Raising the Next Generation of Entrepreneurs

What do the world’s seven largest economies (G7 nations) and emerging powerhouses like China, India, and Brazil have in common? All have entrepreneur-driven societies.

At the heart of every wealthy nation is a legion of small and medium sized enterprises (SMEs) owned and operated by entrepreneurs. Entrepreneurs are the foundation from which strong economies are built and what keeps them competitive. Not only do SME’s bridge the supply chain gaps of larger companies, they also contribute to national productivity, push innovation, and increase the standard living for all.

For developing nations like the Philippines, entrepreneurship is the most effective way to curb poverty especially in far flung communities. This is because simple cottage industries do not require sophisticated infrastructure to operate — they can be set up anywhere, so long as there is a market with expendable income. Entrepreneurship fast-tracks development in the countryside which, in turn, creates additional employment and prevents migration of people from rural to urban areas. Moreover, entrepreneurship promotes capital formation by utilizing idle assets (capital, land, and unemployed workers) and converting them into something productive.

Entrepreneurship also promotes a culture of creativity, invention, and business dynamism among the populace. This is due to the fact that small businesses must continue to evolve and innovate in order to compete in the marketplace. They must think outside the box to survive. All these leads to the development of new technologies and/or new business practices.

The more entrepreneurs operate within a society, the less people depend on government subsidies. This is why entrepreneurship is said to be the cornerstones of national self-reliance.

Developing a culture of entrepreneurship was not in the forefront of government’s agenda until Secretary Mon Lopez took the helm of the Department of Trade and Industry last year. Under his baton, programs like Kapatid Mentorship, Shared Services Facilities, Go Lokal and Pondo sa Pagbabago at Pag Asenso were established. All these aim to promote the gospel of entrepreneurship among Filipinos.

Unfortunately, the DTI cannot do it alone. Developing a culture of entrepreneurship starts at home.

ENTREPRENEURSHIP STARTS AT HOME
In Philippine society, parents typically encourage their children to become professionals, whether it be a lawyer, architect, doctor, or even a nurse. The rationale is that professionals earn relatively more than the common corporate man while enjoying a semblance of stability and prestige. The more desperate parents raise their kids to be celebrities, politicians, or both. For them, this offers the fastest way to fame and fortune, a fact I cannot refute, unfortunately.

It is only the business owners who typically train their children to become entrepreneurs. They do so to ensure the proper succession of the family business. As a result, business owners become wealthier by the generation. They are the Sys, Gokongweis, Razons, and Ayalas among us. Sadly, there are only a handful of them.

Of course, there are mavericks in society who start and build their own businesses from the ground, up. They are the unsung heroes of our economy. We need more of them to trail blaze new industries and generate jobs. This is why it is our duty, as parents, to impress upon our children that entrepreneurship is an outstanding career choice, not one to be avoided for its inherent risks.

Entrepreneurs are a rare breed. They are people who are self motivated, have a vision, and possess the ability to lead the people around them toward that vision. An entrepreneur is a motivator, a passionate speaker, an organizer, and a chronic planner. He is able to foretell outcomes of certain acts or courses of action.

Academic performance is not a gauge of entrepreneurial talent.

Studies show that there is no correlation between scholastic grades and one’s probability of succeeding as an entrepreneur.

More often than not, entrepreneurs are those who cheat in examinations, barter toys in the school grounds, and lead gangs. This is because entrepreneurs innately figure out how the world works. They know how to make a profit or get ahead in the fastest, most efficient way. They see needs, wants and sources and figure out a way to bridge them. They are creative and not stymied by rules. More importantly, they are willing to assume the risks and consequences of their actions.

The greatest entrepreneurs of our generation — Steve Jobs, Ted Turner, and even our own Ricky Razon of ICTSI — were all scholastically challenged and kicked out of school for not conforming to the norm.

Children display entrepreneurial characteristics early in life and it is every parent’s duty to hone these traits, not vilify them. Cameron Harold, book author and YALE lecturer, describes some of the characteristics typical of natural entrepreneurs.

Children who don’t take instructions at face value. They question the reasons for such instructions and have the gumption to negotiate its terms; children who are self-empowered to make money. You find them selling door to door, making things with their hands to sell or even collect old junk to resell at second-hand stores; children with the innate knowledge to buy low and sell high. These are the kids who buy toys from wholesalers to sell to their peers on the playground; children who recognize opportunity and take advantage of it. These are the young tykes who supply their father’s company with pens, paper and envelopes, just because his father is in the position to approve the purchase.

More sophisticated young entrepreneurs recognize that recurring income is better than a one-time sale. They are those who peddle meat and vegetables to restaurants or provide cooked lunches to office workers. They also recognize the power of “branding.” They have the ability to create a story (or context) for their products and brand it accordingly to create perceived added value.

What do parents do once they detect entrepreneurial characteristics in their children?

Experts advise that children be allowed to execute their plans.

If they fail, parents must acknowledge the effort and encourage them to try again, this time, using the lessons learned from the first attempt.

At an early age, children must be taught the value of money. Giving out allowance without earning it sends the wrong message, experts say. Allowance should be tied to chores. The more chores are done, the more allowance a child is entitled to. This teaches them that there is no free ticket to life — that money is not an entitlement but needs to be earned. It teaches them that the state of one’s wealth is not dependent on others but on their own hard work and industry. Along with this, parents must teach their children to save at least 20% of their earnings, no questions asked. Savings are every person’s weapon against desperation.

Children must be mentored on the dos and don’ts of entrepreneurship and to have an appreciation of good business practices. Experts recommend that parents talk about both good and bad business habits to their children through relatable examples. Perhaps they can tell the story of how Ben Chan grew from a single store in SM City to a retail conglomerate. Conversely, how Texas Chicken failed in the local market. All these make business interesting to our children whilst imparting important business lessons.

Its important, too, to encourage our children to face people and perform. Recitals, declamation contests, and school debates are means to teach our children not to sit in the proverbial back of the bus but to be alphas. The ability to “perform” — to speak publicly, to persuade, to sell, to negotiate, to argue — are all traits they will need in their life as entrepreneurs.

Traits of entrepreneurs are as much a function of nature as it is of nurture.

Parents should do their fair share to breed the next generation of Filipino entrepreneurs. To do so will help the Philippines take its rightful place in the “grown-up table,” along with the G7 nations and new powerhouse economies. It could be our best contribution to nation building.

 

Andrew J. Masigan is an economist.