Starting a business after university: young South African entrepreneurs discuss the highs and lows

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And, while South African statistics have shown that holding a tertiary degree or diploma increases young people’s chances of finding employment compared with their less educated peers, there are fewer job opportunities available than there are graduates. This was illustrated in a recent study I conducted with my colleagues that traced the experience of graduates in the labour market.

Scholars the world over have recognised that entrepreneurship is one important way to address youth unemployment. But it’s no easy task to set up your own business without support, mentorship and opportunities to develop the necessary skills, like financial management, networking and accepting and acting on feedback.

South Africa’s higher education sector has introduced interventions to address youth unemployment, including some designed to help students find their way from tertiary education to entrepreneurship.

In another recent study, we explored the challenges faced by nascent entrepreneurs who had started their businesses after leaving university. Over a six-month period we tracked the journey of 22 youth entrepreneurs as they narrated their experiences of starting and growing a business within a township space in South Africa. Townships were spaces designated for Black people during apartheid; today these areas are recognised as crucial hubs for developing small and medium businesses.

Our findings suggest that, while the experience of transitioning from higher education to entrepreneurship was challenging, our participants were able to draw heavily from informal networks to build and grow. However, they expressed a desire for more formal support and mentorship.

Three main findings

We conducted our research in the Buffalo City Metropolitan Municipality in the Eastern Cape province. The Eastern Cape is in a recession, with an unemployment rate of 42.4%.

There were three main findings.

First, all our participants said hardship was a predominant feature of their journey to develop and grow their small businesses. They also said this struggle was actually helpful in many ways. One entrepreneur expressed this:

It was from my context of challenge that my business was born. I am in the skills sector providing facilitation and training services. It first started off small and a way of giving back. The more I did this the more I realised I was onto something that could help while I also help others.“ [Participant 10, Male]

Another said: "The prevalent challenges from the townships and rural communities where we come from provide us the experience to become entrepreneurs. These are just lessons that life gives you.” [Participant 13, Male]

Second, the participants all said they’d battled to find the resources needed to get their entrepreneurial ventures off the ground. One entrepreneur told us:

The transition from being a student to starting your own business was difficult for me. There was just a huge gap. For me I needed office space and could not get this due to high rentals. Access to physical infrastructure just made it difficult. This space was crucial to me expanding my product offering. Further, no support appeared to be in sight especially for start-ups. [Participant 17, Female]

They also admitted to lacking the know-how to respond to challenges they encountered as they began to build their businesses.

Finally, our findings magnify the pivotal role played by informal networks in supporting youth-owned businesses during the start-up and growth phase of the business.

One young woman said: “Financial resources appear to be the most pressing of issues affecting young entrepreneurs. So I found a group of friends who I can rely on to connect me to such resources. Informally, the idea is to create a hub in which entrepreneurs and like-minded people can network. Through such networks I have found myself being able to get useful advice to see me through, especially during the COVID-19 pandemic.”

These informal networks were especially crucial because of perceived failures and challenges encountered in navigating formal processes. One young man said:

I have given up applying for so called state-assisted entrepreneurship packages. You fill in form after form. Promises are made. When it matters the most, you are left high and dry. For me what seems to work are the groups and platforms I belong to. I can solicit for help and from this a community is mobilised to try and assist.

More support is key

It is clear from our findings that young entrepreneurs face challenges, despite their zeal to start their businesses. We praise efforts within universities and colleges to introduce students to the world of entrepreneurship, notably the work of the Entrepreneurship Development in Higher Education Programme.

At a formal level, more funding is needed for such programmes to assist especially those students moving from the university or college context to being entrepreneurs. Efforts must also be made to enhance support for young entrepreneurs through the networks they belong to. This includes provision for mentorship support and assisted development programmes once people have left higher education. Such networks create partnerships that assist young entrepreneurs.

The research on which this article is based was co-authored by Ruth Soda, who was a Master’s student at the time.

This article is republished from The Conversation under a Creative Commons license. Read the original article.