The pandemic has changed the economic patterns of society. While a few years ago entrepreneurship was something for young people who set up a ‘startup’ or technology company, now circumstances have led many over 40 years of age to reinvent themselves and run their own business to continue working. This is indicated by a report by OBS Business School, where the situation of the entrepreneurial ecosystem is analyzed and the stereotypes linked to it are demolished.
The most entrepreneurial economies are found in the Middle East and Africa, while the lowest levels are in Europe and North America. In Latin America and the Caribbean, unicorns (companies valued at more than 1,000 million dollars) have multiplied by 18 since 2017. 60% of these ‘unicorn’ companies are in Brazil, followed by Mexico, Chile, Argentina, Colombia and Uruguay.
The main reason to become an entrepreneur is to make a living because work is scarce, but the problem is that 85% of these new companies do not survive. Therefore, the profile of entrepreneurs and the business model they propose have changed. The average age of the entrepreneur is 42 years old, according to the report, and in most cases it is a person destined to create their own business after losing their job (72% of cases). “For this, he mainly resorts to his personal savings, perhaps for this reason, businesses are increasingly opened with a lower investment,” he details. And as for their previous employment situation, the South Summit study shows that more than 50% of the new entrepreneurs were employed in other companies and 30% had previously founded a new company.
The greatest probability of success is in the 60-year-old age bracket and having had good previous experience in the professional career improves the probability of success in the entrepreneurial project. In addition, in Spain the majority of entrepreneurs have university studies (55%). “This data does not go unnoticed and there is evidence that certain key resources, such as human capital, accumulate with age,” says Marta Grañó, professor at OBS and author of the report.
New technologies are the market niche where entrepreneurship guarantees greater success. The report reveals that the subsectors that are experiencing the fastest growth are Agtech (technology applied to the agricultural sector), with a rise of 128%, blockchain (121%), AMR (branch of mechanical engineering that designs robots) , which rises 109%; and Artificial Intelligence and Big Data (98%).
One of the negative consequences of the pandemic has been the slowdown in female entrepreneurship. The activity rate in this area fell one point in 2020 to 5.2%, according to data from the Spanish Entrepreneurship Observatory. And regarding training, the report confirms that there are more women entrepreneurs as the educational level increases, while in more complicated economic situations, it is women who take the initiative to start a business.
But one of the branches of entrepreneurship where more women launch their business is direct sales. It is a business model where vendors directly offer the product to consumers in a personalized way and outside of physical stores. From the Association of Direct Sales Companies (AVD), its president Gema Aznar explains that it is a “pioneering” sector and a “clear example of thousands of people entering the labor market”. “It is a business model based on direct and personalized contact between vendors and customers and that is sustained thanks to entrepreneurs with a commercial vocation who decide to embark on this adventure,” says Aznar.
The association calculates that in Spain there are more than 250,000 independent professionals who dedicate themselves to this activity full or part time. “Direct sales is a lever for entrepreneurship and an economic engine,” explains the president of AVD, who notes that the main advantages of this type of business are “the autonomy, flexibility and security that comes from having a powerful brand behind it” . Above all, young people, women and students are engaged in it. “With direct sales they can develop an independent activity, dedicate the time they consider to it and have control over their profits, all without high levels or investment risks,” says Aznar.
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