Britain's entrepreneurial spirit at new high but fear of failure on the rise

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More people have started or are looking to start a business than at any time in the last 10 years but those put off from going it alone due to fear of failure is also rising, new research reveals.

According to 2011 statistics from the latest Global Entrepreneurship Monitor (GEM), a highly respected annual study which surveys 10,000 people in the UK, over 20% of the working age population either expected to start a business in the next three years, were actively trying to start a business, or were running their own business.

This is the highest figure since the GEM project began in 1999.

Professor Jonathan Levie from Strathclyde Business School, who helped conduct the study, said: "After the recovery in people's entrepreneurial attitudes in 2010, we have seen a real increase in intentions and start-up attempts in 2011.

"While necessity-driven start-up attempts increased significantly, they comprised less than 15% of all start-up attempts in 2011. Even in a continued recession, most entrepreneurs in the UK start up because they spot an opportunity."

But while the figures suggest that the number of new businesses to be set up in the near future is set to increase, many wannabe entrepreneurs may not actually put their plans into action.

The study found that among those who agreed that the UK offers good startup opportunities, 41.4% said fear of failure would prevent them making the leap into entrepreneurship, up from 36% in 2010.

Women were more fearful than men with 44% saying failure put them off compared to 38.7% of males.

The increase in business start-up intention and attempts took place against a backdrop of continued decline in the use of external sources of funding of all types by start-up entrepreneurs since 2009.

Levie said: "While this reduction is understandable in the current economic climate it raises the danger of under-funded and possibly short-lived start-ups. We need to find new ways to fund start-ups – and they are starting to appear, like crowd-funding and peer-to-peer lending."

The report pointed to a particularly high increase in entrepreneurship in Wales which it said could be down to efforts by the Wales government to boost new companies.

"Since 2002, the proportion of people aged between 18 and 29 in Wales grew steadily from 3.4% in 2002 to a remarkable 9.7% in 2011," Levie added. "Is it a coincidence that the Welsh government has had a comprehensive set of entrepreneurship policies aimed at young people throughout that time period?"

Click on the link below to download the full report:

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