IN A worrying sign, UK based entrepreneurs have signalled their lack of confidence in Britain, whereas entrepreneurs worldwide have more confidence in their local economies. This was one of the key messages found in the most recent edition of the Entrepreneurs’ Organization (EO) Global Entrepreneur Indicator, which was conducted in November last year.
Twice a year EO surveys more than 8,000 entrepreneur members globally to learn their views on the state of their own business and their local economy. Each of these entrepreneurs has successfully founded a business with over $1m in revenue – the current average annual revenue is over $17m. Collectively, these entrepreneurs employ more than 1.5m workers worldwide and represent more than $138bn in global economic activity.
EO members are continually active in the global economy and really know what’s happening out there. And in our twenty-fifth anniversary year, the picture in the UK is not pretty.
The survey found only four per cent of British entrepreneurs expecting the economic climate to improve in the next six months, while 63 per cent expect it to deteriorate. Globally, 41 per cent of entrepreneurs expect their country’s economic climate to improve, ten times that of their UK colleagues.
Despite the pessimism, the survey finds that 33 per cent of EO members would want to start another business in the UK. However, globally, nearly twice as many EO members – 63 per cent – would start another business in their home country.
Overall, fewer British entrepreneurs plan to increase full-time headcount and fewer expect their net profits to increase. And fewer expect to gain access to much needed debt and other funding sources to continue their investment in Britain.
Why are UK-based entrepreneurs so much more pessimistic? Entrepreneurs understand better than anyone how to triumph over long odds, but clearly there are additional steps that need to be taken to ensure that the UK is seen to offer a more favourable environment for business creation and growth.
The government must do more to ensure entrepreneurs have access to credit and other sources of funding for growth. It has gone some way with the Enterprise Investment Scheme and R&D tax credits, but it could do more to make use of the outstanding entrepreneurial talent that exists in the UK. It must create incentives for job creation and eliminate barriers – such as excessive regulation – that make British entrepreneurs reluctant to increase headcount. It needs to go further to encourage more overseas entrepreneurs to come and set up businesses here and it must encourage more people in Britain to become entrepreneurs, regardless of their age or upbringing.
If more is not done, then entrepreneurs will simply look overseas for opportunities where the environment for entrepreneurship is more favourable. And as a result the UK will lose out.
Keiron Sparrowhawk is president of the Entrepreneurs’ Organization and a founder of PriceSpective.