By Dr Liz Cameron CBE, Chief Executive of the Scottish Chambers of Commerce

You only have to look at Scotland’s past to quickly realise how much entrepreneurship and innovation is steeped in our contributions to the world.

From Andrew Carnegie to Alexander Graham Bell, to Arnold Clark and Walker’s Shortbread, taking risks and driving change has been at the core of many of Scotland’s great success stories.

In recent times, it has understandably been a difficult prospect for many to consider starting up their own business. The impact of the COVID-19 pandemic alongside continued economic uncertainty and rising costs of business have all contributed to people having less confidence to starting a business.

A recent survey by the University of Strathclyde illustrates this hesitation.

The Global Entrepreneurship Monitor 2022/23 has found emerging gaps in the entrepreneurial pipeline with a drop in youth entrepreneurship and a reduction in interest for entrepreneurship as a career option.

We are also behind the overall UK average and further behind when it comes to women starting a business in Scotland.

The survey showed that total early-stage entrepreneurial activity (TEA) – the sum of the nascent entrepreneurship rate and the new business owner-manager rate – in Scotland was 8.8% against a UK average of 11% in 2022.

This is down from 9.5% in 2021, which means that TEA rates in Scotland have remained broadly the same between 2020 and 2022 but have still seen slight regression.

At the same time, while female to male TEA ratio in Scotland remains unchanged from 2021 at 68%, the UK ratio increased from 73% to 79%, suggesting that more women are starting businesses in the rest of the UK compared to Scotland.

Ethnic minorities continue to show a stronger association, with TEA rates double that of the white population at 17% compared to 8.5% in 2022 – and the growth in non-white rate means Scotland is now on a par with the UK non-white average.

TEA rates continue to be driven by younger people in the 18-24 age group, despite a three-point drop from 13.3% in 2021 to 10.4% in 2022.

The survey also found that low confidence continues to be a barrier amongst non-entrepreneurial adults in Scotland with six in ten indicating fear of failure as a reason for not striking out on their own.

The most concerning stat for me is that only four out of ten people in Scotland believe they have the skills, knowledge and experience to start a business, with only the North East region of England lower at 30%.

For a country that normalised entrepreneurship as a career option, these facts paint a worrying picture: that many Scots have a lack of confidence to start their own business.

If we are to restore that confidence and showcase Scotland as an attractive start-up nation, fit for inward investment and ready for the jobs of the future, then we must look at the environment in which to start and grow a company.

We must look at each stage of the process that our young people will go through before they even seriously consider starting their own business. That first step is Education.

Its role in this context is to normalise entrepreneurship as a career path, equipping people with the interest and skills to consider either starting or joining an early-stage business. We currently don’t sufficiently expose young people to entrepreneurial thinking and technique, if at all for many.

We need more specialised entrepreneurial education programs in schools and universities that teach vital skills such as business planning, marketing, financial management, and leadership. Providing practical training and knowledge can equip young people with the necessary tools to start and run their own business.

The work of Youth Enterprise Scotland (YES) has been one of the very few examples to note of connecting the early education sector to the private sector. YES run a variety of enterprise and entrepreneurship programmes for young people aged 5 to 30 in primary and secondary schools, FE colleges, universities, prisons, secure and residential units and with community groups.

We should continue to encourage established businesses to collaborate with young entrepreneurs by offering partnerships, joint ventures, or incubator programs. This can provide access to resources, expertise, and infrastructure, creating a supportive environment for startups.

A good example of this is the Future Chamber programme by Ayrshire Chamber of Commerce, where business owners under 35 years old based in Ayrshire that have been trading for two years receive one year’s free membership of the chamber’s services.

We do need to better join up the landscape that helps facilitate entrepreneurship, this includes government and its agencies, alongside the private sector. A common model for incentivising and supporting entrepreneurship is how we instil confidence in young people, women, and ethnic minorities to consider the world of business.

To fully realise the potential of aspiring entrepreneurs and support them to contribute to Scotland’s future growth and innovations, we must pull out all the stops.