GEM report suggests significant entrepreneurial growth in Scotland

The number of Scots expecting to start their own business in the next three years was significantly higher in 2011 than in 2010, according to research by an academic at the Hunter Centre for Entrepreneurship at Strathclyde.

The Global Entrepreneurship Monitor (GEM) 2011 survey found that the proportion of working age individuals in Scotland who expected to start a business in the next three years rose significantly from 6.0% to 9.8%.

However, Scottish entrepreneurs are also more likely than entrepreneurs across the UK to report that one of the biggest difficulties they faced in starting their business was finding suitable staff.

The report's author, Professor Jonathan Levie of the University's Hunter Centre for Entrepreneurship, said, "It is encouraging that entrepreneurial intention has increased and this could lead to an increase in actual new business creation rates over the next year or two.

"The long, slow decline in early-stage entrepreneurial activity also appears to have been arrested, if not reversed, in 2011.

"However, while there is room for optimism, more needs to be done to turn the intention to start a business into reality. Scottish entrepreneurs still face challenges in getting funding, customers and staff. There is also considerable scepticism across the Scottish public about the wisdom of embarking on an entrepreneurial career, despite the relatively high status afforded to successful entrepreneurs."

Access to finance continues to be a barrier to starting a business with half of non-entrepreneurs thinking it would be their biggest problem and almost half of entrepreneurs citing it as their biggest difficulty.

The survey also revealed that the proportion of employees in small businesses engaged in new business activity for their employer is significantly lower in Scotland than in the UK – despite high levels of recognition by employees that their employer provided support to individuals who came up with ideas for new goods and services.

Sir Tom Hunter, who endowed the Hunter Centre for Entrepreneurship at Strathclyde, said, "The good news is this year's report indicates there are signs that the decline in early stage entrepreneurial activity has halted. The report shows that the proportion of working-age individuals who intend to start a business has also increased, but if we are to succeed on a global stage, we need to do more.

"In many areas we are no longer lagging behind the rest of the UK. Perhaps some of our initiatives in education are now starting to bear fruit, as founders' knowledge of how to start in business in Scotland compares favourably to the UK.

"Now we need ambition that avoids or jumps the hurdles, innovation that doesn't expect Government to provide, or you or me to solve problems. We need entrepreneurs that get on with it.

"GEM Scotland allows us to see where we are, not where we are going. It's up to us to invent where we go next, so let's get on and do that – self-determining how you intend to build your business is the only way forward."

Among the report's key findings:

• In 2011, the proportion of working age individuals in Scotland who intended to start a business in the next three years rose significantly from 6.0% to 9.8%.
• In contrast with previous years, entrepreneurial attitudes, activity and aspirations were very similar in Scotland and the UK. Scotland performed well in relation to its benchmark nations on most activity and aspiration measures.
• A long slow decline in early-stage entrepreneurial activity was arrested in 2011.
• Like the UK as a whole, fewer than half of the Scottish working age population thought that most people would agree that starting a business is a good career choice, despite the relatively high status afforded to successful entrepreneurs across the UK.
• The proportion of employees in small businesses that are engaged in new business activity for their employer is significantly lower in Scotland than in the UK. However, these employees were just as likely as their UK counterparts to agree that their employer provided support to individuals who come up with ideas for new goods and services.
• Half of non-entrepreneurs think that access to finance would be the greatest barrier to them starting a business. Similarly, almost half of entrepreneurs cite access to finance as one of the biggest difficulties they faced in starting their business.
• The self-employed in Scotland are significantly more likely than employees to strongly agree with statements that describe aspects of self-empowerment in work. They are also significantly more likely to be very satisfied with their work and work income.

The 2011 GEM Scotland report is the eleventh assessment of national entrepreneurial activity, which analyses entrepreneurial attitudes, activity and aspirations as well as the factors that underpin them.