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UK business start-up expectations and activity rise to new highs in 2011
24 August 2012
In 2011, more people expected to start their own business in the future or were actively trying to start a business than at any time in the last ten years, according to a new report involving Aston Business School.
The Global Entrepreneurship Monitor (UK) report highlights that for the first time since recording began in 1999, over 20% of the working age population in the UK either expected to start a business in the next three years, were actively trying to start a business, or were running their own business.
The proportion of working age adults actively trying to start a business who were not already running another business rose from 2.9% to 4.1% in 2011, while a further 6.8% expected to start a business in the next three years, up from 4.6% in 2010.
This rise in start-up activity is not just driven by necessity: while there were twice as many necessity-based entrepreneurs trying to start new businesses in 2011 as in 2010, the number of people trying to start new ventures because they spotted a business opportunity also rose significantly .
The report, entitled Global Entrepreneurship Monitor (GEM) UK 2011, published today, was written by Professor Mark Hart from Aston Business School and Professor Jonathan Levie from the Hunter Centre for Entrepreneurship in Strathclyde Business School.
Professor Jonathan Levie said: “After the recovery in people’s entrepreneurial attitudes in 2010, we have seen a real increase in intentions and start-up attempts in 2011. While necessity-driven start-up attempts increased significantly, they comprised less than 15% of all start-up attempts in 2011. Even in a continued recession, most entrepreneurs in the UK start up because they spot an opportunity.”
Professor Mark Hart added: “The growth of early-stage entrepreneurial activity among young adults in Wales is particularly striking. Since 2002, the proportion of people aged between 18 and 29 in Wales grew steadily from 3.4% in 2002 to a remarkable 9.7% in 2011. Is it a coincidence that the Welsh Government has had a comprehensive set of entrepreneurship policies aimed at young people throughout that time period?”
This increase in business start-up intention and attempts took place against a backdrop of continued decline in the use of external sources of funding of all types by start-up entrepreneurs since 2009. Professor Levie noted: “While this reduction is understandable in the current economic climate it raises the danger of under-funded and possibly short-lived start-ups. We need to find new ways to fund start-ups – and they are starting to appear, like crowd-funding and peer-to-peer lending.”
The report also revealed some differences in the barriers to starting a business that non-entrepreneurs felt they faced and the challenges that start-up entrepreneurs said they faced. Professor Hart commented: “Non-entrepreneurs appear to underestimate the issues of appropriate skills, getting customers and staff, and the complexity of regulations. These are all areas where training could help nascent entrepreneurs.”
The GEM UK Report 2011 surveyed more than 10,000 people in the four home nations of the UK. Global Entrepreneurship Monitor (www.gemconsortium.org) is the largest and most comprehensive international study of its kind of entrepreneurial attitudes, activities, and aspirations.