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1 Executive Summary
Context
1.1 The Household Survey of Entrepreneurship explores the main motivations and barriers to starting up a business. This edition of the Household Survey of Entrepreneurship follows up on the survey conducted in 2003. The survey aims to monitor over time people's attitudes, key influences and levels of enterprise activity.
1.2 The Scottish Executive finances this Scottish survey, which is conducted in parallel with a DTI-sponsored survey in England, 1 in order to explore entrepreneurship in Scotland. The Executive acknowledges the importance of entrepreneurship and entrepreneurial attitudes to economic development.
1.3 This report covers findings from the 2005 survey in Scotland. Where possible, comparative analysis is made with the results for England and with results from the previous survey in 2003.
Aims
1.4 The main aims of the survey are to:
- Determine the proportion of the population already involved in entrepreneurial activity
- Determine the proportion of the population who intend to set up businesses or become self-employed in the future
- Ascertain the characteristics and attitudes of the current and would-be entrepreneurs
- Find out the main motivations that cause people to become entrepreneurs
- Examine barriers to entrepreneurship
Method
1.5 2,010 Computer Assisted Telephone Interviews were completed across Scotland between 8 th September and 14 th December 2005 by IFF Research Ltd. from its Telephone Interviewing Centre in London. In addition to these, a further 15,696 interviews were conducted in England. The appendix at the back of this report details the number of achieved interviews overall in Scotland and England by age, gender and ethnicity.
1.6 In Scotland a random probability sample was drawn. No quotas applied. At the analysis stage the data were weighted according to targets derived from the 2001 census (on age and gender interlocked), and thus the dataset is intended to be fully representative of the resident population in Scotland aged 16-64. The weighted and unweighted figures for all groups are also listed in the appendix, as is a more detailed explanation of the survey's methodology.
1.7 All reference to 'statistically significant' results in this report are at the 95% level of confidence.
1.8 Please note that all 2003 figures are drawn from the Household Survey of Entrepreneurship 2003 report, written by NOP Social & Political 2. IFF Research Ltd. can take no responsibility for figures published in this report.
Summary
Overall entrepreneurial activity (Section 2)
1.9 The overall level of entrepreneurial activity in Scotland in 2005 is slightly greater than in 2003, with 11 per cent of the population of Scotland aged 16-64 being self-employed or business owners ('Doers' - up 1 per cent), and a further 10 per cent thinking about starting a business or becoming self-employed ('Thinkers' - up 1 per cent). Subsequently the proportion of people who are neither entrepreneurs nor wishing to be ('Avoiders') is 79 per cent (down 2 per cent).
1.10 There is a higher proportion of Thinkers (12 per cent) and Doers (13 per cent) in England, where a similarly small increase has been seen since 2003, and where the proportion of Avoiders has declined by 1 per cent.
1.11 Within Scotland there are differences in the levels of entrepreneurial activity between council areas. For example, the percentage of Avoiders is 85 per cent in Glasgow, and only 69 per cent in Aberdeenshire and the Highlands and Islands.
1.12 Thinkers are most likely to be concentrated among young people and in comparison with 2003 there are 3 per cent more Thinkers among 16-24 year olds, and 2 per cent more among 25-34 year olds. The increase in the number of Doers is mainly in the 25-44 year old age groups.
1.13 In Scotland the highest proportion of Doers is among the 55-64 year old age group (17 per cent), in contrast to England where Doers tend to achieve this status earlier in life.
1.14 Although there are slightly more female Doers in Scotland in the 2005 survey than was the case in 2003 (up one per cent), there is still a marked disparity between the genders in terms of entrepreneurial activity. Eighty-six per cent of women are Avoiders, compared to 72 per cent of men. Although there is a similar pattern in England, the proportion of female Avoiders there is lower at 81 per cent.
1.15 Those of Black or Asian ethnic origin, and White people not born in the UK, are much more likely than the White British-born to be Thinkers. Because Scotland only has a small ethnic minority population, this helps to explain why the levels of entrepreneurial activity in England, and London in particular, are higher.
1.16 There is a clear relationship between higher educational attainment and being a Thinker or Doer, with those who have SVQ Level 5 qualifications being the most entrepreneurial.
1.17 There is also a clear relationship between enterprise training and entrepreneurship, especially among younger people. Those who have received enterprise training are more likely to be Thinkers or Doers than those who have not. However, the extent to which this is due to self-selection is unclear i.e. whether training makes people more entrepreneurial or whether the more entrepreneurially-minded choose these courses.
Thinkers (Section 3)
1.18 Whilst the overall proportion of Thinkers in Scotland has not increased greatly, the proportion of these who have given 'serious' thought to their enterprise has increased markedly since 2003, in contrast to England.
1.19 The main motivations for wanting to start a business have changed little since the 2003 survey. The main motivations are as follows:
- the freedom to adopt one's own approach to work
- to make more money
- to challenge oneself
- to be one's own boss
- to make an idea or innovation happen
- to fill a gap in the market
1.20 In addition to these, wanting to do something that helps or supports other people has emerged as a frequently cited motivation.
1.21 Those Thinkers that are of non-White British ethnic origin are likely to state that getting away from discrimination in their current employment is a motivation for wanting to start a business.
1.22 Thinkers in Scotland appear to be less motivated by environmental concerns as a reason for going into business than those in England.
1.23 Thinkers in Scotland are most likely to want to get involved in service industries, especially business services. In comparison with 2003 there has been a decline in the numbers wanting to become involved in manufacturing and primary industries.
1.24 Only 7 per cent of Thinkers have actually tried to obtain any finance for their potential new businesses in the previous 12 months.
1.25 In comparison with England, awareness and likely future usage of business advice organisations ( e.g. Scottish Enterprise, Business Gateway) is much higher. However, awareness of these organisations has decreased significantly since the 2003 survey.
Doers (Section 4)
1.26 Most Doers in Scotland are self-employed rather than business owners, and more than three quarters have started their business from scratch. The same is also true of England.
1.27 The 'Newer Doers' in Scotland (started a business or become self-employed in the last two years) are more likely to be motivated by wanting to make an idea or innovation happen, or by wanting to do their line of business better than their previous employers, than is the case with Older Doers.
1.28 Whilst the overall proportion of Doers claiming previous unemployment was a major motivation for starting their enterprises has decreased, the inability to find suitable, regular employment was a greater motivation among the Newer Doers.
Avoiders and barriers to entrepreneurship (Section 5)
1.29 The most frequently mentioned barriers to starting a business or becoming self-employed in Scotland are the fear of getting into debt, the chance that the business might fail, getting finance and losing the security of the current job.
1.30 While financial factors remain the main barriers to entrepreneurship, there have been falls since 2003 in the proportion of Avoiders citing the majority of potential barriers. Most notably, the fear of getting into debt or adding to debt is much less of a barrier than previously.
1.31 A third of Avoiders in Scotland would not consider entrepreneurial activity under any circumstances - these people tending to be older. For the rest, the key factor that would make people consider setting up their own businesses would be easier access to finance.
Attitudes to enterprise (Section 6)
1.32 Overall attitudes towards enterprise in Scotland in comparison with 2003 have not, on the whole, become any more positive or negative. The vast majority of people in Scotland still admire business-people and believe they are imaginative and creative enough to start their own businesses should they want to. However, most still have a fear of being in debt.
1.33 Positive attitudes towards enterprise are more likely to be held by men rather than women, by the young rather than the old, by the employed rather than the unemployed, and by those with more academic qualifications.
1.34 There has been a slight but statistically significant decline in the proportion of adults who agree that they have the skills and knowledge with which to start a business.
1.35 Nearly half of the population in Scotland feel that the education system does not provide the necessary skills and knowledge to enable people to start a business (a similar proportion to England). However, young people, (especially students) are more positive on this question.
Conclusions
1.36 Whilst the survey has found little evidence of a sharp growth in entrepreneurial activity overall in the last couple of years, there are some indications that the efforts in promoting entrepreneurship are having an effect. In particular there have been small increases in the proportions of young entrepreneurs and female entrepreneurs.
1.37 A very high proportion of young people have received some form of enterprise training or work experience, and exposure to this is associated with a greater desire to start their own business (although the direction of causality is unclear).
1.38 Whilst Scotland lags behind England slightly in terms of entrepreneurial activity in overall terms, this is largely due to the high level of enterprise in London, particularly among ethnic minority groups and immigrants. Scotland's levels of entrepreneurial activity are on a par with the North of England.
1.39 Whilst people in the past may have been forced into entrepreneurship through necessity, there is a clear correlation between having enterprise training, and achieving academic qualifications, and wanting to set up in business.
1.40 Overall, the findings of this survey indicate that Scotland is gradually becoming a more entrepreneurial country, and that attitudes towards enterprise are becoming more positive, especially among young people.
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