Are you one of the OECD’s 34 million missing entrepreneurs?

Ever wanted to start a business but feel like there are too many barriers to realise your dream? Turns out, you might not be the only one. In fact, there would be 34.1 million more entrepreneurs in the OECD, and 7.5 million in the EU, if everyone was as active in business creation as 30-49 year old men.

Public policy makers have work to do in kickstarting business creation to generate new jobs, innovation and growth. But they won’t get there unless they are able to engage and activate all parts of society and diverse groups of potential entrepreneurs. 

How inclusive is entrepreneurship?

The OECD-EU Missing Entrepreneurs 2023 report highlights a lack of inclusion in entrepreneurship. According to the report, the “missing entrepreneurs” represent about 1/3 of actual entrepreneurs. Of these, nearly ¾ are women, and 10% are youth (under 30 years old).

The inclusion gap is even greater for employer businesses, growth-oriented businesses, and knowledge-intensive businesses. For example, only 11% of women entrepreneurs in the OECD area reported that they expect their business to create at least 19 jobs over the next five years. For men, that figure rises to 16%.

There are similar gaps in other sections of the population, including seniors, immigrants, and people with disabilities. More equal opportunities in entrepreneurship could release enormous benefits. It is estimated that GDP growth would be 6% higher in Canada over the 2017-26 period if the gender gap in entrepreneurship were closed.

Entrepreneurship for under-represented groups

These under-represented groups typically face greater barriers to entrepreneurship than average in developing skills and accessing finance and business networks. They can also suffer from discrimination and bias.

Entrepreneurship support programmes can help tackle these problems. Yet too often “standard” support programmes fail to meet the needs of under-represented groups. Mainstream agencies tend to offer a “one-size-fits-all” product, and can be blinded by a lack of diversity in their own staffing, failing to understand the different needs of these groups and communicate with them effectively.

Business incubator programmes often host low shares of women entrepreneurs because of issues such as poor recruitment. This is due to male-dominated incubator manager networks and selection panels, and gender-insensitive programme design, for example a requirement of residency in the incubator, evening meetings, or lack of women mentors giving the impression that they are not for women.

How can entrepreneurship policies be made more inclusive?

Much needs to change. First, there must be initiatives targeted and tailored to the needs of specific groups such as youth business plan competitions, women’s business incubators, immigrant angel groups, or entrepreneurship mentors for people with disabilities, as they are often very effective. Second, there needs to be efforts to widen access to mainstream entrepreneurship support programmes, such as financial support and business advice programmes. To succeed, policy makers must ensure:

• There is diversity among those who run and administer business support programmes, including their boards of directors and managers.
• Client referral officers, advisers, consultants and trainers are recruited from within the target groups.
• Training and tools are provided for other advisers, consultants and trainers to help them effectively engage with people from the target groups.
• Schemes are co-designed with businesses from the target communities.
• Messaging is delivered via media and other information channels used by people from the target groups.
• Targets are set and data is collected to monitor target group participation.

Governments are stepping up action to tackle the issue. Ireland’s Women in Business 2020 Action Plan is seeking to increase the proportion of female-founders in Enterprise Ireland’s High Potential Start Ups programme to 30% by 2025, from only 21% in 2019, and increase women participants on other Enterprise Ireland start-up programmes by 50%.

The United States has used procurement targets for decades to open up opportunities for women entrepreneurs. The 1994 Federal Acquisition Streamlining Act set the goal of awarding 5% of the value of all prime contracts and sub-contracts of each federal agency in each fiscal year to women entrepreneurs.

Meanwhile, Germany released an action plan this year: “More Female Entrepreneurs for Small and Medium-Sized Enterprises.” The Plan includes more than 40 actions developed by five ministries in consultation with 27 women’s entrepreneurship networks and organisations. Policy frameworks of this kind are needed for all the under-represented groups in entrepreneurship.

These – and other policies across the OECD highlighted in our Missing Entrepreneurs report – show that change is possible. And with the right policies, we can help today’s dreamers create tomorrow’s businesses – and reduce the number of “missing entrepreneurs”.

Find out more about the Missing Entrepreneurs 2023 here.

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