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Not enough sustainable businesses created in Estonia

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Photo: Arno Saar / Õhtuleht

While the number of people interested in running a business of their own is big in Estonia, the ratio of sustainable businesses to the number of businesses established is low, a study conducted in collaboration between the Estonian Development Fund and local researchers indicates.

The head of the Estonian Development Fund, Tonis Arro, said the survey revealed that there is a large number of people in Estonia who are thinking about establishing a business and also of those who are already doing something with that in mind. "Unfortunately, most of them will not set up a sustainable business."

The main reasons for a new company's going out of business is absence of success or the person's choice in favor of a paid job. The survival rate of businesses in Estonia is half the rate in developed European countries, Arro said.

Arro described low level of ambition as characteristic of Estonian entrepreneurs. "Expectations as regards business growth lag also behind the growth expectations in Latvia, Lithuania, Romania and Ireland, for instance," said Arro, adding that nor did the majority of companies in Estonia see the possibility of expanding their business ahead.

The principal reason for going out of entrepreneurial activity in Estonia is low profitability of the business, with personal reasons and finding a paying job as second and third important reason.

The main factors undermining entrepreneurship in Estonia, according to the experts interviewed for the survey, are insufficiency of enterprise related know-how and skills, the education system's not paying enough attention to creativity and initiative, insufficient transfer of know-how from academia to enterprise, and spread of negative attitudes toward entrepreneurs in society.

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