GEM 2007 North Wales Report
20th Jun 2008
The full report is now available for download (Welsh version to follow)
Executive Summary
- The Global Entrepreneurship Monitor (GEM) analyses entrepreneurial activity across a large and growing range of nations and regions. This report examines the level of entrepreneurship in the North Wales economic area using appropriate data from the GEM 2007 Wales sample survey.
- GEM measures nascent entrepreneurs - 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. Combining these two measures gives us the main output index, namely the Total Early-Stage Entrepreneurial Activity (TEA) rate.
- In 2007, the TEA index for North Wales was measured at 7.4 per cent, which represents an increase from the 5.7 per cent recorded in 2006, 6.0% in 2005 and the 6.2 per cent recorded in 2004. This compares favourably with other areas of Wales, as well as the UK as a whole, and is considerably higher than the early stage entrepreneurial activity index for Mid Wales (5.3 per cent), South West Wales (5.2 per cent), South East Wales (4.3 per cent) and the UK TEA rate of 5.6 per cent in 2007.
- 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, the rate in North Wales is 6.2 per cent. This suggests a higher survival rate of new businesses within the region over time and emphasises the importance of maintaining support for start-ups as they grow within the region.
- North Wales had an opportunity TEA (i.e. those who start a new business to exploit a perceived business opportunity) of 6.2 per cent, a substantial increase compared to 2006 (4.5 per cent). This level of opportunity-driven entrepreneurship is more than for the rest of Wales (3.6 per cent) or the UK (5.8 per cent), which is in contrast to last year’s results.
- Independence is the most important motivation in pursuing a business opportunity for entrepreneurs in North Wales with 50.9 per cent considering this to be the driver behind self-employment as opposed to 41.5 per cent who rated an increase in income as the key factor in starting a business in the region.
- North Wales has a lower proportion of the population participating as high growth early stage entrepreneurs than the rest of Wales and still lags the UK in terms of high job growth businesses.
- There has been a further decline in female TEA activity in North Wales in the last twelve months, falling from 4.8 per cent in 2005, to 3.7 per cent in 2006 and 3.6 per cent in 2007, and only slightly higher than the average for the rest of Wales and the UK.
- Male TEA activity was measured at 11.2 per cent – above both the UK average and that for the rest of Wales.
- The highest level of early-stage entrepreneurial activity was found amongst those aged between 18-24 year olds (12.6 per cent) followed by the 45-54 year olds (8.4 per cent) and 35-44 year olds (7.4 per cent).
- In terms of income, those living in households within the upper third by household income in North Wales have the highest participation rates in entrepreneurial activity (10.3 per cent), and by far the greatest proportion of those starting new businesses do so from being unemployed.
- In terms of educational attainment, the most active group in terms of entrepreneurial activity in North Wales are those with vocational qualifications (14.9 per cent).The participation of those individuals with vocational skills is higher for North Wales than for the rest of Wales (4.9 per cent) and the UK (5.6 per cent). The second most entrepreneurial groups are those with doctoral qualifications (13.7 per cent), followed by Masters level qualifications. Those individuals with no formal qualifications have low participation rates in entrepreneurial activity (2.4 per cent) compared to other education groups.
- In the case of North Wales, the proportion of life-long residents who are involved in early stage entrepreneurial activity has increased to 6.1 percent in 2007, from 2.9 per cent in 2006 and 4.6 per cent in 2005. At the same time, the proportion of in-migrants who are starting their own business has increased to 9.1 per cent, considerably higher than for the rest of Wales or for the UK as a whole. Therefore, North Wales is more dependent on incomers from the rest of the UK to supply the entrepreneurial drive of the region.
- The percentage of the population intending to be involved in future start-ups is higher for North Wales (7.9 per cent) than the rest of Wales (6.0 per cent) or the UK (7.4 per cent). This data is very heartening for North Wales and shows there is vast potential in developing a more entrepreneurial economy. Therefore, the challenge for policymakers is to ensure that this intention is transformed into actual business starts in the near future.
- Attitudes towards entrepreneurship in North Wales appear to follow a pattern more akin to the UK as a whole than the rest of Wales and, on some measures such as personally knowing an entrepreneur; North Wales surpasses the UK as a whole.
- The major barrier for those wishing to start a business remains the same for all regions in the UK, namely ‘difficulties in obtaining finance’, with 48.6 per cent of North Wales respondents claiming that access to funding prevents them from going into business.
- The most common source of funding for business start-ups in North Wales remains bank overdrafts (35.9 per cent), followed by family and friends (20.8 per cent) and mortgages and secured loans (20.2 per cent). Government grants (18.7 per cent) are seen as the next most popular source of finance for entrepreneurial businesses.
- Similar to 2006, in 2007 1.6 per cent of respondents from North Wales have indicated that they have made an informal investment in the last three years, higher than the rest of Wales (1.2 per cent) or the UK (1.3 per cent).
- In North Wales, the highest rate of early stage entrepreneurial activity is to be found in villages and urban areas (both 7.4%), followed by towns 6.4 per cent.
- 6.8 per cent of fluent Welsh speakers in North Wales are involved in new business starts or new firms, as compared to 8.0 per cent for non-Welsh language speakers. This is a considerable improvement on 2006 when 5.3 per cent of fluent Welsh language speakers were entrepreneurially active, and is higher than for the rest of Wales (4.2 per cent).
