ITC: How to target support at young entrepreneurs
The International Trade Centre (ITC)’s Covid-19 Business Impact Survey contacted over 2000 business leaders and managers in 130 countries in April and May 2020, including one-fifth of respondents aged under 35. Comparing their survey responses to those of their elders yields interesting insights into how young entrepreneurs are weathering the pandemic storm (ITC, 2 June).
Forty-two per cent of companies led by managers or owners under 35 said that there was a risk that their business will permanently shut down because of the crisis, compared to 35% for non-youth-led firms. This suggests that although youth-led firms are not necessarily more exposed to the economic impacts of the pandemic, they are more sensitive to the impacts and less able to cope. Possible reasons include their lack of diversification, social networks and professional experience.
On the other hand, the survey found that youth-led firms were significantly more likely to adopt an agile response to the situation than their older counterparts, as they are more likely to turn to online sales, create new or customised products, or loan their employees to other enterprises in response to the crisis. Young entrepreneurs also found it easier, on average, to access information and benefits from Covid-related government assistance programmes compared to their more aged peers. This may reflect relatively higher digital literacy rates among young entrepreneurs. However, only a minority of youth-led firms said they had received help from business support organisations. Young entrepreneurs seemed to need concrete support in the short term to reduce costs, such as rent subsidies, but were less interested in tax waivers and financial programmes compared to older entrepreneurs.