Guide for young entrepreneurs

Stredná odborná škola Handlová SLOVAKIA

RegisterPart I Social economy – a vision of a new form of EU1. The concept and characteristics of the social economy2. Implementation of the social economy3. Rediscovery of the social economy and its new challenges4. The social economy and Slovakia

Part IIA guide for young entrepreneurs – advices, stimulus, support and challenges1.Introduction – present young generation – characteristics 1.1 Young generation, firm and specified factorsGuide for young enterpreneuersStep 1 – A high-quality , the highest possible educationStep 2 – Looking for working opportunitiesStep 3 – Setting up a business – looking for assistance – from internal and external environment

Part I Social economy –– a vision of a new form of EU

1. The concept and characteristics of the social economy

The social economy currently represents a new area of economic activity, which is characterized by linking economic and social objectives. The social economy is basically formed at the interface between the public, private and not-for-profit, formal and non-formal social space. Its holders are, in particular, NGOs (non-governmental organizations) and cooperatives.

The social economy is shaping the business activities and businesses that are active in the market area. It is the third pillar of the economy associated with the market economy and the social economy. The term social economy was introduced by the French Government into the official political terminology in 80 years of the last century and was gradually accepted by other European countries. Social enterprises are seen as entities that contribute to employment growth. Today social economy is dominated by two trends. On the one hand, it is the European model, which has been working with the collective vision of the business. On the other hand, Americans have been trying the model focused on the services and individual approach.

2. Implementation of the social economy

The social economy is carried out in the area of the third sector. Its organization is different from the organization of the private sector; the primary purpose is to meet the needs of members of a particular group of people, communities or to the broader public, as opposed to the organization of the private sector, where it is the primary aim of maximizing profits. Despite a certain connection with the public sector, the social economy organizations are operating separately, independent entities.

3. Rediscovery of the social economy and its new challenges

3.1 The new social economyA new social economy is focused on different areas of activities, identifying their local setting, focusing on the local level. The social economy is focused on the integration of the long-term unemployed and disadvantaged in particular (e.g. graduates of schools). One of the main activities of the social economy is the provision of services, childcare, services for the elderly, aid to disadvantaged sections of the population for example new graduates of schools.  3.2 Challenges for the social economyThe rediscovery of the social economy in response to the above issues is currently associated with a number of challenges. The social economy appears to be in a situation where the public sector is failing to address the problem of long-term unemployment. It brings not only a new way of dealing with those problems, but also a new understanding of the relationship of public and private sector. As well as in the Slovak Republic the social economy is gradually becoming a real phenomenon. The social economy entities have different legal forms, work as a part of the voluntary sector.

4. The social economy and Slovakia

Demonstrations of the social economy in Slovakia, similarly, as well as in other countries of Europe we can find in ancient times, too. However the development was interrupted by the Second World War, the emergence of socialism as well. Although the cooperatives became the part of the policy of the socialist republic, their basic pillar – voluntary nature — was disrupted. New development opportunities started to appear after 1989, when the third sector gradually started to grow, civil activism appears which is the backbone of the social economy.

It also opens up the possibility of a business and the free market, which is another necessity of the social economy. In spite of the favourable environment for the development of social entrepreneurship, currently there are a number of obstacles, which slow the development of this sphere and hamper its development.

 Part IIA guide for young entrepreneuers – advices, stimulus, support and challenges.

1.Introduction – present young generation – characteristics

Every human being, especially a young human being is interested in ensuring his/her position on the top of a social pyramid. This position will bring him/her not only a good salary but also relatively calm and comfortable life, for sure a desire of all young people at the beginning of their active working career.

1.1- Young generation, firm and specified factors.

Youth or a young generation can be defined as a specific group or as a social class. It is role of an important social subject attached to a young generation and it is defined as a progressive subject of evolution. The public starts to perceive a young generation as the most threatened and the most manipulated group.At the same time as well by society as a dangerous group, that quickly can become a dangers to an opened society. Mass media are mostly the main opinion mainstream of a young generation. Conventional electronic media and new technologies are the basic phenomenon which form a strong way and manipulate present young generation, thus new graduates. Opinions and attitudes produced by the media are perceived by youth and accepted by them, inspite of fact that they are not always according to the ethic. Present youth became the basic subject of changeover of a society to digital age of the civilization.

Step 1 – A high-quality, the highest possible educationA high quality preparation at school is the first step on the stairs to the top by a young enterpreneuer to get his/her prospering firm, that will become an inheritance for his/her children and then their children. It is for sure a dream of many beginning enterpreneuers.A a high-quality education is an essential condition for making his/her dream come true. A school leaving exam is a basic item in the biography of an enterpreneuer. Nowadays it is very important to continue in working on his/her curriculum vitae by permanent education on university level. After school leaving exam education – various language courses and specialized professional courses. Whatever course you finish will help you to become successful in business in a hard/tough competitive environment.  Work abroad – work abroad enables to gain language skilfulness that can be used in business after coming back, increasing the possibility of doing business within the whole EU, so not being limited to the small slovak market.

Self – education – education does not end by finishing a secondary school or a university. A young enterpreneuer should study during his/her entire active life, he/she should read books, try new things, make acquaintance with new people. Then he/she will get self confidence and he/she will gain a strong position and good-will on the market.  A graduate practise – to find a job after finishing an education is not always easy. A young human being has got a lot of information, but he/she misses practical skilfulness, employers do require some practise. An emergancy solution is a graduate practise. This is done during at least 3 months and even up to 6 months without the possibility of its prolonging by 20 hours a week.

Permanent education is aimed at intensifying professional skilfulness and practical experience at the employer, which correspond with achieved education of a human being. A graduate practise is for young people till 25 years of age and to get it you must request for it at The Office of Work, Social affairs and family. The main condition for applicants of a graduate practise is an age till 25 and he/she must be registered at The Office of Work. For young people without work a graduate practise means a benefit because they can test in practise their knowledge and abilities. They may get an employment direct in the company where they do their graduate practise. For doing a graduate- practise a graduate is rewarded by a contribution, or a salary that is paid every month. This contribution/salary is tax free. A graduate practise is nowadays co-financed by a European Union project,that covers 85% of costs. A graduate practise is a suitable solution offering school-graduates precious working experience and employers can gain a workforce without any bigger costs.

That is why a graduate practise brings benefits both to graduates and employers.

Step 2 – Looking for working opportunities

There is not a better preparation for young enterpreneuer than trying to gain working experience and habits in a certain employment. Of course a detailed preparation by education at secondary school or university has to come first. For every beginning enterpreneuer it is a big advantage to have possibility to find out on his/her own skin feelings of an employee and feelings of submitting to his/her superior.

Every enterpreneuer, even a young one, must know and realize, that his/her employees are not only items in a salary statement, but they are his/her colleagues, who help him/her to survive at the present jungle of doing business.

If young people want to become enterpreneuers they should accept first of all as many as possible working opportunities. They should not look at every working opportunity through a payslip. They should accept a working opportunity as their chance to find out their strong points, what they like, what they are interested in and what they do not accept at all.

Step 3 – Setting up a business – looking for assistance - from internal and external environment

It is understandable, that a starting entrepreneur needs something like first stimulus from his closest relatives, especially parents. The support from former classmates and closest friend is important as well. After graduation, most of young people keep living with their parents, because they have difficulties to find a cheap accommodation for themselves. Thus, parents can encourage or discourage the starting entrepreneur by their optimistic or pessimistic attitude. The family can offer important psychological support and resoluteness to start up their own business. After having this basic support, the young entrepreneur starts looking for external forms of support. Especially in the Third sector, there are many organizations offering assistance to starting and other entrepreneurs.

The assistance from Association of Slovak Young EntrepreneursThe Association of Slovak Young Entrepreneurs (see further as “ZMPS”) was founded in 2010 as an organization associating Slovak entrepreneurs younger than 40 years of age. The main reason for establishing was the insufficient support of starting entrepreneurs’ generation that performs the future of enterprise in Slovakia. The “ZMPS” has the ambition to carry out activities which would improve the status quo, when young people have good ideas, but they don’t have sufficient experience, contacts and capital to realize them.

Activities of “ZMPS”. We can resume the activities of “ZMPS” in the following items:The exchange of experience and consulting. 1.Networking of starting entrepreneurs2.Financial assistance in staring-up enterprise phases3.Presentation of successful, moral entrepreneurs and business examples that are worth to follow

The assistance from Local Office of Labour, Social Affairs and FamilyThose unemployed (including young graduates) who want to set up a trade can obtain financial assistance from state organizations, especially from Local Office of Labour, Social Affairs and Family. For obtaining the assistance, they must be registered with the Office for 3 months at least.The amount of non-refundable benefit is dependant on region and unemployment rate. It is provided by Local Office of Labour, Social Affairs and Family in the region where the new trade is established. The applicant must submit The Business Plan with calculation of estimated costs for the initiation and implementation of trade. The business plan is assessed by Commission that decides whether the Business Plan is realistic in specified area. The tradesman who receives the benefit from the state is obliged to carry out his business for at least 2 years. If his business activity is terminated earlier, he must return proportional part of benefit. Until the end of 2013, people younger than 25 years of age can obtain the benefit even if they are registered with the Office for period shorter than 3 months.

Graduates who were not able to find their first job within 2 years from graduation can apply for benefit on the day of registration with the Local Office of Labour, Social Affairs and Family. The benefit should cover the cost of running-in. Currently, young people are more interested in a career of entrepreneur.

Youth are more willing to start up a business, but they need consultancy from experts. Various workshops, competitions, grant and initiatives are very helpful for starting entrepreneurs. Incipient entrepreneurs can join various competitions where they have the chance to gain financial assistance, contacts, and experience as well.

The assistance from National Agency for Development of Small and Medium Enterprises

National Agency for Development of Small and Medium Enterprises is a non-profit organization. It was established with the aim to support activities for development and growth of small and medium-sized enterprises in the Slovak Republic at the international, regional and local levels. Those with innovative and perspective business plans mostly seek for investors, not for bank-loans. At the moment, National Agency for Development of Small and Medium Enterprises offers micro-loans with more favourable conditions than those offerd in commercial banks. Micro-loans are provided from minimal amount of 2 500 EUR to maximum amount of 50 000 EUR. Maturity is set from 6 months to 4 years. The Agency realizes many activities and projects that can be used by young starting entrepreneurs. For example the “Entrepreneurial Idea of the Year” is very attractive activity for young people, helping with running of their ideas up.

Incubators – the assistance for start-up phase of an entrepreneur

The main mission of incubators is to provide a new start-up with necessary assistance from the very beginnings of entrepreneurs´ business activities, including the draft of the business plan up to the establishment of an independently operating company and its launch into commercial environment. The assistance is provided by their internal and external employees. Incubators help to create new job opportunities. Their services are provided with the aim to facilitate the start-up phase of an entrepreneur, and to help them to overcome initial problems connected with starting-up. Incubators provide more advantageous starting-up conditions for starting entrepreneurs – space and services for lower prices and consultancy for symbolic charge.

Assistance from Youth Information Centre

The network of Youth Information Centers performs important assistance for young people. Their aim is to provide access to information and consulting services, to support publishing and distributing of information material for youth. They focus on effective searching, creating and providing information and consulting services for youth, depending on their needs and requirements. Youth Information Centre is able to help in every area of interest, including business. In this area, Information Centre offers complex service and supports the most difficult phase of business – starting up.

Assistance from financial institutionsFunding of graduates´ business plans by banks is difficult. Banks usually require asset liability or business history and young people usually don’t have any of it. In current times of pan-European crisis, reduced government spending and cuts, it is essential that young graduates who find themselves the courage to stand on their own feet and start running their own business, should focus mainly on support from the European Union, which provides various grants and significant sums of money to develop various business projects. But the reality is a complicated paperwork to obtain non-repayable financial contributions provided by the EU.