Scottish Government

Nick Moon, Claire Ivins, Samantha Spencer ( NOP Social & Political)
ISBN 0 7559 3990 5

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In 2003, NOP surveyed around 2,000 individuals in Scotland to find out about attitudes towards enterprise, identify the proportion engaged in or thinking about entrepreneurial activity, explore their motivations and identify potential barriers. This was part of a broader survey across the UK for the Small Business Service ( SBS) and the Scottish Executive, repeating work first carried out in 2001 (in England only).

Main Findings

• Almost one in five adults (19 per cent) in Scotland is either already involved in entrepreneurial activity or is thinking about it.
• Men are twice as likely as women to be involved in or thinking about entrepreneurial activity.
• Older people and those that are married or cohabiting are significantly more likely to be involved in entrepreneurial activity than younger people.
• Attitudes to enterprise are generally positive and very much in line with attitudes in England. The vast majority of working age adults (96 per cent) say that that they admire people who start their own business.
• 69 per cent say that they would encourage a friend or relative to start a business. 65 per cent say that they have the skills or knowledge to be able to start a business.
• The most commonly cited motivations for those thinking of starting a business are freedom to adopt their own approach to work, wanting to challenge themselves, and wanting to make more money. These are the same as the motives of those already in business.
• For those thinking about getting involved in entrepreneurial activity, fear of getting into debt and getting finance for the business are the main deterrents to starting a business.

Aims of the Survey

The Scottish Executive has identified the promotion of a culture of enterprise and helping new business formation as priorities for economic development.

In 2003 the Executive commissioned NOP to carry out a survey of individuals in Scotland, as part of a UK-wide survey commissioned by the Small Business Service. The survey aims to:

• Monitor over time attitudes to enterprise;
• Explore the main motivations and barriers to starting a business; and
• Monitor proportion intending to set up their own business.

The SBS first carried out a household survey of entrepreneurship in autumn 2001 (in England only). It is expected that the survey will be repeated biennially.

For the analysis, the population has been segmented into three main groups:

Thinkers: those thinking about becoming entrepreneurs.

Doers: those who are already entrepreneurs, either running their own business or self-employed.

Avoiders: those who are neither currently engaged in entrepreneurial activity nor thinking about becoming so.

Method

The survey was carried out between October and November 2003. Interviews made use of Computer Assisted Telephone Interviewing technology ( CATI) drawing upon a random sample of telephone numbers.

Data were weighted according to the new 2001 Census profile on age, gender, ethnic origin and housing tenure in order to be representative of the population of Scotland. In Scotland the 2003 survey findings were weighted.

The report for the UK as a whole includes comparisons between segments of the population (split by age, social class, education, sex, and ethnicity), that are not possible in Scotland because of the smaller sample size.

Entrepreneurial activity

The results show that the population can be segmented as follows:

• 9 per cent are Thinkers
• 10 per cent are Doers
• 81 per cent are Avoiders

Therefore, approximately one in five (19 per cent) of the population aged 16-64 in Scotland is either already involved in entrepreneurial activity or is thinking about it.

This proportion is slightly, but significantly, smaller than in England where 11 per cent of the population are Thinkers and 13 per cent are Doers.

Nine per cent of the Thinkers and Avoiders have previously owned or part owned a business

Men are twice as likely as women to be involved in entrepreneurial activity or to be thinking about it (26 per cent compared with 13 per cent).

As might be expected the proportion of Doers in the population rises with age. Older people are significantly more likely than younger people to be Doers. 12 per cent of 35-44 year olds, 13 per cent of 45-54 year olds and 16 per cent of 55-64 year olds are Doers compared with only 4 per cent of 16-24 year olds and 6 per cent of 25-34 year olds.

In contrast, the proportion of Thinkers peaks amongst those aged 35-44 (12 per cent are Thinkers compared with 9 per cent of the overall population). The proportion in older age groups then declines significantly. Only 4 per cent of 55-64 year olds are Thinkers.

Those with a degree are slightly more likely than average to be Thinkers (12 per cent) but are not significantly more likely to be Doers (11 per cent).

Those with low level qualifications, ( SVQ 1 grade or equivalent) are significantly more likely to be Doers than the general population (21 per cent).

Those from less privileged backgrounds are less likely to be entrepreneurs. Only 3 per cent of those who rent from local authorities or housing associations are Doers compared with 12 per cent of those who own or who are buying their own properties and 14 per cent of those who rent privately. Those in the most deprived wards of the country are also less likely than average to be entrepreneurs - only 5 per cent are Doers compared with 14 per cent of those in the least deprived wards.

Migrants (people who have moved to Scotland from the rest of the United Kingdom or from outside the UK) are significantly more likely to be entrepreneurs than those who are Scottish (14 per cent of migrants are Doers compared with only 9 per cent of non migrants.)

Attitudes to entrepreneurship

The vast majority of working age adults (96 per cent) agree with the statement that they admire people who start their own business and nearly seven out of ten (69 per cent) agree that they would encourage a friend or relative to start a business. Both are slightly higher than in England where the figures were 93 and 64 per cent, respectively.

Two-thirds of working age adults (65 per cent) agree that they have the skills or knowledge to be able to start a business. This is similar to the findings for England where 66 per cent of respondents also agree.

As one might expect, Thinkers and Doers are much more likely to agree with this statement than Avoiders. Ninety-two per cent of Thinkers and 96 cent of Doers feel they have the right skills and knowledge to start a business.

Three quarters (74 per cent) of respondents have a fear of being in debt. Avoiders more often express a fear of being in debt than do Thinkers and Doers. 78 per cent of Avoiders are concerned about debt compared with 57 per cent of Doers and 61 per cent of Thinkers. The findings for England are identical to those for Scotland.

About a quarter (28 per cent) of the Scottish population say they would not feel confident talking to a bank manager about a business loan; this proportion is similar in England at 27 per cent.

58 per cent of adults of working age say that they enjoy the challenge of situations that many consider risky. The findings for Scotland are in line with those for England at 57 per cent.

Thinkers and Doers are also more likely to agree with this sentiment. About three quarters of Doers (74 per cent) and 77 per cent of Thinkers agree compared with only approximately half (53 per cent) of Avoiders.

Respondents in Scotland show a positive attitude towards those who undertake entrepreneurial activity. Nearly nine out of ten working age adults (89 per cent) agree that people who start and fail at business deserve a second chance. Again this is similar to England where 87 per cent agree.

Around a third of adults (35 per cent) agree that many people who are highly successful in business have low morals or ethics. This is identical to England one third of Doers (33 per cent) also agree that many people who are successful in business have low morals or ethics.

Current entrepreneurial activity (Doers)

Of those involved in entrepreneurial activity, around 73 per cent are self-employed and 30 per cent own or part own a business.

For only thirty per cent of doers is the enterprise as a sideline to their main economic activity.

Almost one quarter (24 per cent) of Doers started within the last year and a further 20 per cent in the last 2-3 years. These are similar to the figures for England. One in ten were started four to five years ago whilst 12 per cent were started 6-10 years ago. About one third (34 per cent) were started more than 10 years ago.

Over half (52 per cent) of Doers did not have any specific enterprise education, training or work experience before starting their own business, similar to the general population at 48 per cent. A high proportion of Doers are over the age of 35 and so are less likely to have experienced enterprise training and education which is relatively new.

For 26 per cent of doers this is not their first business.

The main motivations for those already running their own business (Doers) are:

• freedom to adopt their own approach to work (87 per cent)
• always wanted to be their own boss (72 per cent)
• wanted to challenge themselves (72 per cent)
• making more money than they were earning before (67 per cent)

Potential for entrepreneurial activity (Thinkers)

Respondents identified as Thinkers can be further segmented into:

• ' serious Thinkers'
• ' less-serious Thinkers'.

Over half (55 per cent) of Thinkers have given serious thought to starting a business and are almost certain that their business will happen, or think it is likely to happen at some stage (serious Thinkers).

37 per cent of Thinkers are less serious, having given starting up in business some thought and think it may possibly happen at some stage. A further seven per cent said that they had not given it much thought but would like to do it some day.

Seventy per cent of Thinkers have had some relevant background entrepreneurial experience in the form of enterprise education, training or work experience, or contact with other family members who have run their own business compared to about half (52 per cent) of the general population.

Thinkers are much more likely to have a friend or relative who has run their own business than the national average. It seems therefore that these experiences are likely to inspire thoughts about taking part in entrepreneurial activity.

The main motivations for those considering starting a business (Thinkers) are:

• freedom to adopt their own approach to work (91 per cent)
• to challenge themselves (92 per cent)
• wanting to make more money than they are currently earning (89 per cent)

Barriers to entrepreneurial activity

The Thinkers identified the following barriers to starting a business:

• fear of getting into debt (53 per cent);
• getting the finance for the business (52 per cent); and
• worry of insufficient sales, orders, or profits (48 per cent).

Among Avoiders the most frequently mentioned reasons for not wanting to start a business were:

• fear of getting into debt (68 per cent);
• the chance that your business might fail (66 per cent).