Encouraging entrepreneurs

A publication by the European Commission's Enterprise Directorate General indicates there is not enough entrepreneurial activity in Europe if our economic growth targets are to be met.

Studies have identified a number of reasons, and many initiatives have been launched to address specific issues. At EU level, the focus has turned to the building on these individual efforts, sharing experience and ideas.

Entrepreneurship is so often the spark that takes a research result or a process and turns it into a new product or service. It is about having an eye for the market and taking the risks to try and fill a gap there. Above all, entrepreneurs need commitment, both in personal terms - time and energy - and in monetary terms.

<b>Harnessing creativity</b>

Entrepreneurs do not need to have a strong scientific background. Even if they are making cutting-edge, high-tech products, they needn't understand the technology in great detail. Rather, their role is to harness the creativity of the technologists, disciplining their work to produce marketable products. Successful innovation is first and foremost about creating a smooth interface between these two worlds.

In setting out its economic growth targets, the EU has recognised that there is not enough entrepreneurial activity within our frontiers. Encouraging more entrepreneurs to try these ideas on the market place would both increase economic growth and lead to more jobs.

Figures from 2003 show that only 4% of Europeans have started a business within the past three years, or were engaged in starting one, against 11% in the US. Just as significantly, too few of Europe's new companies actually achieve important expansion, although almost one third of small companies declared growth as their main ambition.

To counter these problems, the EC has recognised the need to improve the business environment, to make it simpler and more attractive for entrepreneurial activity. Realising such change requires not only administrative development but also cultural changes at local and regional, as well as national and EU, levels, the Commission has published a Green Paper on Entrepreneurship, and earlier this year followed up with an Action Plan on Entrepreneurship.

The Action Plan sets out an ambitious agenda for boosting entrepreneurship. Of its 14 key actions, nine will be implemented in 2004-05, and the remainder in 2006. Fostering an entrepreneurial mindset among young people is the first key action, where work has already begun. A benchmarking exercise aims to develop best practices for students learning how to run businesses.

<b>Improving conditions</b>

Transfers of existing businesses could be made easier - these have a better chance of survival than start-up companies. Social security schemes will be evaluated to help the self-employed who often lose health insurance, guaranteed income in the case of inability to work, pension rights and rights acquired in their previous career.

The Commission will work with national and regional authorities to improve conditions for women entrepreneurs or those form ethnic minorities. Listening to SMEs is another key action aimed at ensuring that more account is taken of their opinions in drafting policies that will affect them.

Other actions will stimulate the supply of finance to young companies. There will also be a re-examination of the role of state aid in market failures and an analysis of the taxation of retained earnings and informal investors.

In 2006, the second group of key actions will come into play, although they will need more detailed planning.

<b>A former Member of Parliament, Gwilym Roberts chaired many House of Commons Committees, covering business and consumer affairs, and served in the DTI. </b>