Entrepreneurs remain optimistic despite economic downturn
You can't go a day without mention of the "credit crunch" in the media. But despite the gloomy outlook for the economy, a recent study suggests that over half of all small business owners have no intention of changing their expansion plans.
The international study, "DNA of an Entrepreneur", released by specialist insurer Hiscox this month shows that entrepreneurs in most major economies are still bullish about their growth plans. In the US, for example, 69% stated that they will continue with their business growth plans despite the prevailing economic climate.
Barriers to Growth
The survey uncovered some of the major obstacles faced by future entrepreneurs:
1. Tax: More than two thirds (68%) of British entrepreneurs think our taxation system does not favour someone wanting to set up their own business. The story is similar in Germany and France (65% and 66% respectively) but, in Holland, drops to 48%. In the US, only 40% of owners think taxation systems are unfavourable to small businesses.
2. Government bureaucracy: The biggest issue for the French, with three quarters (76%) citing government red tape as a major barrier to setting up their own business. It is also the single largest concern of German small business owners (67%), and over half of the British (54%) and Dutch (55%) also state it as a concern. The US stands out as being completely the opposite: over two thirds (68%) think that government bureaucracy doesn’t create any major barriers to going it alone.
3. Financing: As the credit crunch deepens, financing options for new businesses will become more limited – and finding finance to start up a small business is already a challenge right across Europe. Two thirds (64%) of British small business owners state that finding finance for a new business is not easy. The situation seems to be more acute in Germany and France, where the challenge is noted by 81% and 72% respectively. The situation is only slightly better in Holland and the US, where 55% and 58% respectively say it was difficult to source initial funding for their enterprises.
4. Education: The survey revealed almost two thirds (61%) of UK entrepreneurs believe the British education system does not encourage individual ‘ideas and dreams’ which can fuel future entrepreneurial growth. This is broadly in line with the French (66%) and the Dutch (50%), while the more conservative German education system seems even more discouraging (80%). The Europeans' view is in sharp contrast to the US, where only 35% feel their education system is unsupportive.
5. Cultural factors: Each nation’s cultural inclination (or disinclination) to take risks could have a bearing on the mindset of their entrepreneurs. In the UK, only 44% feel that, culturally, we are a nation of natural risk takers, compared to 78% of Americans. The Germans and French are, culturally, the most risk averse nations of all, with only a third (33% and 34% respectively) feeling that there is a culture of risk taking in their country.
Entrepreneurial Spirit
Despite these obstacles to entrepreneurs, and the economic climate, many entrepreneurs are undeterred:
- A third of British business owners (34%) say they set up in business with the aim of making more money than they could working for someone else, while a fifth (21%) are motivated by the desire to bring their own ideas to life.
- The Americans are more ambitious: almost half (46%) want to go it alone to make more money, more than a third (36%) are driven by an ambition to bring their own ideas to life and a further third (33%) by the desire to escape the tough US corporate world.
- The strongest independent streak is found in Dutch and French business owners, almost three quarters of whom set up in business to “be their own boss” (74% and 71% respectively), compared to 58% of the British respondents to the DNA of an Entrepreneur study.
Posted August 1, 2008
