Graduates are being forced to delay or scale back their plans to start-up a company because of the burden and worry of student debt, new research has revealed.
A joint study into the attitudes of budding entrepreneurs suggests the national bid to inject enterprise into every classroom may be in vain, as their older peers are shelving the prospect of self-employment.
More than half of University-leavers surveyed said they would defer their start-up plans until debt was paid off, while 18 per cent see the burden as so great that their business vision needs to be scaled back.
More positively, none of the graduates responding to the study, commissioned by Barclays and the National Council for Graduate Entrepreneurship, felt their debt was significant enough to prevent them starting up.
Reflecting on the headline statistics, published in The Financial Times, Paul Hannan of the NCGE said would-be entrepreneurs revealed a pragmatic attitude to their business plans.
But he appealed to the Richard Bransons and Anita Roddicks of tomorrow not to delay start-up because as self-employed individuals, they would only need to pay back their student debt once their business had achieved more than £15,000 in profit.
“That could give self-employed people quite a lot of scope to build up a business,” he said.
Elsewhere, the study showed some people view debt left over from University as a motivator to form a company and start trading as soon as possible.
Furthermore, about half of the graduates who admitted they were angry to be debt-shackled emerged as the group most seriously considering starting a business.
These respondents are more likely to have already drawn up a business plan or taken other measures for their future venture, such as to seek start-up advice from a business mentor.
“Students who are angry about it [debt] are very motivated and to become an entrepreneur you need to be a motivated individual,” said Mr Hannan, director of NCGE.
Less optimistically for start-up rates, there was much less entrepreneurial spirit in those students who started University seeking to become an entrepreneur, as their ambition declined as study progressed.
Inspirational stories about graduate start-ups are the way for Universities to effectively promote self-employment, the Council said, rather than focusing on the technicalities of company formation.
Jan 17, 2006
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