« Background
The Survey
Main Results
Suggestions
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Summary
1
Why? FOBS survey arose from the need to deepen the knowledge of the entrepreneurs and their businesses
Goals: Have an insight into the factors that determine the success and growth of newly born enterprises
How?
Looking into
Motivations for starting up one’s own business
Barriers and risks encountered during the first years of existence
Current situation of the enterprise
Business plans for future development
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Background
2
January 2005: Task Force “Factors of Business Success”, coordinated by Eurostat
Mission: Design the questionnaire and define the project’s methodology
February - March 2005: Feasibility study to test the methodology and the questionnaire (cohort of 100 enterprises in PT).
October 2005 – March 2006: Final survey
15 participant countries: Bulgaria (BG), Czech Republic (CZ), Denmark (DK), Estonia (EE), France (FR), Italy (IT), Latvia (LV), Lithuania (LT), Luxembourg (LU), Austria (AT), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK) and Switzerland (SE). «
Background
3
Target Population
Enterprises newly born in 2002 that survived in 2005 (according to Business Demography definitions)
Sections C to K, excluding class 74.15 of NACE Rev.1.1
14 069 enterprises
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The Survey «
4
Sample
Stratified random sampling, broken-down by 9 economic activity classes and 3 employee size classes
2 688 enterprises
Response Rate: 70% Response Rate: 70%
Survey participationSurvey participation: Mandatory : Mandatory
Survey typeSurvey type: Mail : Mail
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5
Questionnaire Structure
Section A – Identification of the Original Entrepreneurs
Section B – Conditions of the enterprise at start-up and profile of the Original Entrepreneurs
Section C – The enterprises’ present situation
Section D – Future plans
The Survey
I – Profile of the Original Entrepreneurs
II – Conditions for Enterprises Start-up
III – Main Difficulties
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6
Main Results
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I – Profile of the original entrepreneurs «
85.8% were men, 55.7% had 40 years and over and 51.2% had the primary and lower secondary education
7
14,2%
85,8%
Females Males
55,7%
32,8%
11,5%
40 years and over Between 30 and 39 years Less than 30 years
51,2%
26,4%
6,7%
15,7%
0%
20%
40%
60%
1Primary and lower secondary education Upper secondary education
Post-secondary non-tertiary Tertiary education
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8
The three age groups are dominated by men, representing each one more than 75.0%
I – Profile of the original entrepreneurs
22.0%15.4% 11.9%
78.0%84.6% 88.1%
0%
20%
40%
60%
80%
100%
Less than 30 years Between 30 and 39 years 40 years and over
Females Males
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9
83.8% had previous work experience in the activity branch of the start-up enterprise
I – Profile of the original entrepreneurs
60.0% had no previous experience in running an enterprise
60.0%
29.4%
10.5%
No experience Yes, once Yes, more than once
83.8%
16.2%
Yes No
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47.5% considered “Making more money” the most important start-up motivation
10
I – Profile of the original entrepreneurs
8.2%
13.0%
18.1%
18.8%
19.1%
19.4%
28.2%
32.7%
44.6%
47.5%
17.8%
20.8%
20.6%
38.9%
24.3%
28.3%
30.8%
32.5%
30.9%
36.5%
91.3%
83.6%
78.8%
74.0%
66.1%
61.3%
42.3%
56.5%
52.3%
41.0%
34.8%
24.4%
16.0%
5.4%
2.1%
4.5%
15.8%
6.6%
11.9%
0% 20% 40% 60% 80% 100%
Work as subcont. for former employer
Living from hobby
Age of children
Reach international market
Family tradition
Satisfaction in work
Combining work & private life
Sole possibility to carry out profession
New service/product idea
Avoid unemployment
Being one's boss
Seeking a new challenge
Making more money
Very important Some importance Not important/Do not know
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11
Among the Top 4 start-up motivations:
“Seeking a new challenge” ranked as very important for upper education levels
“Making more money” ranked as very important only for Primary and lower secondary education level
I – Profile of the original entrepreneurs
69.7%
68.4%
63.6%
54.8%
68.9%
60.3%
47.4%
73.3%
71.0%
57.8%
52.2%
59.7%
65.9%
69.7%
47.1%
47.8%
42.2%
26.7%
29.0%
45.2%
36.4%
31.6%
30.3%
52.9%
40.3%
34.1%
30.3%
63.1%
52.6%
39.7%
31.1%
0% 20% 40% 60% 80%
New service/product idea
Being one's boss
Making more money
Seeking a new challenge
Avoid unemployment
Being one's boss
Making more money
Seeking a new challenge
Avoid unemployment
Being one's boss
Making more money
Seeking a new challenge
Avoid unemployment
Being one's boss
Seeking a new challenge
Making more money
Ter
tiary
edu
catio
nP
ost-
seco
ndar
yno
n-te
rtia
ry
Upp
er s
econ
dary
educ
atio
n
Prim
ary
and
low
erse
cond
ary
educ
atio
n
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12
61.5% of women “Worked as an employee” before start-up comparing with 49.0% of men
43.9% of men “Ran another enterprise” before start-up while only 22.0% of women
61,5%
49,0%
22,0%
43,9%
1,9% 1,7%
10,3%3,9%4,4%
1,5%0%
20%
40%
60%
80%
Females Males
Worked as an employeeRan another enterpriseWere a studentWere unemployed and available to the labour market Had no gainful activity and were not available to the labour market
I – Profile of the original entrepreneurs
“Worked as an employee” before start-up was dominant in both genders
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13
Entrepreneurs up to 39 years mostly “Worked as an employee” before the start-up (69.2% and 55.2%)
“Ran another enterprise” before the start-up was the dominant situation in the group “40 years and over” (49.4%)
69,2%
55,2%
44,3%
9,2%
1,4% 0,5%5,4% 7,0%
3,4%1,2% 1,2% 2,4%
35,2%
49,4%
14,9%
0%
20%
40%
60%
80%
Less than 30 anos Between 30 and 39 years 40 years and over
Worked as an employeeRan another enterpriseWere a studentWere unemployed and available to the labour market Had no gainful activity and were not available to the labour market
I – Profile of the original entrepreneurs
Inverse relationship between “Worked as an employee” and age and direct relationship between experience in “Ran another enterprise” and age
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14
0,3%
0,5%
7,0%
9,9%
15,5%
17,5%
17,6%
31,7%
0% 10% 20% 30% 40%
C - M ining and quarrying
J - Financial intermediation
H - Hotels and restaurants
I - Transport, storage andcommunication
D - Industry
F - Construction
K - Real estate, renting andbusiness activities (not 74.15)
G - Wholesale and retail trade
31.7% start-up an enterprise in “Wholesale and retail trade” sector
Around 66% of newly born enterprises were concentrated in Services activities (NACE sections G, H, I, K)
I – Profile of the original entrepreneurs
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15
3,3%
0,2%
1,3%
87,2%
16,1%
12,9%
10,0%
0% 20% 40% 60% 80% 100%
Venture capital
Capital contribution fromother enterprises
Financial support from publicauthorities
Bank loan without collateral
Financial assistance fromfamily/friends
Bank loan with collateral
Using own funds/savings
87.2% used “Own funds/savings” to finance the enterprise start-up
II – Conditions for enterprises start-up
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16
46.8% received advices for start-up mainly from “Family and friends”
97,8%
95,3%
95,0%
94,9%
88,0%
85,6%
80,9%
4,7%
5,1%
14,4%
12,0%
19,1%
43,1%
46,8%
5,0%
2,2%
0% 20% 40% 60%
Unemploymentadministration
Financial institution
Organisations specialising inbusiness start-ups
Training course forentrepreneurs
Didn't need advices
P rofessional consultants
Didn't have any relevantadvice
P rofessional acquaintances
Family and friends
II – Conditions for enterprises start-up
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17
69.0% didn’t receive/take any special training targeted at helping the enterprise start-up
27,1%
3,9%
69,0%
Training on own initiative
Training upon request of public authorities
Didn't take training
II – Conditions for enterprises start-up
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18
72.1% didn’t have cooperation with other enterprises or considered this issue not relevant
10,4%15,6%
72,1%
0,1%
1,7%
Cooperation with other enterprises in a network
Subcontractor to a larger enterpriseFranchisee or a licensee
Participation in a joint ventureNone/Not relevant
II – Conditions for enterprises start-up
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19
In 2004, 2 years after the start-up, the average size of the newly born enterprises was 5.5 persons employed
II – Conditions for enterprises start-up
Primary and lower secondary education
Upper secondary education
Post-secondary non-tertiary
Tertiary education
[0 - 2] persons employed 31,8 35,3 30,2 32,8
[3 - 5] persons employed 37,0 34,2 35,9 36,7
6+ persons employed 31,2 30,5 33,9 30,5
Average 5,3 5,3 6,1 6,6
Median 4,0 4,0 4,0 4,0
Mode 2,0 2,0 2,0 2,0
Main Descriptive statistics of the original entrepreneur
Employed size classes
Localization measures
Frequencies distribution of start-up enterprises (%)
Number of persons employed
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20
60.6% sold their goods/services to the “Local/Regional market”
9,9%
45,8%
60,6%
1,8%
0% 20% 40% 60% 80%
Outside EU
Within EU
National market
Local/regional market
II – Conditions for enterprises start-up
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21
34.8% considered “Administrative issues” the most important start-up difficulty
III – Main difficulties
4,9%
7,7%
8,4%
11,8%
14,2%
18,1%
18,4%
23,3%
27,5%
32,3%
33,6%
34,8%
9,7%
23,0%
27,7%
19,7%
39,4%
26,1%
30,9%
34,5%
29,5%
28,0%
27,5%
34,3%
85,4%
69,3%
64,0%
68,5%
46,4%
55,7%
50,7%
42,2%
43,0%
39,7%
38,9%
31,0%
0% 20% 40% 60% 80% 100%
None/not relevant
Alone as entrepreneur
Findind suppliers
Backing from family
P ricing goods/services
Finding suitable premises
Information technology
Contacts with costumers
Get financing
Outstanding invoices
Suitable personnel
Administrative issues
Very important Some importance Not important/Do not know
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22
Among the Top 4 start-up difficulties:
“Administrative issues” was the most important difficulty for entrepreneurs with no experience
Get “Suitable personnel” was the most important difficulty for entrepreneurs with more than one experience in running enterprises
III – Main difficulties
24,1%
25,7%
34,3%
37,5%
29,5%
31,8%
34,3%
34,7%
36,4%
35,0%
30,8%
25,9%
0% 10% 20% 30% 40%
Outstanding invoices
Get financing
Administrative issues
Suitable personnel
Contacts with costumers
Suitable personnel
Administrative issues
Outstanding invoices
Get financing
Outstanding invoices
Suitable personnel
Administrative issues
Yes
, mor
e th
an o
nce
Yes
, onc
eN
o
Pre
viou
s ex
perie
nce
in s
tarti
ng u
p an
ent
erpr
ise
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23
75.4% considered “Competition too vigorous” the most important factor as impediment to selling their products or services
10.2%
22.5%
23.3%
75.4%
26.7%
41.4%
50.5%
16.9%
63.1%
36.1%
26.2%
7.7%
0% 20% 40% 60% 80% 100%
Absence of marketing skills
Dificulties in pricing the products/services
Little demand for products/services offered
Competition too vigorous
Very important Some importance Not important/Do not know
III – Main difficulties
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24
55.3% considered “Profitability” the most important factor as impediment for developing their business activity
14.9%
15.1%
21.4%
24.0%
29.3%
32.5%
42.3%
50.3%
55.3%
34.4%
32.4%
34.5%
40.4%
36.8%
34.2%
36.3%
24.1%
31.0%
87.6%
59.4%
50.6%
52.6%
44.1%
35.6%
33.9%
33.3%
21.4%
25.6%
13.6%
14.6%
2.7%
26.0%
9.7%
0% 20% 40% 60% 80% 100%
Finding partners
Availability of risk capital
Availability of managerial competences
Combining family and work
Availability of short term credit
Availability of bank loans
Regulatory and administrative burden
Availability of qualified personnel
Staff costs
Non or late paying costs
Profitability
Very important Some importance Not important/Do not know
III – Main difficulties
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25
Suggestions
Some remarks on the Questionnaire:
Question: “Have you started an enterprise before?”
For reflection: Would be important to know the activity situation of these enterprises?
Are they still active?
Are they bankrupted?
Were they involved in a demographic event such as a merger or a split-off ?
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26
Question: “Did you receive or take any special training that was targeted at helping you start your enterprise?”
For reflection: Question too limited? Specially for entrepreneurs who had started an enterprise before?
Why not replace or complement it by asking if they did receive training in subjects relating with Enterprises Management (marketing and sales, financial management, accounting, human resources, etc.)?
Suggestions
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27
Question: “Do you consider your enterprise to be innovative with respect to any of the following categories?” Yes/No
a) A new good or service introduced to the market (product innovation)
b) A new production process or method (process innovation)
c) A new organization of management (organizational innovation)
d) A new way of selling your goods or services (marketing innovation)
51,2%
28,0%26,4%
42,0%
6,7%11,0%
15,7%20,0%
0%
20%
40%
60%
Portugal European Union
Primary and lower secondary education Upper secondary education
Post-secondary non-tertiary Tertiary education
For reflection: Question too subjective? Is the entrepreneur’s educational background determinant in their evaluation?
Why not focus on the characteristics of the new product, process…? Example: Is the product new in the market? Has competitors in the domestic market?
Suggestions
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Thank you Thank you for your for your
attention!attention!