Global Entrepreneurship Monitor Scotland 2006 Jonathan Levie Hunter Centre for Entrepreneurship University of Strathclyde 14 December 2007

Early-stage Entrepreneurial Activity: How Scotland Compares 2005 TEA scores for 42 sovereign nations & Scotland Scotland United Kingdom United States Ireland

TEA rates in Scotland & benchmark countries TEA % change Scottish TEA as a % of other TEA rates Scotland %n/a UK %97%72% High income nations %87%67% Small high income nations %80%62%

Have you ever taken part in business or enterprise training at school? Source: GEM UK and Scotland 2004, 2005 and 2006 Surveys

In the UK, would most people consider starting a new business a desirable career choice? Source: GEM UK and Scotland 2004, 2005 and 2006 Surveys

In the next 6 months will there be good opportunities for starting a business in the area where you live? Source: GEM UK and Scotland 2004, 2005 and 2006 Surveys

Would fear of failure prevent you from starting a business? Source: GEM UK and Scotland 2004, 2005 and 2006 Surveys

Do you have the knowledge, skill and experience required to start a new business? Source: GEM UK and Scotland 2004, 2005 and 2006 Surveys

How many businesses fail in their first year? UK public estimates Source: Allinson, Braidford, Houston & Stone, 2005

% of new VAT-registered businesses still registered after one year and three years Source: BERR

Most important reason for closing my business (excludes businesses that were sold) Source: GEMUK 2006 survey

% of those who closed a business in the last year who are currently starting or running a business Reason for closure UK Scotland Found another job 11 8 Retirement 8 Personal reasons 16 Too much competition Lack of customers 27 Financial reasons 23 Entrepreneurial recycling is healthy in Scotland – Scotland does not have a business failure problem – or a business closure problem

What if we shattered the business failure rate myth? 11% of years old Scots are thinkers and 2% are actively trying to start (nascent entrepreneurs) Fear of failure is a barrier to start-up for 42% of thinkers but only 18% of nascents 55% of thinkers who fear failure feel much more positive about their business prospects when told the true business failure rate (Allinson et al., 2005) Combining these findings, if all thinkers knew how small the business failure rate is, we could increase the number of nascents by 25%

Fear of failure is holding the start-up process back, and affecting the next generation of entrepreneurs. Our bankruptcy laws now provide the swiftest discharge time in Europe. But few entrepreneurs go bankrupt anyway. Now what? A concerted public education campaign, aimed at thinkers, the media and the new business support industry, to shatter the business failure rate myth Implications for Policy