GEM 2007 South West Wales Report
21st Jun 2008
The full report is now available to 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 South West 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 - 64yrs 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 the main output index, namely the Early-Stage Entrepreneurial Activity (TEA) rate.
- In 2007, the TEA index for South West Wales was measured at 5.2 per cent which represents a decrease from the 5.6 per cent recorded in 2006, as compared to 5.3 per cent for Wales as a whole. This is lower than the level of entrepreneurial activity found in North Wales (7.4 per cent), but higher than South East Wales (4.3 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, the rate in South West Wales, is 5.9 per cent, lower than North Wales (6.2. per cent) and Mid Wales (11.2 per cent), but higher than South East Wales (3.4 per cent).
- South West Wales has an opportunity TEA (i.e. those who start a new business to exploit a perceived business opportunity) of 3.9 per cent. This is slightly lower than for the rest of Wales and the UK rate both (4.3 per cent). For necessity entrepreneurship – where individuals perceived they have no choice but to enter into entrepreneurial activity – South West Wales had a necessity TEA of 0.8 for 2007, which is higher than the rest of Wales or the UK.
- South West Wales lags behind the UK in terms of High Expectation Entrepreneurship, which is an indicator of the prevalence of fast growth businesses within the economy.
- Independence remains the main reason for entrepreneurs across all regions pursuing a business opportunity, with seven out of ten entrepreneurs in South West Wales citing this as the key driver in establishing a new business, higher than the rest of Wales and the UK. A lower number of entrepreneurs in the region are motivated by financial considerations.
- In South West Wales, the female TEA activity rate was measured at 3.7 per cent, lower than the 4.3 per cent recorded in both 2006 and 2005. This is similar to the 3.6 per cent measured for the Rest of Wales. The proportion of women managing their own established business in South West Wales (2.9 per cent) is slightly higher than for the Rest of Wales and the UK.
- Entrepreneurial activity and age have a similar distribution in South West Wales compared to the other Welsh regions, with the highest level of early-stage entrepreneurial activity being those aged between 25-34 years, with a TEA of 9.3 per cent, followed by the 35-44 year olds (7.1 per cent).
- In terms of income, those living in households within the upper third in terms of household income in South West Wales have the highest participation rates in entrepreneurial activity (9.9 per cent); however the lower household income tier with 6.1 per cent, is higher than the middle tier with 3.5 per cent.
- The highest level of early stage entrepreneurship by work status in South West Wales is the economically active (9.2 per cent). This may be explained the relatively high level of necessity driven entrepreneurship found in South West Wales in 2007.
- The general pattern of higher TEA activity for those with graduate level educational qualifications appears to hold for South West Wales.
- The TEA activity rate for immigrants (8.8 per cent) is higher than the average for the in the rest of Wales and for that matter, immigrants in the UK. Therefore, whilst the same positive relationship is found between immigration and entrepreneurship for both parts of Wales and the UK, the effect is much greater in South West Wales.
- The percentage of the population with entrepreneurial intentions is roughly the same for both South West Wales (6.6 per cent), and the rest of Wales (6.4 per cent). However, both lag behind the UK (7.4 per cent) as a whole.
- The difficulty in obtaining finance is the major barrier highlighted by entrepreneurs in all regions, with just under half of respondents in South West Wales (48.5 per cent) claiming that access to funding prevents them from going into business, followed by the fear of debt (17.8 per cent) and lack of skills (13.3 per cent).
- The most commonly utilised source of finance in South West Wales is the bank overdraft, used by 38.8 per cent of entrepreneurs in South West Wales.
- In 2007, some 1.5 per cent of respondents from South West Wales had made an informal investment in the last three years compared to 1.1 per cent in 2006, which is similar to the average for the rest of Wales and the UK level of business angel activity.
- In comparing urban and rural entrepreneurship rates for the region, South West Wales shows a higher TEA rate (7.8 per cent) for areas classified as ‘villages’, and those classed as ‘towns or fringe’ (6.1 per cent) than the more built-up urban areas (3.7 per cent).
- The population of rural areas have more confidence in their enterprise skills; knowledge of other entrepreneurs; but a higher level of, fear of failure. The difference between South West Wales and the rest of Wales is that those living in South West Wales ‘villages’ are much more likely to feel they have the skills to start a business, and starting a new businesses carries a high status compared to than their counterparts living in South West Wales ‘towns’.
- Serial entrepreneurship is a very important element in the future entrepreneurial activity in all regions of Wales.
