Aiming for high growth
Article Date: Oct 28 2005
Less than ten per cent of early-stage entrepreneurs expect their businesses to be employing 20 or more individuals within five years, according to a new worldwide survey from research collective the Global Entrepreneurship Monitor (GEM).
The four-year study, which analysed the results of interviews with 505,000 individuals in 44 countries, was conducted by GEM member organisations London Business School and Babson College, in Massachusetts.
Focusing on the phenomenon of ‘high expectation entrepreneurship’, it revealed some startling findings. Unsurprisingly, North America leads the world in terms of such growth ambitions, however, many of Europe’s more developed nations sit right at the foot of the table.
In North America, for instance, around 1.5 per cent of the adult population not only foresees themselves running their own businesses in five years but also hope to be employing at least 20 individuals by this time. Individuals in Oceania (1.2 per cent) and Latin America (one per cent) are the next most aspirational. Developing Asia (0.8 per cent) and Africa (0.75 per cent), meanwhile, finished someway ahead of Europe and Israel (0.5 per cent), which propped up the list.
Statistically speaking, these results may not represent a significant difference, but to Phil Verity of business adviser Mazars, which sponsored the report, they do highlight some interesting trends.
‘The US has a culture of entrepreneurship and attaches little stigma to failure,’ Verity explains, ‘while if you look at some places in Africa, for example, there has been a real focus on helping people start their own businesses and generate wealth in their own regions. That self-sufficiency is something people believe in.’ Practices in the West, such as outsourcing, he adds, are also helping to ‘stimulate’ a wealth of start-ups in India and other developing countries.
These trends contrast markedly with the UK and many of Europe’s other more developed nations. ‘One of the things we have to address in the UK is being smarter about teaching entrepreneurship in schools,’ Verity suggests.
Overall, despite the limited number of high expectation entrepreneurs unearthed by the survey, the contributions they make to their respective economies should not be underestimated. High expectation entrepreneurs, the report suggests, account for almost three-quarters of total expected job creation within the five-year period, with fewer than five per cent of entrepreneurs expecting to create over 62 per cent of all new jobs stemming from start-ups. It must be noted, however, that these figures relate to expected, not actual, levels of job creation.
The survey also discovered that high expectation entrepreneurship is most prevalent amongst males aged between 25-34 years old.
‘Among the trends we’d like to see in future are the gap between male and female entrepreneurs to close, the differences between the UK and US to narrow and, with an ageing population, we think we should also do more to encourage older individuals to become entrepreneurs,’ Verity concludes.