Last Thursday the Government issued what it termed "a new plan aimed at creating an extra 93,000 jobs from startup companies in the next five years" - - in effect doubling employment at Irish young firms.
That may or may not happen but the limited data used in the new report in respect of 2011 comprises a mix of units of foreign companies and inactive companies while the majority of the firms in the annual total have no employees.
Startup activity is important for an economy even though failure rates are high - - but firms that employ staff are the key while some one-person operations never grow.
However, rising startup rates can also reflect a poor economic situation as individuals cannot get good-paying employee jobs.
In Ireland from Q2 2007 to Q2 2014 the number of self-employed with employees fell by 34,000 to 89,000 while the number of self-employed with no employees rose by 8,000 to 227,000.
In the United States in 2012, 410,001 new employer firms were created according to the Census Bureau, which represented only a small increase from the prior year. These new firms accounted for 8.1% of all businesses in the United States. However, the volume and the share of new business creation remain far below the rather steady level the United States enjoyed from the late 1970s through the 2000s.
The 2012 figure is 27% lower than the peak reached in 2006, when 561,721 new employer firms were formed while in 1980-1989 the new firm share was 12.4% and in 1990-1999 was 10.8%, according to the Kauffman Foundation.
Richard Bruton, enterprise minister, said on Thursday that the Government’s National Policy Statement on Entrepreneurship in Ireland [pdf] represents "the first time a government has published a comprehensive national plan for entrepreneurship. It is the Government’s plan to deliver an ambitious but realistic increase in the numbers of start-ups in Ireland over the next five years.
Page 14 cites CSO data that show 11,847 startups began operations in 2011 in a population of almost 190,000 firms - - over 90% of all startups were in the services, distribution and construction sectors. In 2011 startups represented a little over 5% of the existing population in construction and distribution but in services and financial services the startup rate was just over 7%.
Of the 11,847 startups, 9,444 had no employees in 2011.
In total, 90,000 active enterprises have no employees (besides founders) and units of other companies or offshore companies such as Apple and Google use for tax avoidance, are letter-box entities - - Michael Noonan, finance minister, said last year that Irish authorities do not know how many offshore companies exist.
The number engaged with the 90,000 non-employee companies is 69,000.
In 2011, of the 9,444 employee-free firms, there were 5,502 individuals identified as being engaged with them; 769 startups who employed 4,429 in 2011.
In 2006, over 10,000 people were involved in employee-less firms; by 2011 that number had fallen 4,765 but an additional 4,000 were employed.
The report says Ireland can double the jobs impact of startups on our economy if we:
"This is a challenging but realistic ambition for the next five years."
Over 30% of all enterprises that were active during 2011 began trading in the period 2006 – 2011 inclusive. These enterprises accounted for nearly 10% of persons engaged in the private business economy in 2011.
1. The target of increasing startups by 25% is based on a total that includes 9,444 enterprises - - or 80% of the total, which has no employees, whereas the number engaged in non-employee firms should generally be greater than the number of firms as enterprises often include more than one founder.
2. Trying to increase the survival rate is not realistic.
Of the 16,696 enterprises which were enterprise births in 2006, 10,188 or 61% have survived to reference year 2011. Of the 13,461 enterprises birthed in 2007, 6,513 or 48.4% survived to reference year 2012.
"Overall, the survival rate for enterprises that are State supported (in existence after five years) is high. This ranges from 68% in LEO (local enterprise offices) supported enterprises to over 85% for Enterprise Ireland’s High Potential Startups (HPSUs)."
US Bureau of Labor Statistics data show a consistent failure rate for young firms up to 5 years old.
Eurostat data are similar with higher levels for Austria and Sweden.
3. Scaling: Fast or high growing firms are not typically in high tech and earlier this year researchers from three Scottish universities reported a mismatch between the nature of UK high-growth firms and the policies developed to support them.
The study was carried out by researchers at the universities of St Andrews, Glasgow and Stirling and published by the foundation, National Endowment for Science, Technology and the Arts (Nesta).
It claimed a number of myths had developed around the nature of high-growth firms, saying policy makers typically perceived them to be new or very young high-tech businesses which often emerged from university spin-offs.
According to the BBC, Dr Ross Brown of the University of St Andrews said: "Our research clearly shows that there is a mismatch between the nature of high-growth firms and the policies which have been developed to support them.
Kauffman Foundation research has shown that US state economic development programs, "which traditionally target high-tech firms, may be missing 75% of high-growth companies."
Most of the content of the Government's report details action plans and aspirations as well as improving the culture of entrepreneurship.
It's foolish and misleading to lump indigenous startups with subsidiaries and financial vehicles of large foreign-owned companies.
Richard Bruton, enterprise minister, has a poor record in the policy making area.
The standard government report today is simply a promotional brochure with an avoidance of facts that may conflict with what is a permanent propoganda campaign where dowsides are whitewashed from the narrative.
Prof Dan Isenberg wrote on the Harvard Business Review blog last May:
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