Almost 250,000 people in Scotland launched new businesses or continued to run early-stage enterprises during 2020, despite the challenges of the Covid-19 pandemic, a survey has found.
The Global Entrepreneurship Monitor (GEM) Scotland 2020 report estimates 7.3% of the Scottish population, or 247,000 adults, were actively engaged in setting up a business or already running an enterprise established in the past three-and-a-half years.
Despite the healthy level of entrepreneurial activity, there will undoubtedly be significant challenges ahead for start-ups and the figures were accompanied by a grim warning about their prospects.
Our findings suggest that thousands have had to delay the operationalisation of their new businesses. It is likely that many of these businesses will never see the light of day.”
Samuel Mwaura, co-lead of the GEM Scotland study.
Around 60,000 young people in Scotland, or 13% of 18-24-year-olds, were early-stage entrepreneurs, the highest rate among the home nations, the report says.
Entrepreneurship among people under 30 in Scotland has steadily grown from being the lowest in the UK at 3.5% in the 2007-09 period.
GEM measures rates of entrepreneurship across multiple phases in the general adult population.
In 2020 nearly 140,000 people from 46 economies across the globe were surveyed, with 2,019 responses from Scotland.
North leads the way
The study found Scotland had similar rates of total early-stage entrepreneurial activity (TEA) to other nations within the UK, mainly because it held steady in the face of the pandemic while early-stage entrepreneurial activity in England suffered a significant decline from 2019 rates.
The Highlands and Islands had the highest proportion of 18-64-year-olds in early-stage entrepreneurial activity north of the border (8.7%), followed by south-west Scotland (7.4%), east Scotland (6.9%) and the north-east (6.5%).
The north-east has seen a significant decline in the overall TEA rate from 2019 (8.7%) to 2020 (6.5%), while the rest of Scotland held steady despite the pandemic.
Around 5.3% of adult women in Scotland either tried to set up a new venture or ran a young business in 2020, compared to 9.3% of men – a rate that has changed little over the last decade and makes the gender gap in Scotland the highest amongst the home nations.
There is a significant gender difference in reasons for trying to start a business with 62% of men citing the building of “great wealth or a very high income” as a key motivation, compared to only 51% of women.
By contrast, 76% of female early-stage entrepreneurs in Scotland, compared to 57% of males, said a key reason they were trying to start a business was “to earn a living because jobs are scarce”.
Start-ups’ ‘vital’ role in recovering from a crisis
Samuel Mwaura, lecturer at Strathclyde University’s Hunter Centre for Entrepreneurship and co-lead of the GEM Scotland study, said: “New businesses play a vital role in the recovery from major crises, however, in 2020 immediate and sustained efforts to mitigate the coronavirus crisis prioritised more established businesses to the neglect of start-up entrepreneurs.
“Many of the 250,000 start-up entrepreneurs in 2020 will not have accessed much-needed support.
Regional disparities
“Our findings suggest that thousands have had to delay the operationalisation of their new businesses. It is likely that many of these businesses will never see the light of day.
“We also found significant regional disparities among the four regions of Scotland, each with unique strengths and vulnerabilities.
“This means that different regions have different needs and tailored support is required.”
Entrepreneurial Scotland chief executive Sean McGrath said: “These are eye-catching and hugely reassuring figures. They support the view that individuals who have an entrepreneurial mindset are key players in the economic recovery.”
He added: “Against all the odds and in the midst of a health crisis the like of which none of us have ever lived through before, it is deeply encouraging to learn that so many individuals are either engaged in business creation or running one.
“This is undoubtedly good news and comes at a time when people everywhere are endeavouring to drive Scotland’s economy forward and out of the difficulties caused by the pandemic.”
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