The average entrepreneur
What type of people start up businesses in the UK?
So what type of person is likely to start a business today? Well, latest available statistics on business start-ups reveal that the majority of entrepreneurs are white males, in their forties, who live in the South East.
They are likely to have been educated to degree or A-Level standard and to have previous work experience in the same sector as their business – though they’re not necessarily experienced in owning or managing a business.
If you don’t fit this profile, take heart: the greater part of entrepreneurs may be white, middle-aged and male, but figures suggest that there is considerable scope for increasing the extent of entrepreneurship amongst women, those from ethnic minorities and younger people. Existing women-led and minority ethnic group-led businesses are very likely to be start-ups, with around 90% at the micro-business level.
For an indication of what type of person is starting up businesses, here’s a look at the statistics and trends for each characteristic of the entrepreneurial make-up:
As mentioned above, the majority of entrepreneurs are in their forties. Other self-employed individuals have a slightly lower age profile than owner managers and are more likely to be in their thirties. Most small business employer owners and co-owners fall into the 35 to 44 (25%), 45 to 54 (31%) and 55 to 64 (26%) age categories. The proportion in older cohorts is much smaller; just 7% over 65.
Starting a business is being promoted as a viable career option for young people more than ever before, but statistically, while this sector is likely to grow in the future, young people are more likely to consider starting up as a sideline venture or as a something to do later in life. This is borne out by survey findings, which show that just 9% of small business employer owners and co-owners are aged under 35.
Only 14% of small and medium enterprises are led by a woman or by a management team mostly comprised of women. But the gender gap is slowly closing: the figures are up since 2005, when just 12% of start-ups were led by women. With the government keen to encourage women in business, there’s every indication the upward trend will continue.
For now, the UK has some work to do: according to figures released mid-2008, the UK came 13th in the gender gap index out of 130 countries surveyed – slipping from 11th place the year before.
For more detailed analysis of gender statistics, consult our Female Entrepreneurs section.
Education and career history
Educational background clearly has a large impact on entrepreneurship and rising levels of education can be associated with higher relative rates of enterprise activity.
Figures show the highest qualification held by owner managers tends to be A Level or equivalent (29.4%) followed by a degree or equivalent (21.8%). However, a significant minority of owner managers – 11% – has no educational qualifications whatsoever.
Almost two-thirds of entrepreneurs say that before working in their business, they had no prior experience of owning or managing a business, though half of active entrepreneurs have previously worked in the sector they start a business in.
According to the Global Entrepreneurship Monitor UK 2004, most ethnic minority groups are far more entrepreneurial than their white counterparts. Despite high levels of entrepreneurial activity however, the reality is that many ethnic minority businesses are concentrated at the bottom of the value-added chain and located in some of the most deprived areas of the UK. Many minority ethnic groups report problems relating to access to finance and to public sector business support.
Some 93% of owner managers and other self-employed people are white, according to the most recent BERR figures. Just 8% of UK small business employers are MEG-led; that is led by a member of a minority ethnic group or a management team with at least half of its members from minority ethnic groups.
This shows steady growth since 2004 however, when the figure was closer to 5%, and a near return to 9% recorded in 2003.
Nearly a third of all UK enterprises are located in London and the South East, with each of these regions boasting over 700,000 businesses apiece. Small businesses in London are more likely to be minority ethnic group-led, at 22%, compared to 8% overall.
In the GEM UK 2007, respondents in the ‘South’ – the area comprising London, South East England, South West England and the East of England – were much more likely to think they had the skills to start a new business than those living in Scotland and Northern Ireland. Similarly, a relatively high proportion of Londoners expect to start a business over the coming three years.
So it seems as though the north-south divide still exists. However, government initiatives to decentralise enterprise funding means there should be greater support for entrepreneurs outside of the South East in coming years.
Unsurprisingly, the differing attitudes of entrepreneurs aren’t recorded – but perhaps they should be. Regardless of your age, background, sex or ethnicity your success an entrepreneur is likely to be down to your attitude to business. If you’re determined, prepared to make personal sacrifices, have the ability to plan ahead and take on board advice while remaining focusing on your goal and also, of course, have a decent business idea you’ll have every chance of success wherever you’re from and whatever age you are.