Credit: GEM Luxembourg 2017/2018

The Global Entrepreneurship Monitor (GEM) report 2017/2018 has revealed that entrepreneurship initiatives in Luxembourg have proven successful.

The main strengths of Luxembourg's entrepreneurial system, according to the report, were infrastructure and government policies, both in the opinion of experts and the general population. On the other hand, funding and availability of resources, such as offices and skilled human resources, were considered the main obstacles.

The GEM examined the impact of government initiatives such as nyuko, Fit4Entrepreneuship and Fit4Start in promoting entrepreneurship, both by raising public interest in entrepreneurship careers and by providing training and a funding. The first observations were encouraging: 13% of the population said that these initiatives increased their interest in entrepreneurship. Training programmes were also popular among entrepreneurs, with one-third reporting having completed such training in secondary school and nearly half after leaving school.

In 2017, the proportion of entrepreneurs in Luxembourg compared to the total population was 9.3%, which is higher than the European average (8.3%). The proportion of young entrepreneurs among men (12.5%) was higher than that of women (5.9%). This difference is relatively stable over time. Male entrepreneurs were primarily active in the processing and business services industries, while women were more active in the education, health and other sectors. In addition, the majority of new businesses were small businesses with five or fewer employees.

Luxembourg entrepreneurs were found to be mainly motivated by the desire for independence rather than necessity. Meanwhile, 41% of the total population claimed to believe that they have the skills to start a business, compared to 43% in Europe. The proportion of people who consider themselves to be qualified was again higher among men (50%) as well as the better educated (50%) than among women (30%) and those with less education (33%).

However, 53% of people who perceived a good opportunity to start a business said that the fear of failure prevented them from achieving it, compared to 37% in Europe. Fear of failure was more common among women (61%) and less educated people (55%) than men (45%) and highly educated people (47%). Figures from the GEM similarly found 50% of start-ups to be innovative compared to 25% of established companies. The proportion of innovative start-ups is the highest in Europe.

Moreover, the vast majority of entrepreneurs were found to require external sources of funding: 7% of respondents said they have provided funds (loans or equity) to a new business created by someone else. The figures have shown that family and friends were the main sources of financing for start-ups.

Finally, in Luxembourg, as in other EU countries, the main reasons for a company's failure were revealed as lack of profitability, personal reasons and problems with access to adequate financing.