Business

Friday 19 September 2014

Recession blamed for our lack of entrepreneurial spirit

Published 06/07/2013 | 05:00

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EVEN though 19,000 Irish people started a new business last year, Ireland still lags behind many other European countries when it comes to entrepreneurship. We are now 14th in the EU in terms of early-stage entrepreneurs, while just 6pc of the population was involved in starting a business last year – down from 7.3pc in 2011.

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This year's Global Entrepreneurship Monitor says the recession has had a very severe negative impact on the Irish public's perception of business opportunities.

In 2007, 46pc of people saw business opportunities in their local area and this had fallen to 26pc by 2012. That trend is not limited to Ireland. Other countries particularly marked by the economic crisis like Greece, Spain and Portugal, also saw massive falls in the public perception of business opportunities.

But though it damaged confidence, the recession also directly encouraged entrepreneurship. Almost a third of Irish people surveyed said high unemployment in recent years has encouraged them to consider starting their own business. People look for other ways to make money when jobs are scarce and a fear of failure is less of a deterrent, as there is less to lose.

The relationship between hardship and entrepreneurship is especially evident in developing countries. In stark contrast to Ireland's 6pc, two-fifths of all Ugandan adults were involved in start-up activity last year.

Research flags several areas where the Government could provide more support for entrepreneurs. One of these is the lack of a safety net for business owners, since self-employed people are generally not eligible for all social welfare benefits.

The high cost of social insurance for employees was also flagged and the survey found tax or pension breaks for taking on employees was suggested as one way to target this.

Two trends emerge in entrepreneurship research every year – globalisation, and growing numbers of women. New Irish businesses have an increasingly international customer base, because the country's peripheral location and small population forces entrepreneurs to look outside national borders for business. Nearly one in four of all Irish early-stage entrepreneurs have or expect they will have at least a quarter of their customers based overseas.

Like most other European countries, Ireland has a much higher proportion of men starting up businesses compared with women.

Men are twice as likely as women to be entrepreneurs in this country. That still compares well to the European average, where females make up just a third of all self-employed or business starters. The European Commission has recognised that women face more difficulties than men when establishing and running a business, mainly in access to finance, training, networking and managing family commitments. Ireland's response to this includes a €250,000 start-up fund specifically for women launched last year, which was highly oversubscribed.

Sarah McCabe

Irish Independent

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