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November 2008

Factors of Business Success in Portugal. «. «. paula.bordelo@ine.pt ana.chumbau@ine.pt. November 2008. «. Summary. «. Background The Survey Main Results Suggestions. «. «. 1. Background.

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November 2008

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

  2. Summary « • Background • The Survey • Main Results • Suggestions « « 1

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

  4. Background • January 2005: Task Force “Factors of Business Success”, coordinated by Eurostat Mission: Design the questionnaire and define the project’s 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 15participant 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). « 3

  5. The Survey « • 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 • Sample • Stratified random sampling, broken-down by 9 economic activity classes and 3 employee size classes • 2 688 enterprises Survey participation: Mandatory Survey type: Mail Response Rate: 70% « 4

  6. The Survey « 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 « 5

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

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

  10. « I – Profile of the original entrepreneurs • 83.8% had previous work experience in the activity branch of the start-up enterprise • 60.0%had no previous experience in running an enterprise « 9

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

  12. « I – Profile of the original entrepreneurs 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 « 11

  13. « I – Profile of the original entrepreneurs • “Worked as an employee” before start-up was dominant in both genders • 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 « 12

  14. « I – Profile of the original entrepreneurs • Inverserelationship between “Worked as an employee” and age and direct relationship between experience in “Ran another enterprise” and age • 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%) « 13

  15. « I – Profile of the original entrepreneurs • 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) « 14

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

  17. « II – Conditions for enterprises start-up • 46.8% received advices for start-up mainly from “Family and friends” « 16

  18. « II – Conditions for enterprises start-up • 69.0%didn’t receive/take any special training targeted at helping the enterprise start-up « 17

  19. « II – Conditions for enterprises start-up • 72.1%didn’t have cooperation with other enterprises or considered this issue not relevant « 18

  20. « II – Conditions for enterprises start-up • In 2004, 2 years after the start-up, the average size of the newly born enterprises was 5.5 persons employed « 19

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

  22. « III – Main difficulties • 34.8% considered “Administrative issues” the most important start-up difficulty « 21

  23. « III – Main difficulties 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 oneexperience in running enterprises « 22

  24. « III – Main difficulties • 75.4% considered “Competition too vigorous” the most important factor as impediment to selling their products or services « 23

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

  26. 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 ? « 25

  27. Suggestions « 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.)? « 26

  28. Suggestions « • Question: “Do you consider your enterprise to be innovative with respect to any of the following categories?” Yes/No • A new good or service introduced to the market (product innovation) • A new production process or method (process innovation) • A new organization of management (organizational innovation) • A new way of selling your goods or services (marketing innovation) For reflection: Question toosubjective? Is the entrepreneur’s 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? « 27

  29. Thank you for your attention! «

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