50% of people believe they have the skills to start a business

More people are engaged in starting new businesses than established business ownership, suggesting a challenge for policy makers to provide appropriate infrastructures and support to allow
entrepreneurial businesses to flourish.

This was one of the findings of the eighth annual Global Entrepreneurship Monitor (GEM). The report is the largest annual measure of entrepreneurial activity worldwide, compiled by more than 150 scholars from 42 countries.

The report also found that entrepreneurial activity is higher in countries with lower levels of GDP, where the necessity for enterprise is greater, whereas in high income counties, like Japan and the EU 15, entrepreneurial activity is lower.

Entrepreneurs from developing countries are riding the wave of innovation and technology by bringing ‘new’ products to their markets, and similarly, entrepreneurial activity seems focused on export markets, with over 7.8% of early-stage entrepreneurs in the UK having 75 – 100% of their markets abroad.

Experience and gender also factor - those starting new businesses are young (24-25), and men are still more likely to entrepreneurially active. The exception is women from low income countries who are more likely to be entrepreneurs than their higher income counterparts.

Key U.K. Findings (taken from the GEM UK Report)

• New business start-ups had a small drop from 6.2% in 2005 to 5.8% in 2006. However the reduction was smaller than in the comparable economies of the USA (12.4% to 10%), Germany (5.4% to 4.2%) or France (5.4% to 4.4%).

• Entrepreneurial attitudes continue to be positive, though indicators have slipped slightly on their 2005 levels. Among UK adults, 7.8% expect to start a business over the next three years, 27.2% know an entrepreneur, 36.8% see good business opportunities and 49.6% think that they have the skills to start a business. Fear of failure does however remain high at 35.8%.

• 23% of all start-up activity is in new product market areas with 10.2% of early stage activity and 9.6% of established business activity in new technology areas.

• 7.8% of all early stage entrepreneurs have 75 – 100% of their markets abroad.

• UK policy towards entrepreneurship continues to be strong and focuses on entrepreneurial activity as one of the major drivers behind the UK further improving its productivity.

Key Global Findings

• An entrepreneurial boom exists in China and India. New business start-ups in China are up 16.2% from 13.7% last year; 60 % is opportunity-driven; 70% of the Chinese think entrepreneurship is a good career choice; and 32% expect to start a business in the next three years. Chinese governments and policies are most supportive—new funds, new incubators, science parks are all recent initiatives. Improvements in education, funding, and commercial infrastructure are still in demand.

• The scenario is similar in India where one in every ten is engaged in entrepreneurial activity, and the gender gap narrows in India. But India has the highest level of business exits (15%) among GEM nations in 2006. The communications infrastructure is excellent, yet governmental bureaucracy and the presence of ‘big player’ companies make it difficult for start-ups to establish themselves. Surprisingly, India is behind in developing new policies in support of entrepreneurs.

• Entrepreneurial activity rises in countries with low GDPs. Countries with similar levels of GDP tend to have similar entrepreneurial activity-- most likely because of the dominance of large businesses.

• Entrepreneurs everywhere are taking advantage of opportunities; still countries with the lowest GDP have the highest levels of necessity-driven entrepreneurs. France and Germany –where necessity entrepreneurship is high—are the exceptions, most likely because of labor reforms which encourage business start-ups over unemployment services.

• The number of new business start-ups is always higher than established business ownership. This is particularly the case in the U.S. where Early-stage entrepreneurship is high compared to Europe where established business ownership is similar.

• Low and middle income countries show higher levels of innovation and technology in Early-stage entrepreneurship than in established businesses. Still, these lessdeveloped countries are not necessarily using technologies that would be considered new in more sophisticated consumer markets of higher income countries.

• Experience and Gender still matter—Early-stagers are young (24-25) and men are more likely to entrepreneurially active. The exception is women from higher income countries are less likely to be entrepreneurs than their lower income counterparts.

New developments, and all national reports, can be found here.