Factors of Business Success in Portugal: Insights from FOBS Survey

1. November 2008 Factors of Business Success in Portugal paula.bordelo@ine.pt ana.chumbau@ine.pt

2. Background The Survey Main Results Suggestions Summary 1

3. 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 ones own business Barriers and risks encountered during the first years of existence Current situation of the enterprise Business plans for future development Background 2

4. January 2005: Task Force Factors of Business Success , coordinated by Eurostat Mission: Design the questionnaire and define the projects 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

5. 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 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 participation : Mandatory Survey participation : Mandatory Survey type : Mail Survey type : Mail

6. 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

7. I Profile of the Original Entrepreneurs II Conditions for Enterprises Start-up III Main Difficulties 6 Main Results

8. 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

9. 8 The three age groups are dominated by men , representing each one more than 75.0% I Profile of the original entrepreneurs

10. 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

11. 47.5% considered Making more money the most important start-up motivation 10 I Profile of the original entrepreneurs

12. 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

13. 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 I Profile of the original entrepreneurs Worked as an employee before start-up was dominant in both genders

14. 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%) 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

15. 14 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

16. 15 87.2% used Own funds/savings to finance the enterprise start-up II Conditions for enterprises start-up

17. 16 46.8% received advices for start-up mainly from Family and friends II Conditions for enterprises start-up

18. 17 69.0% didnt receive/take any special training targeted at helping the enterprise start-up II Conditions for enterprises start-up

19. 18 72.1% didnt have cooperation with other enterprises or considered this issue not relevant II Conditions for enterprises start-up

20. 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

21. 20 60.6% sold their goods/services to the Local/Regional market II Conditions for enterprises start-up

22. 21 34.8% considered Administrative issues the most important start-up difficulty III Main difficulties

23. 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. 23 75.4% considered Competition too vigorous the most important factor as impediment to selling their products or services III Main difficulties

25. 24 55.3% considered Profitability the most important factor as impediment for developing their business activity III Main difficulties

26. 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 ?

27. 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

28. 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) For reflection : Question too subjective ? Is the entrepreneurs 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

29. Thank Thank you you for for your your attention! attention!