Recent figures from the Global Entrepreneurship Monitor (GEM) Report for Ireland, launched this week, show that the prevalence of those aspiring to be entrepreneurs in 2011 was very low at just 8.5 percent.
Despite this, the Report showed an increase in the rate of Total Early-Stage Entrepreneurial Activity (TEA), with an average of 2,200 individuals starting a new business every month.
These results provide a snapshot of the mixed findings of the GEM Report, which is the largest ongoing study of entrepreneurial dynamics in the world and provides an annual assessment of the entrepreneurial activity, aspirations and attitudes of business people across 54 countries.
The statistics
The Report showed a dramatic drop in the percentage of people considered entrepreneurship a good career choice, from 70 percent in 2006 to just 46 percent in 2011. Commenting on this, Declan Hughes, Manager of the Enterprise and Trade Division, Forfás, said: “There is a need to continue to improve the perceived attractiveness of entrepreneurship as a career option and of perceived entrepreneurial opportunities. ”
This drop in the status of entrepreneurship is probably linked to the fact that there has been a significant increase in the rate of owner managers closing a business in 2011. The figure stood at 2.8 percent last year, compared to just 1.2 percent in 2010; making 2011 the highest closure figures in Ireland for ten years. Business owners cited lack of profitability as their main reason for closing.
On a more positive note, 71 percent of early stage entrepreneurs expect to become employers and 20 percent expect to employ 20 or more after five years. These figures are well ahead of EU and OECD averages.
Another promising aspect of the Report was the percentage of Irish entrepreneurs engaged in medium or high technology sectors – 11 percent – which is relatively high in comparison to the EU and OECD averages of 7.9 percent, and 7.3 percent, respectively.
Tom Hayes, Head of Micro Enterprise and Small Business at Enterprise Ireland welcomed the increases in this sector saying: “These Conclusion On the whole, those commenting on the Report acknowledged the positives, while also recognising that challenges still remain. For example, Declan Hughes of Forfás said: “The positive trends arising from the Report, though significant, are but one part of the picture, with significant challenges to entrepreneurship also existing”. Among the challenges he cited the increase in those who are motivated to entrepreneurship by necessity, as well as the decrease in the number of investors and a decline in the amount being invested. Following the publication of this Report, Minister Bruton took the opportunity to reiterate his determination, through the Action Plan for Jobs, “to provide further support for the Irish entrepreneurial community to generate even greater numbers of innovative entrepreneurs to create strong, export led businesses in the coming year”. The GEM report is supported by Enterprise Ireland, Forfás, the European Social Fund and the Department of Justice and Equality, under the Equality for Women Measure 2007-2013, and also by the Department of Jobs, Enterprise and Innovation.