12.04.2011
Own business in Lviv: the gap between desire and intention
- According to a study conducted by the Rating Group, almost one third of Lviv residents aged 16 and older would like to start their own business: 11% definitely would and another 20% would rather do so. Among working-age residents of Lviv, nearly 40% express an interest in starting their own business. At the same time, 58% of respondents do not want to engage in entrepreneurial activity, 5% already have their own business, and 6% were unable to decide.
- The younger the respondents and the higher their level of education, the greater their willingness to start a business. Among young people aged 16–25, more than half would like to engage in entrepreneurship, while among those aged 56 and older, 90% do not want to do so. Among men, the share willing to start their own business is about one third higher than among women. By occupation, the highest interest in entrepreneurship is observed among the unemployed and students, and the lowest among office workers and pensioners. The desire to run one’s own business is expressed by twice as many unmarried respondents as married ones, 52% versus 27%. At the same time, respondents who already have children show a stronger desire to open their own business than those who do not. The higher the income of respondents, the stronger their inclination to start a business, and among the wealthiest respondents the largest share of those who already own a business is found, especially in the 46–55 age group.
- When asked what attracts them more in entrepreneurship, profits or independence, opinions are almost evenly split. Among those who would like to start a business, 48% say they are mainly attracted by potential profits, while 43% primarily value independence and autonomy in decision-making, and 9% are undecided. Independence is valued most by respondents aged 26–35, those with higher education and women, while men and respondents of above-average and older age tend to focus more on profits.
- Unfortunately, only 5% of those who would like to start a business assess their chances of doing so in the next one or two years as significant. Nearly half, 48%, describe their chances as low, and 34% say they have no chance at all. This means that although about 190,000 Lviv residents would like to have their own business, in reality only about 6,000 new entrepreneurs may appear in the city over the next one or two years. This indicates a massive gap between the number of those who would like to start a business and those who believe they will actually do so in the near future, a difference of more than thirtyfold. Symbolically, a similar gap exists between the incomes of the rich and the poor in Ukraine, whereas in Europe this gap does not exceed tenfold. This further confirms that the real path to Europe lies through the creation of a middle class in Ukraine, and the example of Lviv shows that the reserves for this are far from negligible.
- The main obstacles to starting a business named by those who would like to engage in entrepreneurship are the lack of start-up capital, cited by 60%, and high taxes, cited by 51%. About one third are restrained by the overall economic crisis at 35%, high levels of competition at 29% and bureaucratic barriers to doing business at 28%. One in five mentioned uncertainty about profitability at 22%, fear of pressure from regulatory authorities at 21% and a lack of entrepreneurial experience at 19%. Less frequently mentioned obstacles include fear of criminal interference at 14%, lack of necessary knowledge and skills at 12%, lack of confidence in one’s own abilities at 10%, unwillingness to take risks at 9%, lack of ideas at 8% and age or health issues at 4%.
- It is noteworthy that among Lviv residents who rate their chances of starting a business as high, concerns about lack of start-up capital and lack of business experience are much less widespread than among those who consider their chances minimal or nonexistent. Lack of start-up capital is most worrying for people aged 26–35, high taxes and high competition for those aged 16–25, bureaucratic barriers for middle-aged respondents, while the overall crisis is a concern across all age groups. Women are more likely than men to be restrained by high taxes, bureaucratic barriers, lack of confidence and unwillingness to take risks, while men more often point to the general economic crisis, high competition, lack of entrepreneurial experience and insufficient skills. While lack of start-up capital is an equally important obstacle for respondents with different levels of education, more educated respondents are more concerned about bureaucratic barriers, pressure from regulatory authorities, possible criminal influence, and the lack of experience and skills.
Methodology
- Survey population: residents of the city of Lviv aged 16 and older.
- Sample size: 827 respondents.
- Method: face-to-face formalized interviews using a questionnaire.
- Sampling error: for values close to 50% no more than 2.7%, for values close to 30% no more than 2.3%, for values close to 10% no more than 1.6%.
- Fieldwork period: 19–28 February 2010.
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