Cypriots see business opportunities but fear failure, according to survey

A survey has shown that 39.8% of Cypriots believe that there are opportunities to start a business in Cyprus, while 60.5% believe they have the skills to do so, but 53.3% fear failure.

The findings of the 2023/2024 National Entrepreneurship Report for Cyprus were published by the University of Cyprus Entrepreneurship Center on Tuesday.

Cyprus is participating for the eighth year in the Global Entrepreneurship Monitor (GEM), which produced the report and is a tool for providing a reliable overview of a country's entrepreneurial activity.

The presentation of the findings was welcomed by the Minister of Energy, Commerce and Industry, George Papanastasiou, who said that GEM has proven to be a particularly useful tool for the Ministry and the government, as its findings provide guidance on entrepreneurship issues and reinforce efforts to promote Cyprus as an attractive destination for business activity.

In Cyprus, he said, there are approximately 125,000 businesses, employing around 500,000 people. Of these, 119,000 are very small and employ fewer than 10 people, contributing to the employment of around 190,000 people. In addition, there are 5,400 small businesses employing between 10 and 49 people, providing jobs for around 100,600 people. In the medium-sized enterprise category, which employs between 50 and 249 people, there are 858 companies, employing approximately 82,500 people, while 155 companies in Cyprus employ more than 249 employees and provide jobs for approximately 125,500 people.

"These figures demonstrate the important role that businesses play in our country," he said, underlining the Ministry's goal of supporting them, as they play a decisive role in achieving the government's objectives regarding the development and strengthening of the competitiveness of the Cypriot economy.

Referring to the report's findings, he said that there has been a significant increase in the percentage of adults in Cyprus who believe that there are good opportunities for starting a business, reaching 39.8%. He noted that the ownership of new businesses in Cyprus also rose, reaching 4.7% from 3.9% in 2020, adding that Cyprus ranks sixth in Europe in terms of established ownership, which further enhances the positive image of its business environment.

"Cyprus is showing positive signs, with Cypriots now more optimistic about the business opportunities available to them. Among other things, the increase in the number of new businesses indicates that the market is picking up, while compared to other European countries, Cyprus is close to the average and maintains a good position in the field of entrepreneurship, presenting a mature and stable business environment," he said.

Papanastasiou added that the Ministry of Energy, Commerce and Industry understands the importance of businesses for the economy and the need to support and strengthen entrepreneurship, which is why it is implementing specific actions and policies. He referred specifically to the priority of promoting the 2025-2030 policy document on competitiveness and internationalization of the Cypriot industry, noting that this policy aims to create a flexible and technologically innovative industrial landscape, which will contribute significantly to the development of the competitiveness of the Cypriot economy.

He also referred to grant schemes to facilitate access to finance and improve the liquidity of businesses. "Our goal is to provide incentives to our business community to make investments that further strengthen the competitiveness of Cypriot businesses, leveraging technology as well as the opportunities arising from the green and digital transition, by absorbing and utilizing as many resources as possible from European funds, including the Recovery and Resilience Facility," he added.

Specifically, he said that the competent Industry and Technology Service has secured a total of €362 million for the current programming period until 2027, which will be allocated through targeted grants. In particular, with regard to the new entrepreneurship grant schemes, he said that the Ministry has secured €40 million compared to €21.7 million in the previous period. "This scheme has already been announced for the second time with a total budget of €20 million," he said.

Referring to the report's finding that Cypriots, while seeing many business opportunities, seem to be afraid to take the next step, he said that usually those who fail are either those who are not ready to take risks or those who take too much risk, emphasising the importance of taking manageable, calculated risks for the success of a business.

The report's findings

The survey in Cyprus was conducted with the participation of a representative sample of 2,000 adults aged 18-64 and 36 experts between May and June 2023. The findings of the report were presented by Dr. Ariana Polyviou, Lecturer at Cyprus University of Technology.

According to the findings, in 2023-24 the percentage of adults who believed that there were good opportunities to start a business increased significantly to 39.8% from 26.8% in 2022-23. At the same time, the percentage of those who said they had the skills to start a business rose to 60.5% from 52.7%, well above the European average of 51.8%.

According to the survey, the percentage of those who said they were afraid of failure rose to 53.3% from 51.7% in the previous period. This percentage is significantly higher than the European average of 45.1%.

The percentage of people who said they knew an entrepreneur was also significantly higher than in Europe. In Cyprus, the percentage reached 66.9%, while the European average was 52.1%.

According to the survey, compared to Europe, the percentage of the population in Cyprus that believes that starting a business is easy has been lower over time.

An important indicator for the survey is the TEA index, which refers to early-stage entrepreneurship. In Cyprus, the percentage of the population starting or running a new business stands at 11%, up from 8.3% in 2022-23 and the European average of 9.2%.

As regarrds gender equality Dr. Polyviou said that men in the early stages of an entrepreneurial activity account for 14.5%, while women account for 4.9%, with a ratio of 0.6. In other words, for every 10 men, only 6 women are in the process of starting a business. The ratio has increased from 0.4 in 2022-23, but is still below the European average of 0.7.

According to the findings, the age group most likely to start a business is 18–34 year-olds at 14.4%, while only 5.8% of 35-64 year-olds do so. The corresponding figures for Europe are 12% and 7.9% respectively.

Asked about their motivation for starting a new business, 85.4% of respondents said "to acquire significant wealth," 65.5% said "to earn a living," 39.7% said "to make a difference," and 27.1% "to continue the family tradition."

Cyprus ranks sixth in the advanced stage of entrepreneurial activity index, i.e., businesses operating for more than 42 months, with a rate of 8.2%, with the EU average standing at 7.6%.

The National Entrepreneurial Context Index (NECI) has declined compared to last year. When asked about the greatest strengths of Cyprus' business ecosystem, respondents cited physical infrastructure as the most important, while commercial infrastructure, government policies (taxes and bureaucracy) and ease of market entry received lower ratings than last year. Compared to other countries, Cyprus lags behind in government programs for entrepreneurship, according to the survey.

Based on the findings, the University of Cyprus Entrepreneurship Center made recommendations, such as incorporating financial literacy into the curriculum, training teachers in entrepreneurial teaching methods in various subjects, creating programs to guide students in the creation and development of start-ups, and offering short courses to higher education graduates on developing new businesses or transforming existing ones.

With regard to government procedures and policies, it recommends the creation of regional entrepreneurship councils with the participation of active entrepreneurs and the provision of incentives for the development of synergies between universities and new businesses, as well as the provision of grants and advisory support to women and vulnerable groups.

Furthermore, the Center proposes, among other things, providing incentives to existing businesses to invest in early-stage businesses, creating tax incentives for global investment funds to participate in business investments in Cyprus, and creating innovation funds linked to the needs of the public sector.

It is also proposed to create services offering guidance on digital strategy and access to digital tools, to provide grants for technology upgrading, to develop physical infrastructure, and to create a national network of mentors with experienced entrepreneurs in key sectors.

(Source: CNA)