GEM, the world’s largest study of entrepreneurship have released a new report focused on UK attitudes to, and experiences of, starting a new business. While the report is concentrated on Britain it also compares attitudes to start-up businesses with those in France, Germany and the USA. There is both some good news and some bad news from this report. Let’s start with the bad news
Bad News for UK Start-ups
- 49.6% of British people do not believe that starting a business is a good career choice. Up from 47.4% in 2010
- 9.8% of adults expect to start a business in the next 3 years, 4.2% of the adult population are actively trying to start a business but only 3.4% of adults are actually running a business.
- There is a lack of positive stories about new businesses in the media. 55.8% of people said that the media did not often carry positive news stories about people starting new businesses, up from 48.5% in 2010.
- People are increasingly scared of starting a business. People who reported a fear of failure stopping them starting a new business even where they saw good opportunities increased from 36% in 2010 to 41.4% in 2011.
- Lack of funding is a major obstacle to people wanting to start a business. 50.6% of people who wanted to start a business, and 46% of people who actually have started a business, cited it as the main barrier.
Good News for UK Start-ups
- 47% of people who wanted to start a new business believed that they could afford to fund it out of their own pocket.
- People who had a new business, up to 4 months old, remained stable in 2011 at 3.4%. Meanwhile people who had established businesses older than 42 months went up from 6.2% to 6.5%.
- The total number of people involved in planning or running early stage startups was 7.6% in 2011 where it had remained constant at around 6% between 2002 and 2010.
- The number of people who had no intention to start a business and were not involved in starting a business dipped below 80%. The first time this has happened since the survey started in 2002.
- 27.9% of people felt there were good opportunities to start businesses in their local area
- 36.7% of people felt that they had the necessary skills and experience to start a business
The GEM report gives a very mixed picture of the UK start-up scene. Clearly a significant proportion of the population can see business opportunities and feel capable of starting a business. However a fear of failure, lack of funding and lack of positive news stories are discouraging them. Starting a business is a minority pursuit in the UK with only 7.6% of people actively involved in start-ups. By European standards this is not bad and places us a couple of percentage points ahead of both France and Germany. However we still have a long way to go to catch-up with the American’s where over 12% of the population are involved in start-up activity.