Problem addressed
In Czechia, disadvantaged people who are willing to start their own businesses but who live in rural areas face substantial barriers. Groups include long-term unemployed jobseekers, economically inactive people, persons with disabilities, low-skilled people and employees who have been dismissed. Barriers include isolation in rural communities, a lack of business/entrepreneurial knowledge, and very low confidence and ambition as a result of the lack of role models. This ESF project aims to develop entrepreneurial capacity among these groups in order to reduce the amount of undeclared work, help people to become less dependent on social benefits, and support micro-businesses in rural areas of Czechia.
Innovative solution
Máš na to podnikat a pracovat! (You can make business and work!) supports people to find a suitable job or to start their own business. Its main innovation is its ability to provide a guaranteed income to participants while they develop and test their business ideas, thus eliminating the pressure of having to self-finance the process. This is done through the Business and Employment Cooperative (BEC), which follows a three-step process: business incubation, testing and self-employment.
The business incubation phase typically lasts between two and three months. During that time, participants are eligible to receive unemployment benefits from the labour office (the exact amount depends on their previous working situation) as they are participating in special business training session. The project finances counselling, tuition and mentoring on creating a solid business plan. The project may also finance specialised courses/qualifications, where appropriate.
The second phase covers the testing of business plans, under the umbrella of BEC. Here, participants become paid entrepreneurs, receiving a project-funded salary of CZK 13,400 (EUR ~550) per month. This funding can last for up to six months.
In the third and final phase, participants launch their business and become self-employed. During the first few months of self-employment, participants can continue to attend one/two-hour group sessions each month with other participants in the second or third phase in order to seek advice, share success stories, and improve their labour market integration and position. The system is based on counselling and matchmaking between jobseekers and potential employers, with potential support for wages of up to CZK 18 000 (EUR ~740) per month, or payment for appropriate retraining.
The project is jointly funded through the European Social Fund (85%) and the BEC (15%).
During the first phase of the project, BEC liaises with labour offices and different municipalities to promote the project and recruit rural jobseekers interested in starting their own businesses. BEC also liaises with various external experts to provide training opportunities, based on the specific needs of participants.
During the testing phase, BEC manages the paid entrepreneurs, as they officially join BEC in order to gain entrepreneurial status, a status recognised by the government.
For the final phase, participants can either leave BEC and become fully self-employed (gaining their own business licence), or they can continue as employees of BEC, co-managing their business idea.
Key results and benefits
BEC is responsible for evaluating project progress. The main goals are for 40% of phase 1 participants follow the programme through to phase 3, and for no more than 10-20% of participants to return to unemployment.
During the project, BEC uses a simple diagnostic tool for participants to evaluate the riskiness of starting their business. That tool also evaluates their attainment of entrepreneurial knowledge and flags when additional extra support is needed to mitigate such risks. This tool can be used at the beginning and end of the process.
BEC introduced its social innovative model 10 years ago as a tool for unemployed people in Czechia to test business ideas. A total of 320 individuals applied for the project, with 151 accepted. By the end of the first phase, 110 business plans had been created and 109 people ‘graduated’ through their courses.
Compared to a control group of people who registered their interest at their labour office but did not join the project, only 16% went on to start their own business, compared to 41% through the ESF-funded project.
Of those that made it to the second (test) phase, 58% continued on to make it a business, while 34% decided to pursue a more traditional job. The remainder returned to the labour office or became economically inactive.
The businesses tested achieved sales of CZK 3,531,756 (EUR ~142,000) and gross profit of CZK 2,727,316 (EUR ~110,000).
Potential for mainstreaming
BEC has in-house expertise to educate and nurture participants looking to develop and test their business ideas. If organisations in other countries do not have such expertise, it is recommended that they collaborate closely with local labour offices or educational institutions to access such services.
The current project is estimated to achieve a net impact of saving CZK 130,030 per unemployed person per year, compared to State support. Such savings would justify increased funding from local and national municipalities and allow it to become sustainable in the future.
