What makes graduates choose self-employment?

Harper Adams University (HAU) has higher-than-average self-employment among its leavers and graduates. This project collected data from self-employed and employed leavers to investigate how and why individuals choose self-employment as an initial destination

This report will be of interest to careers staff, and university staff who support students in developing employability and entrepreneurial skills and knowledge.

Key findings

Individual traits influenced the choice of self-employment:

• Self-employed leavers were more likely to have many business ideas they wanted to pursue. They also preferred to manage their own workload and be in control of their own time. As a group, they considered themselves to be self-confident, and generally perceived themselves as more entrepreneurial than employed leavers.
• Employed leavers were more likely to say that secure employment and financial stability were important to them. They indicated that professional success was important to them, and were motivated by this.

Some key external factors also influenced the participants' choices:

• Exposure to self-employed role models was the same for both survey groups, but their background differed, with those from a farming background more likely to be self-employed after graduation.
• The decision to enter self-employment was commonly motivated by positive, or "push" factors.
• Self-employed leavers were more likely to have encountered self-employment and/or entrepreneurship at university than employed leavers.

What's inside?

The report includes detailed statistics on the traits and factors outlined above. It also details further information on the participants' interpretation and understanding of enterprise and entrepreneurship. The report considers exposure to self-employment and entrepreneurship through education, and reviews the resources and information that participants found valuable during their education.

About the report

This HECSU funded project considered the following research questions:

• Why do university leavers choose to become self-employed or start their own business, and what factors (formal and informal) influence this decision?
• To what extent are those who choose to become self-employed or start their own business displaying entrepreneurial behaviour?
• Which existing information, activities, guidance and resources are of value to those who pursue self-employment or start a business, and what else would be helpful for this group?

Two surveys were carried out, self-employed leavers (40 respondents) and employed leavers (112 respondents). The data from the two groups was compared and evaluated. Student record data was also used to consider student background in relation to employer outcomes for a wider HAU population (1,593 records).

Abstract

This project stemmed from a simple question: why does Harper Adams University (HAU) have a higher proportion of leavers entering self-employment after graduation than many other institutions? Were students making an active choice to enter self-employment or start up a business, or were other factors pushing them towards this outcome? And how does this link to the question of entrepreneurship, and to what extent their experiences in education have influenced their outcomes.

To answer this question I had to gather robust data. The Destination of Leavers from Higher Education (DLHE) survey provided a great starting point, as it identified recent leavers who indicated that they were starting a business or self-employed, around six months after leaving university. I re-contacted leavers from the four most recent complete survey periods, with an online questionnaire asking about their background, profile and personal traits, employment details, career decision making, and their educational experiences.

Responses were received from 40 self-employed and 112 employed leavers, who left HAU between 2012 and 2016. Anonymised DLHE data from the same years was used to provide wider background context and information.

Self-employed leavers were more likely than employed leavers to have many business ideas they wanted to pursue. They were also more likely to prefer to manage and control their own workload and time, and to consider themselves to be self-confident. This self-confidence was also present in the free text responses that I collected, with self-employed leavers making comments such as: 'Success in the past has encouraged me to start my own business' and 'I do what I know I am good at and feel confident with'.

In contrast, employed leavers were more likely to value secure employment, financial security and professional success.

It was good to see that decision making was generally motivated by positive, or 'push' factors, contrary to the current perception that self-employment is often forced on young people through the gig economy. Respondents were asked how influential the following factors were:

• business ideas
• professional ambition
• desire to work for oneself
• redundancy
• lack of viable alternatives.

The first three were considered positive factors and the latter two negative.

Three quarters of those who responded were positively motivated, making a confident and informed choice that self-employment was their preferred option. Some employed leavers also indicated interest in self-employment but commented on barriers e.g. 'Working restricts time that you can spend on your own business ideas but is the only way to fund it currently. It is frustrating.'

Exploring these barriers, and looking at individuals who have overcome them, would be a stimulating area for further exploration.

The research found that self-employed leavers generally perceived themselves as more entrepreneurial than employed leavers. They were confident to make comments such as 'I have found a gap in the market and exploited it' and 'Do the same as everyone else, expect the same as everyone else'.

However, respondents did not always have a consistent understanding of enterprise and entrepreneurship. Many assumed that entrepreneurship involved high risk and believed that you cannot be entrepreneurial unless you are self-employed.

Nevertheless, I was encouraged to note that some leavers had a wider interpretation, and understood that entrepreneurship need not be all or nothing: 'It is not necessarily something that the media allows the majority to perceive it to be. You don't have to be Lord Sugar to be an entrepreneur, there's lots of acorns out there just waiting to grow. Start small, think big and grow fast.'

There was also a difference in the external factors and experiences within each group. Generally speaking, exposure to self-employed role models was the same for both survey groups, but their background prior to arrival at HAU differed. Those from an agricultural background had significantly higher levels of self-employment and business start-up than those who were not.

Many self-employed leavers recognised that time from other people, and access to buildings or financial support had contributed to their ability to pursue self-employment. The agricultural background of many students therefore plays a part in HAU's higher than average levels of self-employment, but as shown by the consideration of individual traits and motivations, it is not the only factor. There were also some respondents from an agricultural background who chose to become employed, due to less positive experience of, and exposure to, self-employment.

Although there was no difference in exposure to self-employed role models between the two groups, those who became self-employed were more likely to have encountered self-employment and/or entrepreneurship at university. Respondents referred positively to a range of information and resources, including

• course content
• guest speakers
• information, advice and guidance from the HAU Careers Service
• external resources.

This project has produced valuable information on the characteristics and experiences of university leavers who choose self-employment. However, the findings also raise questions about how we can further support entry to self-employment.

Universities must consider how to replicate, or provide alternative versions of, a support and resource network for those who do not have access to one through their own connections and experience. It is also vital to reflect on how we help students to develop relevant individual traits, such as self-confidence.

This may be through the curriculum or in other settings, but personal development opportunities can cultivate students who have the traits linked to successful self-employment and business start-up, particularly if this is reinforced with strong support and clear information on enterprise and entrepreneurship.

Written by

Claire Toogood

Lecturer

Harper Adams University