Entrepreneurs in Northern Ireland may need more niche advice for growth
Economy Watch by Andrew Webb, Grant Thornton chief economist
A Christmas break at the end of a long year and our social conditioning to take stock and make changes at the start of a new year means January is the most popular month for job searching and job changing.
While many will choose to make a switch from one employer to another, we have traditionally been reluctant to consider making the jump into self-employment.
A dynamic entrepreneurial economy is positively related to innovation, productivity and job creation - all the things Northern Ireland craves.
Towards the end of the year, two new reports on our local entrepreneurs were released by the Department for the Economy which provide a fascinating insight into our levels of entrepreneurship and their performance.
The Global Entrepreneurship Monitor (GEM) has been measuring entrepreneurial activity of working age adults for over 20 years.
GEM measures entrepreneurial activity from intention to start right through to exiting either through a business sale or shut down.
The new report for Northern Ireland shows that the proportion of our population describing themselves as "early stage entrepreneurs" - those in the process of starting a business or running one for less than three-and-a-half years - is 6.5% of the working-age population, or one in every 15 adults.
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Although this rate lags behind the UK rate as a whole (8.5%), it has been on an upward trend over the past 15 years.
In seeking to understand why people here are motivated to become entrepreneurs, the findings from the GEM report suggest that opportunity (pull factors) are far outweighing necessity (push factors such as losing a job).
That finding would be consistent with the strength of the labour market in recent years, which has added tens of thousands of jobs since the depths of the recession.
The age profiles of people engaged in entrepreneurial activity also throws up some interesting insight.
A significantly higher share of those aged 25-34 years old are engaged in early stage entrepreneurship than those aged 35 and over.
For people not engaged in entrepreneurship, Northern Ireland lags significantly behind the rest of the UK in recognising opportunities for start-up.
Around seven in 10 non-entrepreneurs don't see a good opportunity for starting a business.
Further, for those that do see an good opportunity, about half are put off by a fear of failure.
How our entrepreneurs fare was the subject of the second of the two new entrepreneurship reports that were released just before Christmas.
This report, from the Enterprise Research Centre and Queen's University, provides insight into a range of growth metrics for start-ups and existing companies.
We already know that Northern Ireland lags behind the rest of the UK in start-up rates but what about the growth trends of those that do start?
A key indicator of this performance is the proportion of new firms that go on and generate at least £1m in revenues after three years.
The proportion of new firms that achieve this is very small (2% in the UK), but Northern Ireland is ahead of the national average, with 2.7% of firms achieving £1m turnover after three years.
Sample sizes don't permit a council-level analysis but 'north of Northern Ireland' (broadly consisting of Causeway Coast and Glens and Derry City and Strabane District Council) comes out top of the UK at 4.6% of firms.
Reaching £1m turnover is no mean feat and making the next leap from there is even more difficult. Across the UK, 7.4% of firms with turnover of £1m-£2m per annum in 2015 grew to at least £3m in 2018.
In Northern Ireland, the figure is 6.7%. Understanding these differences is important if we want to change them.
It was therefore encouraging to see Enterprise Northern Ireland launch their enterprise barometer recently.
Their survey of 1,250 businesses provides rich insight into the attitudes and ambitions of our small, micro and sole-proprietor businesses.
This survey revealed that 51% of businesses are growing but one in 20 are in difficulty.
Operating costs, property costs and wage pressures were cited as the top three reasons for those businesses that cited issues with profitability.
On a positive note, just over three-quarters of surveyed businesses outlined an ambition to attract more clients and customers in the year ahead.
Supporting our business base to achieve these ambitions is a crucial element of government policy.
The business support world remains as confusing as ever.
More than half of the respondents to Enterprise NI's survey noted a lack of clarity around where to go for business support and yet, at the last count, there are around 2,000 business support programmes which are being delivered by hundreds of providers.
Much of this is one-off transactional type support and doesn't appear to be making any significant impact on performance.
There is a growing case being made that more effective support will be delivered by moving away from this transactional approach and moving to a relational approach with trusted advisors and mentors that can guide business growth and act as a critical friend.
Key areas where support is required include in digital marketing, accessing funding and in sales and export development.
Supporting our existing cohort of businesses to achieve their ambitions might just show a new generation of would-be entrepreneurs that it is a rewarding career path.
In next week's Economy Watch, we hear from EY chief economist Neil Gibson