Region falls behind on business start-ups

Nov 7 2007 by Peter McCusker, The Journal

THE North-East has 30,000 fewer businesses than it should have, although there are signs a risk-taking culture is beginning to take hold.

New research discovered there are 46,000 businesses in the region – a number described as “exceptionally small”. The findings come in a recent report prepared for the North-East’s Regional Skills Partnership by the Tyne and Wear Research Information.

The report’s authors, who are backed by One NorthEast, say a region the size of the North-East should have nearer 70,000 businesses.

“The North-East has an exceptionally small number of businesses in relation to population – about 40% below the UK average.

“The reasons for this include lower incomes, a relatively large public sector and a relatively large average firm size,” adds the report.

But there are signs that the entrepreneurial spirit is taking hold.

The report adds: “Nevertheless, since 2002 the stock of VAT registered businesses has grown faster than the UK. This faster business growth may be due to faster growth of housing wealth and a faster growth of employment.”

Agencies in the region are involved in moves to create a more risk-taking culture in the North-East, which has to create more than 30,000 more businesses in a year just to catch up with the UK average. One NorthEast supports a number of initiatives, including the Future Entrepreneurs scheme, which targets the under 25s, Enterprise Week and the Entrepreneurship Scholarship programme.

Tim Pain, head of enterprise at One NorthEast, is confident the region will be able to compete as an enterprise centre in the coming years.

“We’ve identified that our region as a whole needs to develop a more entrepreneurial culture,” he said.

Carole Beverley, of the Entrepreneurs’ Forum, said: “The North-East is a great place for start-ups at the moment and the people we speak to on a daily basis have a real vision for where their businesses will go and grow.

“It’s well documented that a culture change cannot happen overnight, but it’s really important that we recognize the positives instead of making comparisons with a past that bears little resemblance to the current business climate.

“Optimism amongst entrepreneurs in the region is exceptionally high regardless of where reports position us.The feeling we get speaking to entrepreneurs around the region on a daily basis is that now is the time to do it – the message really is ‘if we can, you can’.”

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