, it was a very useful
experience, leading to an exchange of ideas, validation of
some of their practices, fruitful meetings, etc. Overall,
COPIE provided an excellent approach to confront
methods and to find out more about best practices.
Maria Nowak (ADIE - Association pour le
Droit à l'Initiative Economique) presented
her association's proposals on overcoming
legal barriers for business creation out of
unemployment in France. There are two
different visions about the situation of
small businesses in France: (1) politicians
and media say "there is a lack of
entrepreneurial spirit"; (2) self-employed
say "I don't know how to register, it's too
complicated, I need support…"
The importance of creating enterprises in
France can hardly be overestimated, as it is one of the main avenues for job creation. In
2009, small-scale projects initiated by unemployed persons accounted for 135 000 start-
ups, involving most vulnerable group. However, self-employment still did not exist in the
labour code and the administration has so far not conducted a survey on the informal
sector. The French parliament adopted the law for modernisation of the economy (2008),
which regulates also self-employment. The auto-entrepreneur regime aims to: (1) simplify
registration; (2) alleviate charges (payment of social charges only when turnover); (3)
promote the extension to part-time work
As a result, since 2009 the number of auto-entrepreneurs has risen by 1.2 million,
accounting for roughly half of the total number of entrepreneurs in France. It has become
a major mode of integration, while solving part of the unemployment issue. The auto-
entrepreneur regime should continue to be supported and extended to other categories
of enterprise.
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Bertil Lidfeldt (Swedish Public Employment Service)
presented how the Swedish social security reform is
seeking to reduce the risks of moving to self-
employment. In Sweden, main responsibility for social
services lies in municipal councils (e.g. health and
parental insurance). The cooperation between
authorities (Public Employment Service, tax agency,
social insurance agency, SE business registration office,
customs, etc.) is essential to facilitate the starting of
companies. A special website, www.verksamt.se
provides advice to would-be entrepreneurs, addressing
the whole business cycle, from creation to closure.
The Public Employment Service support for unemployed persons when starting a
company is consistent and covers a large number of areas: labour market information,
personal counselling with business experts, financial support to start a business
corresponding to unemployment benefits during 6 months (extra support for disabled
people), education and training, etc. New target groups for the Public Employment
Service are long-term sick persons (with possibilities to return to the labour market) and
newly arrived immigrants.
A lively Q&A session followed. On the question of having statutory versus voluntary
approach towards education and training of business starters a number of discussants
intervened. In Belgium, statistics suggest that those who have followed management &
accounting courses are more successful than others in their business. The debate on the
convenience of requesting obligatory diplomas (or knowledge) to start a business
generally leads to the conclusion that more information (and examples of best practices)
should be exchanged among MS and among actors in the field.
C) Entrepreneurship culture
Facilitator: Christian Vintergaard, Director, Foundation for Entrepreneurship
(Denmark)
Christian Vintergaard considers that raising the
entrepreneurial spirit of Europeans is pending upon:
The institutional side: how can authorities
promote a more entrepreneurial culture?
An individual side: how to convince more
people to become entrepreneurs?
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Ivan Diego Rodriguez presented the result of the
Community of Practice on Inclusive Entrepreneurship
(COPIE) thematic group on Entrepreneurship education1.
Conceived as a guide for the new ESF programming
period, the COPIE Toolkit for Inclusive Entrepreneurship
encompasses an entrepreneurship education diagnostic
tool. It proposes a methodology to establish a matrix of
results. These latter would be used as a basis to spot
some areas for improvement and to establish an action
plan.
Questions such as “What would you have liked to have
learned at school?” were addressed. To be yourself, to
play business games were among the answers proposed to promote entrepreneurship at
school through various pathways.
It is important to see entrepreneurship as a methodology to add value to others. It does
not concern only financial value, but also social return on investment. Entrepreneurship
education should then be promoted at University in educational science as a new way of
teaching.
Anca Otilia Dodescu presented the AntrES
project promoting women entrepreneurship in
Western Romania by providing training for
Business start-up, Business development and
financing facilities. An important part of the
training programme is the participation of role
models that are successful women entrepreneurs
from the local area.
Financed by the ESF this programme has been
selected by the Commission as a success story. She
highlighted the strong support received by the
programme by municipalities and the peer learning aspect which strongly contributed to
the success of AntrES.
Thanks to this scheme, 1 800 women were trained, 209 new business start-ups have been
launched, and 72 new jobs for trainers were created.
1 http://www.cop-ie.eu/thematic-groups-entrepreneurship-education
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Dennis Hoenig-Ohnsorg from Ashoka focuses on
young social entrepreneurs. He wants to
demonstrate that youth is often seen as a problem
and that they should be seen as a solution. He tries
to identify young people with a strong
entrepreneurial spirit which could also play a
multiplier effect by convincing other young people
to become entrepreneurs. This whole process can
be seen as a cultural change. Activating the
entrepreneurial spirit among youth will create a
community of change-makers, which are able to
bring forward a European vision as part of the
European identity.
Questions were raised on the necessity to promote entrepreneurship not only as a goal in
itself but as behaviour at work, even for employees. It could be done through the
promotion of role models, though it could have a negative effect as it could discourage
potential entrepreneurs who do not identify themselves with these role models. For this
reason, Dennis pleads for a broader perspective of the entrepreneur as a change-maker of
the reality for more than one person but for the whole community.
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Cost-effectiveness of inclusive entrepreneurship support
Alexander Kritikos, Research Director, German Institute for Economic Research
Alexander KRITIKOS presented an analysis of the effectiveness of 2 business support
schemes targeting starters out of unemployment: the bridging allowance
(Überbrückungsgeld) and the start-up subsidy (Ich-AG).
The bridging Allowance (1986-2006) gave a six-month financial support to unemployed
individuals. The Start-Up Subsidy programme (2003-2006) gave a monthly allowance to
unemployed who want to start a business plus for a maximum of 3 years (reduced to 9
months in 2006 and further reform in 2012).
Both programmes led to positive results: survival rates, even after 56 months, were high,
with a difference of 20% between those who benefitted from the bridging allowance and
those who did not. For the start-up subsidy, the difference was 15%. As a result,
participants were less likely to be subsequently registered as unemployed, they were
more likely to be integrated into the labour market (self-employed or employed). In
addition, businesses started under the two schemes had a strong job creation record:
between 2.6 and 5.1 jobs on average for the bridging allowance2 and between 1.7 and 2.6
jobs for the start-up subsidy3 after 56 months. Participants in the programme were also
likely to earn more than what they had earned previously in salaried employment. Both
programmes were effective in comparison to alternatives. The start-up subsidy is
particularly interesting with regard to inclusive entrepreneurship as it attracted
entrepreneurs from underrepresented and disadvantaged groups, such as women (47% of
beneficiaries), young people and the low-skilled.
As far as the cost-effectiveness of the programmes is concerned, the Federal Employment
Agency saved money with the bridging allowance as successful beneficiaries who started
their business went away from unemployment. The start-up subsidy, on the contrary, was
more expensive than it would have been to give unemployment benefits to the same
beneficiaries.
2 Depending on the gender of the founder and the region where the business was created.
3 Depending on the gender of the founder and the region where the business was created.
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Closing speech
Madi Sharma, Member of the Employer's Group, European Economic and Social
Committee
In her closing speech, Madi Sharma stressed that the ideas of entrepreneurs matter, in
particular in the context of the current crisis. This is why action should be taken to create
a favourable environment for entrepreneurship.
Mentoring and training for starters are essential to help people transform their ideas
into action, even though entrepreneurship is a lot about learning by doing.
Speaking also from her own experience as an entrepreneur, she underlined that
getting rid of stereotypes (e.g. about women's capacity to run a business), is
important if we want to foster entrepreneurial spirit. Origin, sex or age should not
prevent anyone from becoming an entrepreneur.
In addition, we should learn to accept failure. While in Silicon Valley, an
entrepreneur's credibility increases with failure, in Europe entrepreneurs often do not
get a second chance.
Moreover, as undercapitalised businesses tend to fail, easing access to finance is a key
factor to success.
Finally, she highlighted the Single Market as an opportunity for entrepreneurs, which
should be taken into consideration when designing policies in the fields of
employment, education, training and poverty alleviation.