Early-stage entrepreneurial activity is relatively high and remains above the long-run average
Most recent data: 2014 (note: the figures cited here differ slightly from those presented in the GEM 2014 Global Report as they reflect the larger UK sample, data collection for which was completed later in 2014)
Early-stage entrepreneurial activity in the UK remains above the long run average of 6%, with the final UK estimate for 2014 of 8.6%. The rate of total entrepreneurial activity is comparatively high, typically lying above that of France and Germany but below the US. In 2014, 8.5% of working age adults expected to start a business within the next 3 years which is above the longer term trend for the UK.
The UK has a high regard for the status of successful entrepreneurs and optimism about start-up opportunities has recovered to pre-2008 levels. However, just 58% of the population think that starting a business is a good career choice.
Males tend to be more entrepreneurially active and have more positive attitudes than females, who are more risk aware. Around 1 in 5 (18%) of UK early-stage entrepreneurs had high job expectations in 2014; which was higher than the rates for its European peers but lower than in the US, at 27%.
The typical UK early-stage entrepreneur is male, aged 39, has a university degree, and is from a middle to higher income household. He is likely to be motivated by opportunity, rather than necessity, and is more likely to be working in a consumer-oriented business.
Enablers and Constraints
The UK has a relatively strong base for encouraging early-stage entrepreneurial activity with widespread access to business support and mentoring programmes; the provision of entrepreneurial awareness schemes throughout the education sector; and good access to office space, and IT and broadband infrastructure.
The key challenges remain access to bank finance; the costs involved with taking on staff; and access to and finance for developing export markets.
Initiatives Supporting Entrepreneurship
The Start Up Loans Company is a government funded initiative operated by the Department for Business, Innovation and Skills that provides start up support in the form of a repayable loan together with a business mentor for entrepreneurs across the UK. The Scheme was set up in 2013; the idea originally proposed by Lord Young in response to the relatively low levels of entrepreneurial activity in the UK compared to the US, and was designed to help solve the problem of supporting people who have a feasible business idea but no access to finance.
An additional scheme supporting entrepreneurship amongst young children is being run by Young Enterprise in partnership with Virgin Money and the Department for Business, Innovation and Skills. Named The Fiver Challenge, the scheme gives pupils aged up to 11 the chance to set up their own business, learn about the world of enterprise and develop entrepreneurial talents. The children are given five pounds, which they have to use to create products or services to sell at a profit – which they are allowed to keep – and then return the original loan to the Fiver Bank.
Trends Over Time
The Total early-stage Entrepreneurial Activity (TEA) rate was close to 6% between 2003 and 2010, but then rose and for the last four years it has fluctuated between around 8% and 10%. The most notable increase has been amongst the over 50 age group.
While opportunity perception has recovered to pre-2008 levels, fear of failure has remained high while skills perception has remained lower than before 2008.
Challenges for the Future
The biggest challenges in the UK lie with raising the growth ambitions of entrepreneurs and matching this with the skills necessary for growth.