Last week the Global Entrepreneurship Monitor (GEM) released their 2014 report on the global state of entrepreneurship.
Since 1999, GEM has been collecting, analyzing and interpreting data across the world on the capacity of individuals to act entrepreneurially. GEM participants represent 72.4 percent of the world's population and 90 percent of the world's GDP, which makes for a comprehensive and robust look at entrepreneurship on a global scale.
Here's an inside look at notable findings and five of 10 key takeaways you can apply to your small business.
- Entrepreneurship Intent
Fear of failure is the highest among people in innovation-driven economies, like the U.S. and Canada. Here in the U.S. we may be a lot of things, but less fearful is not one of them. Our definition of failure, and what we link failure to can often set us up for success or prevent us from starting a business in the first place. This is why, for the foreseeable future, resources centered on the personal development of entrepreneurs will continue to be in high demand.
- Entrepreneurship Culture
Social value contributes to North America's high rate of entrepreneurialism. The U.S. values entrepreneurship -- not only as a career choice, but as a status symbol. Other countries across the globe are not as fortunate in this regard.
Interestingly enough, entrepreneurs in the European Union (EU) may find their entrepreneurial pursuits at odds with the status quo -- more so than their American and Canadian counterparts. The GEM reports:
Entrepreneurs in African and North American economies share the value of high status to successful entrepreneurs, which indicates that there is an entrepreneurial culture in those economies. EU economies show the lowest social values towards entrepreneurship, in all three dimensions: starting a new business is a desirable career choice, high social status and media positively contributes to developing an entrepreneurial culture.
- By The Numbers
North America is among economies with the highest share of early-stage entrepreneurs. I wasn't surprised by this finding. By observation alone we know the U.S. and Canada have set their sights on building a supportive entrepreneurship ecosystem. From Silicon Valley and Silicon Beach to New York's Silicon Alley and startup towns across the nation, startup communities and hubs are forming. Are you looking to kickstart your community's startup scene? If so, VC Mark Suster has some pointers.
- Entrepreneurship Drivers
In other parts of the world entrepreneurship is driven by necessity. In the U.S. and Canada the motive is improvement.
The study reveals in several economies, including the United States and Canada, "two out of three early-stage entrepreneurs were motivated by improvement-driven opportunity." Improvement-based startups outweigh those of necessity in the U.S. when compared to the rest of the world. This explains the rise of social entrepreneurship as founders look to business techniques to find solutions to social problems.
"Unlike traditional business entrepreneurs, social entrepreneurs primarily seek to generate 'social value' rather than profits. And unlike the majority of non-profit organizations, their work is targeted not only towards immediate, small-scale effects, but sweeping, long-term change." (PBS.org) When society is stuck, entrepreneurs in North America have a higher propensity and desire to get it unstuck.
- Business Exits
In North America, the rate of exits has more to do with personal reasons that profitability.
When you think about business failure, cash flow comes to mind. While it is a proven dominant factor, GEM research suggests that in North America it comes in close second to "personal reasons".
The GEM looks at business dynamics (the rate of established businesses and the rate of business discontinuation) and found "the dominant reason for small business closings across the globe is lack of profitability (except in North American economies, where personal reasons are in first place and non-profitability in second)."
"Personal reasons are in second place in all other regions. Lack of finances is in third place, but much less intensely in North America than in the rest of the world."
Read the full list and report, Global Entrepreneurship Trends: What Every Entrepreneur Needs To Know , at YFS Magazine.