Why Britain needs to change its view of entrepreneurs

Interview with GEM's Executive Director, Rebecca Harding

In February, the Global Entrepreneurship Monitor (GEM) launches its latest Global Report - a seven-year study of entrepreneurial activity in 42 countries across the world. Here, Rebecca Harding reveals the health of entrepreneurship in the UK, and discusses how to break a stalemate which policy initiatives have still to address.

Making the leap

Britain is the second easiest nation in the world in which to set up a business. Despite this, many innovators remain reluctant to make the leap and turn their bright idea into a commercial reality.

For while the past seven years have seen a more positive attitude towards entrepreneurship in the UK, this is yet to filter through to any real increase in the number of new businesses.

"We have initiatives that the rest of the world wants to copy - like Enterprise Week," says Dr Harding. "The Government policy is there. It's excellent and it's working.

"Despite this, there remains a more fundamental challenge. It's not about stimulating a few new start-ups but about changing an entire culture. That takes time."

Changing the nation's thinking

"We need to go back to basics, to rekindle the spirit of the industrial revolution, to free-up people's minds to experiment - and sometimes make mistakes.

"We need to strip away the social stigma attached to failing, and reach a situation whereby parents of bright children recommend entrepreneurship as a career option in the way they currently suggest medicine or law."

If the ambition requires blue-sky thinking, Dr Harding is at least clear where it should start - in schools.

"Innovation is about trial and error. We need to teach children that it's OK to think differently, to sometimes get it wrong. Our target-driven curriculum is squeezing creativity and experimentation out of the national psyche."

Ethnic minorities lead way

Dr Harding points to evidence that people from all ethnic groups - Indians, Australians, Eastern Europeans - are more likely to start their own business in the UK than white Britons.

"It suggests that a generation is being suppressed. Black Africans, on the other hand, are leading the way. They're more positive about being self-employed. They feel they are likely to reach a glass ceiling in a conventional job anyway, so have more motivation to do it their way."

The UK picture

According to research by GEM:

• London, the South East and, to an extent, the East of England top the league for new business start-ups - possibly because they have more of a culture of entrepreneurship, with easier access to finance and networking opportunities.
• More women are becoming entrepreneurs - proof that recent initiatives are working. But worryingly, the number of men starting businesses has dropped.
• Over half of those who decide not to press ahead with their own business cite access to finance as their stumbling block. Dr Harding says: "There's a perception problem. The money is out there, but people don't know how to access it."

She adds: "Britons spot the opportunities but can't bridge the gap between an idea and a commercial reality. That's where a government should step in - to offer support where the private sector never will, in education and training, research and development."

The Government playing its part

Dr Harding is also keen for government action to help developing middle-sized companies to remain under UK ownership.

"We could well have the next Microsoft being formed at a British university right now - but it's likely to end up under overseas ownership. The reason is that in spite of everything, there is still an equity gap in the UK capital market that limits the access these firms have to UK growth finance," she says.

Making entrepreneurship a way of life

Above all, the solution lies not with quick fixes. Instead, argues Dr Harding, the UK needs a 15-year strategy to embed entrepreneurship within society, and ensure it remains there.

In fact, Britain already has one of the lowest 'fear of failure' rates in Europe. But Dr Harding says: "The UK sees wealth creation as a dirty word. And when people do set out to do something different, there's a sense that others get satisfaction if it goes wrong.

"In the US or Canada, entrepreneurs are respected for what they achieve. Everyone knows someone who has started up a business - so why not have a go?"

The good news

But, compared with others, the UK entrepreneurial picture is at least static.

Dr Harding adds: "The ripples of a stock market crash, like the dot-com bubble, take a long time to reach the edge of the lake. The impact is still very much in evidence elsewhere in the world, where the number of new businesses continues to fall. In that context, the UK trend looks surprisingly healthy."

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NESTA sponsored GEM's annual conference in January 2007, ahead of the launch of their latest Global Report.

Published January 2007