One of the groups of community that gets hit hardest by the economic crises is the unemployed people. In a situation where it is difficult to find a job many of them are considering the possibility of starting a business. In addition, the government promotes start-ups in order to alleviate the unemployment.
The aim of this study was to determine how many unemployed people have chosen entrepreneurship after losing their jobs. Furthermore, the reasons for becoming an entrepreneur and the problems they have to face were also investigated.
„The proportion of entrepreneurs by need is relatively large in Estonia comparing to other European countries and the number of them has increased even more due to economic crises.“ – Anne Jürgenson
The Eurobarometer survey found that in Estonia the proportion of entrepreneurs by possibility of all entrepreneurs was the lowest in Europe in 2009, there was 36% of entrepreneurs by possibility and 41% of entrepreneurs by need.
The study showed that the entrepreneurs by need are often characterized by the unemployment status during the establishment of company, their education level is similar to other entrepreneurs and comparing to entrepreneurs by possibility their growth ambitions are more modest; also their incomes and business survival probability are lower.
Entrepreneurs by need have some success factors in comparison to others, such as specific education, work experience in the company’s field of activity and the overall high level of education. Fund-raising is already problematic for all start-up entrepreneurs but it is often a particular challenge for entrepreneurs by need.
The main findings:
- Estonia stands out from the European Union with the large proportion of enterprises by need, i.e. enterprises which are established due to forced circumstances or lack of job opportunities.
- The success of entrepreneurs by need is inhibited by incomplete preparation for business activity and they are often not ready for the changes accompanied by the role of entrepreneur.
- If the company is successful, entrepreneurs by need mostly wish to continue with business.
- The shortcomings in the preparation can be compensated by raising the awareness of entrepreneurship, providing funding and mentoring services.
- Increased awareness of entrepreneurship in society at large would reduce business barriers and expand career opportunities and therefore would be in favour for economic development.