Enterprise and entrepreneurship is a key driver in economic growth and can be a huge part of the solution to unemployment. Its impact also affects the whole of civilization because of the advancement in innovation technology as well as the creation of jobs that in consequence reduce poverty, according to Ernst and Young’s (2011).
“Small and medium-sized enterprises (SMEs) with less than 250 employees make up two-thirds of total employment in OECD countries. The European Commission showed in its SME Performance Review that the number of jobs in SMEs had increased at an average annual rate of 1.9%, while the number of jobs in larger enterprises increased by only 0.8% between 2002 and 2008” Ernst and Young (2011).
Ideally, governments should take an all-inclusive approach, which promotes the strengthening of the entire entrepreneurship environment. However, doing this first requires accurately measuring the multi-layered phenomenon that is entrepreneurship, as well as understanding the impact of a host of different factors on the level of entrepreneurship in a country. “These include the quality of the physical infrastructure, the health of the population, the level of education, the pace of adoption of new technologies and many other macro and micro factors” Ernst and Young (2011).
Therefore, is it essential that a ‘framework’ that can measure entrepreneurship accurately whilst analysing KPI’s (key performance indicators).
Among the key findings in Ernst and Young’s (2011) report:
1. Self-confidence is key
Our overall analysis provides a clear overview of where the G20 member countries stand with respect to fostering entrepreneurship. Combining two of our key findings — entrepreneurs’ confidence in their own country, and new business density
2. Entrepreneurship culture
The culture of a country can affect entrepreneurs and entrepreneurship on many levels. Our perceptions survey was central to our analysis of whether the culture of a country is conducive to Entrepreneurship.
3. Education and training
We go beyond looking at the overall performance of the educational system, to take a closer look at entrepreneurship specific education and assess how important this is for encouraging entrepreneurship.
4. Access to funding
Securing access to funding, both at the start-up phase and at later stages of enterprise development, is one of the biggest challenges for young entrepreneurs. We analyze the experiences of entrepreneurs in accessing funding across the G20 countries, and find some dramatic differences and valuable lessons.
5. Regulation and taxation
The regulatory and taxation environment is one of the areas in which governments have a key role in providing an enabling environment for entrepreneurial growth.
6. Coordinated support
There are typically a number of different agencies involved in facilitating and supporting entrepreneurship within a country. The level of support these agencies provide — and the extent to which they coordinate with one another — can make a crucial difference to the entrepreneurship Environment.
This increasing entrepreneurship and recognition of small enterprises in the health of the economy is also highlighted in recent reports.
According to the UK National Statistics (Nation. Stats 2012), the actual increase in the total business population between the start of 2011 and the start of 2012 will lie between 200,000 (4.4 per cent) and 253,000 (5.6 per cent).
The 4.8 million private sector businesses employed an estimated 23.9 million people, and had an estimated combined annual turnover of £3,100 billion.
The majority (62.7 per cent) of private sector businesses were sole proprietorships, 28.0 per cent were companies and 9.3 per cent were partnerships. At the start of 2012, small and medium-sized enterprises (SMEs)3 accounted for 99.9 per cent of all private sector businesses, representing no change since 2011 and almost unchanged since 2000. SMEs also accounted for 59.1 per cent of private sector employment and 48.8 per cent of private sector turnover at the start of 2012.
For (Heseltine 2012), the prize is potentially huge. There are about 3.6 million self-employed people and sole traders in the UK, and 1.2 million businesses with at least one employee. That is 4.8 million in total. It is a fact, often noted, that if just one in 10 of these businesses took on an employee, or an additional employee, that would increase employment by 480,000.
In (Young 2012), it is estimated that if the UK had the same rate of entrepreneurship as the US, there would be approximately 900,000 additional businesses in the UK and that’s the real context for our stakeholders.