I came across some research yesterday with the marvellous title: Switching Costs and Occupation Transition into Self-employment: A Duration Modelling Approach - only an academic could come up with a title like that.
The research looks at entrepreneurship, and finds that only one out of seven people who are thinking of starting a business will actually set one up in the next twelve months. I suppose that's to be expected - in these times of the Apprentice and Dragon's Den it's trendy to aspire to be an entrepreneur. But it's still worth reflecting on why the others don't make the leap and set up in business - and what those of us who support entrepreneurs can do to encourage the other six.
The bit that I found most interesting is the following:
The economically inactive and unemployed start new businesses much more quickly than those considering entrepreneurship while in paid employment. 50% of the small number of economically inactive individuals who would like to start a new business in the next year do so, whereas only 14% of aspiring entrepreneurs in paid employment do so.
Again, you can well imagine that to be the case. It's easier to take risks if you've got nothing to lose - it's much harder to give up a steady job to then enter the risky world of entrepreneurship. But it's a case of needs must when you're skint.
The most entrepreneurial people I've come across were the people of Guayaquil in Ecuador, where I lived for a year when I studied Spanish at University. Guayaquil is a classic port city, chaotic and energetic - like my home town of Liverpool or many other port cities such as Naples or New York. I have this theory that port cities create more entrepreneurs, partly because of the daily influx of new people and imported goods which need to be got rid of in a hurry.
Many people in Guayaquil were entrepreneurial for one simple reason - they had to be. If they didn't work out a way to make a few dollars that day, they'd go hungry. So people were brilliant at coming up with ways to make money. That's why the co-operative that my friend Mafer runs in Guayaquil - lending money to women to set up microbusinesses - is so valuable - because it gives people a chance to make a living.
I'm not suggesting we end unemployment benefit in order to increase entrepreneurship, but it's worth noting this research and recognising that one of the key factors in business start-up is hunger. To succeed, you've got to really want it - or need it. I meet many social entrepreneurs with that hunger - and you know that one way or the other they're going to succeed. I meet others - often from voluntary organisations which are diversifying into social enterprise - who don't have that same hunger. You can't be an entrepreneur and be indifferent - you've got to really want it.
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