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05 July 2010
Entrepreneurs must persist despite difficult economic circumstances, according to Professor Mark Hart, who speaks exclusively to Insider about the future of entrepreneurs in the region.
Professor Hart's Global Entrepreneurship Monitor (GEM), which was released today, reveals that one in five entrepreneurs in the Midlands citing their reason for beginning a business as "out of necessity".
This 'need-to-succeed' is reflected in the number of people starting up their own business; Professor Hart says that the global recession has had very little effect on the number of people beginning a business.
The Aston University professor noted that the percentage of entrepreneurs beginning a business in the Midlands had dropped from 6.4 per cent in 2008 to 5.2 per cent in 2009; a drop which he describes as "insignificant".
He added: "Entrepreneurial activity is key for the growth of the West Midlands' economy.
The same number of individuals are saying we're in the process of starting a business' remain basically the same.
It's a change in attitude that we have found very interesting.
In the West Midlands, which is different to everywhere else in the UK except London and the South East, up to one in five people are saying they're starting a business out of necessity- by which, I mean that they have no other means of income." Four thousand new business and established business owners were interviewed for the report, which is replicated in 24 countries.
However, Professor Hart concedes that education does play a significant role in whether young people will start their own business. "This is the first time we've had a close look at Birmingham specifically, which was interesting, and one difference is clear: the 18-24 year olds in Birmingham do not behave like their counterparts in London in that they just do not start up businesses." Professor Hart continues: "Young people are very positive; when you ask do you think you'll start a business in the future?' they put their hands up and say yes, definitely.
But in Birmingham, they're not actually going through with it." When asked why this was the case in Birmingham, rather than London, Professor Hart was quick to answer. "Young people in Birmingham are significantly less likely to say they have the skills to start up.
So it's a confidence issue, and not only that, almost 70 per cent of young people say that funding is the biggest barrier, something that older age groups don't find as much.
You have to have an asset base and a good track record with the bank; that's become much more important over recent years." And surely this confidence knock cannot have been helped by the recent announcement that regional development agencies are to close? "The RDAs are disappearing, everything seems to be disappearing, and then who takes on the job? The responsibility then gets dumped on Birmingham City Council, which then says, well our budget's limited, what can we do?" With the next few years being crucial to finding new entrepreneurial talent, Professor Hart cannot be blamed for asking of the RDA closures: "Is this really the right time to be doing this?"
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