GEM report reveals low business start-up rates
The latest Global Entrepreneurship Monitor (GEM) report for Scotland - produced by the Hunter Centre for Entrepreneurship - found that start up rates were significantly lower that UK rates last year and are at their lowest since recording began in 2000.
Researchers found that Scotland's early stage entrepreneurial activity, which includes proportions of people setting up businesses or owning and managing new businesses, was among the lowest in 20 developed countries that participated in the survey.
More than half of the entrepreneurs questioned said it was more difficult to start a new business in 2009 than in the previous year, and younger prospective entrepreneurs appear to have been worse hit by the recession.
The report also showed that the longer-term trend of declining rates of enterprise activity is matched by a decline in the perception of opportunities to start up businesses.
Dr Jonathan Levie, the report's author, said, "Scotland had a delayed reaction to the global economic slowdown, but the reaction in terms of entrepreneurial and investment activity seems to be more severe than that in the UK as a whole and other small, high income, independent nations.
"This weakness in the face of economic challenge is worrying, since new start-ups can help drive a recovery in employment and economic activity."
Dr Levie said 'direct action' was required to encourage new business creation. "In a society where knowledge of business and entrepreneurs is low, as it is in Scotland where 77% of Scots do not have a family business background, intervention through education and training is necessary.
"The UK-wide GEM data suggest mentoring and training programmes linked to funding - such as the Prince's Scottish Youth Business Trust - are precisely what is needed to encourage young entrepreneurs.
"In addition, UK figures show that compulsory training in starting a business while at school increases the odds of someone later trying to create new business activity for their employer by three times, and for themselves by almost two times."
Sir Tom Hunter, who endowed the Hunter Centre for Entrepreneurship at Strathclyde, said, "Scotland as a whole needs to take a radical look at itself and change markedly. Aggressive fiscal policies are required as is ground level support for entrepreneurial start-ups. Drive a tax regime that encourages growth at all levels of the economy. Education as ever is a key ingredient."
The 2009 GEM Scotland report is the tenth assessment of national entrepreneurial activity, which analyses entrepreneurial attitudes, activity and aspirations as well as the factors that underpin them. More information is available at http://www.strath.ac.uk/huntercentre/news/
