Ernst & Young: What Makes the World’s Most Successful Entrepreneurs?

LONDON--(BUSINESS WIRE)--A new report released today by Ernst & Young, Global Entrepreneurship Monitor and Endeavor, entitled 2011 High-impact entrepreneurship global report, provides insights into the characteristics of high-growth, high-impact entrepreneurs. The report is based on a survey of more than 800,000 people in 60 countries worldwide of whom over 70,000 were entrepreneurs.

The survey found that these high-impact entrepreneurs (estimated growth of >20% per annum) ¹ usually start their companies when they are between 26 and 45 years old. They are more likely than entrepreneurs from lower-growth companies and the general population to have college or graduate degrees and they are likely to work in partnerships. Also, high-impact entrepreneurs are most likely to conduct a significant portion of their business internationally.

A rare breed

Although close to 10% of survey participants were entrepreneurs, very few of them have achieved high or even moderate rates of growth. Only 3 out of every 1000 respondents to the survey had founded a business that achieved high rates of growth. However, in the next five years, high-growth entrepreneurs expect to add between 3 to 15 times more jobs than low-growth businesses.

Maria Pinelli, Global Vice-Chair Strategic Growth Markets for Ernst & Young says, “As a group, entrepreneurs represent the best hope of creating sustained economic growth around the world. However, interestingly, the report shows that although there is a really important pool of entrepreneurs out there, only a minority have founded businesses that achieve an average 20% or more estimated growth. To replicate this group of “super entrepreneurs” there needs to be the right social culture and educational system from the beginning of their development to equip them with the right skills and behaviors to build sustainable, globally focused high growth companies. ”

In terms of their attitudes, high-growth entrepreneurs have little fear of failure and are among the most likely individuals in the survey to start a business because they perceive that there is an opportunity to be grasped. In addition, once these entrepreneurs become successful, they are the most likely to start funding other ventures as angel investors. Those who have invested in other businesses have placed on average a total of almost US$90,000 in capital into these ventures.

High growth entrepreneurs around the world

High-growth entrepreneurs in high-income countries² are more likely to rely on exports to reach a significant number of their customers. Nearly one third of high-growth entrepreneurs in high-income countries look to international clients to make up one-quarter or more of their customers. In emerging markets, this figure only drops to 18%.

The director of Endeavor’s Center for High-Impact Entrepreneurship, Rhett Morris, says: “In emerging markets, entrepreneurship has an important role in propelling future growth. As these economies modernize and become more efficient, the best entrepreneurs will take advantage of new opportunities that arise in their own communities as well as those in other nations to lead the way in creating jobs and fostering economic growth in their countries.”

In terms of personal attitudes and attributes, the most striking difference between entrepreneurs from developed countries and emerging markets is their motivation to start a business in the first place. Nearly 40% of high-growth entrepreneurs in emerging markets have started their business to increase their personal revenues, while those of mature markets were looking to be independent.

Maria concludes: “These findings highlight that although there is an important pool of entrepreneurs globally, just owning a business is not enough. In developed economies where growth is still fragile, entrepreneurs have a vital role to play in helping to turn the corner. In 2011, the 44 country winners in Ernst & Young’s Entrepreneur Of the Year award program delivered on average 21% growth in a slow economic environment. This statistic substantiates the High Impact Entrepreneurship findings, that high-growth entrepreneurs can buck the trend and deliver sustained growth in all economic circumstances. Entrepreneurs create jobs and fuel economic activity. However, the most common barrier to future growth is the lack of funding. It is amazing to me that this group of business leaders – entrepreneurs – are not supported and acknowledged for the critical role they play in creating societal benefits. They clearly need more support and attention in fiscal and government policy. They can lead economic recovery.

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¹ Growth rates were estimated using the age of the firm and the current number of employees for survey respondents. Within these calculations, all entrepreneurs were assumed to have the same number of employees in the first year of operation. This number used for this assumption was arrived at by determining the average number of employees for all entrepreneurs with firms one year old or less who responded to the survey from 2006-2010.

² Countries, include: Belgium, Croatia, Denmark, Finland, France, Germany, Greece, Hungry, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, the Netherlands, Norway, Saudi Arabia, Slovenia, Spain, Sweden, Switzerland, the UK and the US.

About the report:

GEM’s surveys were conducted in more than 60 countries from 2006-2010. Participating countries were led by local research teams that surveyed at least 2000 randomly selected adults using methodologies that were appropriate for each particular context. Strict quality control processes have been implemented by GEM’s international team both before and after data collection efforts. Not all countries participated in each year of the survey.

About The Center for High-Impact Entrepreneurship and Endeavor:

The Center for High-Impact Entrepreneurship (C-HIE) is a research center within Endeavor, an organization founded in 1997 that is leading a global movement to catalyze long-term economic growth by selecting, mentoring and connecting the best High-Impact Entrepreneurs. C-HIE seeks to deepen understanding of the most impactful entrepreneurs to educate key constituencies, such as policy makers, on how High-Impact Entrepreneurship can be utilized to foster economic growth.

About The Global Entrepreneurship Monitor:

The Global Entrepreneurship Monitor (GEM) is a not-for-profit academic research consortium that has as its goal making high quality information on global entrepreneurial activity readily available to aside an audience as possible. GEM is the largest single study of entrepreneurial activity in the world. Initiated in 1999 with 10 countries, GEM 2010 conducted research in 59 economies all over the world.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.