GEM 2007 Mid Wales Report
20th Jun 2008
The full report is now available to download (Welsh version to follow)
EXECUTIVE SUMMARY
- The Global Entrepreneurship Monitor (GEM) analyses the level of entrepreneurial activity across a large and growing range of nations and regions. This report examines the level of entrepreneurship in the Mid Wales economic area using the Wales sample taken from the GEM 2007 survey.
- GEM measures nascent entrepreneurs – that is the proportion of the adult population aged 18 - 64 yrs who are actively participating in the process of start-up - and owners of ‘new businesses’ – those who are active in running a new business for less than 42 months. By combining these two measures, the main output index, namely the Early-Stage Entrepreneurial Activity (TEA) rate, is derived.
- In 2007, the TEA index for Mid Wales was measured at 5.3 per cent, which is considerably lower than the 8.2 per cent recorded in 2006, but similar to the level in 2005 (5.7 per cent). It matches the early stage entrepreneurial activity index for Wales (5.3 per cent), in contrast to the other Welsh regions i.e. South East Wales (4.3 per cent), South West Wales (5.2 per cent), and North Wales (6.2 per cent).
- In terms of established business ownership i.e. those who have owned and managed a business that has paid wages or salaries for more than 42 months, in Mid Wales, the rate is 11.2 per cent, considerably higher than North Wales (6.2 per cent), South West Wales (5.9 per cent) and South East Wales (3.4 per cent). This demonstrates the dependency of the region on entrepreneurial activity by both new and established firms.
- The GEM study measures individual participation in entrepreneurial activities in the following two ways – individuals either start a new business to exploit a perceived business opportunity or they are pushed into entrepreneurship because other options to work are unsatisfactory. The percentage of necessity entrepreneurs – where individuals perceived they have no choice but to enter into entrepreneurial activity - has decreased from 1.6 per cent in 2005, to 1.2 per cent in 2006 and 0.9 per cent in 2007.
- In 2007, 2.5 per cent of the Mid Wales early stage entrepreneurs were expecting to start firms with fairly rapid and large growth potential. This is much lower than the rest of Wales (8.7 per cent) which, in turn, lags the UK as a whole (12.1 per cent). In terms of the High Job Creation Entrepreneurs index, 0.33 per cent of the population of Mid Wales were expecting to increase the number of employees within their firms by 20 or more in the next five years, a slight increase over 2006.
- In Mid Wales, the female TEA activity rate was measured at 5.1 per cent in 2007 in comparison to 4.6 per cent in 2006, but remained below the figure recorded in 2005 (6.0 per cent). However, these figures are considerably higher than the 3.2 per cent measured for the rest of Wales and the UK. The proportion of women managing their own established business in Mid Wales (5.4 per cent) remains considerably higher than the rate for both the rest of Wales and the UK, 2.6 and 2.5 per cent respectively.
- Male entrepreneurial activity has accounted for the higher TEA rate in Mid-Wales in 2006 (11.8 per cent), but declined in 2007 to 5.5 per cent.
- The highest level of early-stage entrepreneurial activity is found for those aged between 35-44 years (9.8 per cent). Entrepreneurship by the oldest age group (4.4 per cent) is almost twice the rate for the rest of Wales (2.4 per cent) and is high compared to the rest of the UK (3.2 per cent). However, only 2.6 per cent of the youngest age group (18-24 yr olds) are involved in starting and managing a new business.
- In terms of the relationship between entrepreneurship and income, those living in households in the upper third by income in Mid Wales have a 6.0 per cent participation rate in entrepreneurial activity. This is followed by those in the middle third of income (5.4 per cent), with the poorest third having the lowest participation rates in starting and managing a new business (3.9 per cent).
- In relation to work status, the TEA rate is highest in Mid Wales for the ‘economically inactive’ (16.8 per cent) and those who work part-time (7.4 per cent).
- In terms of educational attainment, those who hold doctoral level qualifications are the most entrepreneurial group (11.9 per cent). However, those with vocational qualifications also have high entrepreneurship rates.
- The highest entrepreneurial rate is found for in-migrants to the region (7.5 per cent), which is higher than the rate for the rest of Wales (6.9 per cent) or the UK (6.3 per cent). However the entrepreneurial activity rate for lifelong residents is lower in Mid Wales (3.0 per cent) than for the rest of Wales (4.2 per cent).
- The percentage of the population expecting to be involved in future start-ups in Mid Wales (6.1 per cent), is lower than for the rest of Wales (6.5 per cent) and the UK (7.4 per cent).
- As in 2006, less people (28.8 per cent) would consider fear of failure as a barrier to entrepreneurship as compared to 34.7 per cent for the rest of Wales and 35.9 per cent for the UK. This, and the higher perception of possessing the skills to start a business, may help to account for the higher levels of entrepreneurship within Mid-Wales.
- The difficulty in obtaining finance is identified as the major barrier faced by entrepreneurs in all regions, with 58.4 per cent of respondents in Mid Wales claiming that access to funding prevents them from going into business. This is higher than the rate for the rest of Wales (49.1 per cent) and for the UK (49.9 per cent).
- The most important source of funding for business start-ups in Mid Wales remains bank overdrafts (50.3 per cent), a far higher rate than for the rest of Wales (34.0 per cent) or the UK (29.6 per cent). The second most commonly accessed source is friends and family (31.6 per cent), which is much higher than in the rest of Wales (19.5 per cent) or the UK (22.0 per cent). The use of government grants is the third most popular source of funding.
- In 2007, 0.9 per cent of respondents from Mid Wales indicated that they have made an informal investment in the last three years, similar to 2006 but lower than the rest of Wales and the UK (both 1.3 per cent). The mean of the total investments made by individual business angels over the last three years is, at £6,563, substantially lower than the figure for the rest of Wales and the UK.
