Nearly 6 in 10 of young people dream of launching a business – but face major knowledge gap

Business education must become a national priority

The Federation of Small Businesses surveyed over 2,000 young people aged 18-34 across the UK.

The research found a significant lack of enterprise education within schools. This type of learning develops vital skills that will help students grow personally and professionally and promote themselves and/or their business idea. Only around a third (35 per cent) surveyed said they had received business startup guidance while at secondary school. 

The study also found that youth clubs play a crucial role in addressing this educational shortfall. The vast majority (83 per cent) of those who received business support from youth clubs found it helpful, showing that young people are keen to boost their entrepreneurial knowledge. 

Is enabling young entrepreneurs the key to UK economic growth? 

The UK’s young entrepreneurs hope to set up their own business for a number of reasons: 

• to make money (52 per cent)
• to fulfil a personal vision or passion (29 per cent)
• they have a business idea or have spotted a gap in the market (15 per cent)
• to continue their family business (5 per cent)

Over half of young entrepreneurs are motivated by the potential to make money – showing that the UK’s young people aspire to create wealth and raise their standard of living. 

More than one in two (53 per cent) of young entrepreneurs in the UK also say they plan to participate in some form of business growth activity – including creating a new business product, or employing staff in the next five years. 

And against a backdrop of high street decline, it’s important to note that 11 per cent of young entrepreneurs hope to open a business on the high street in the next five years.

“It’s clear there is an absolute treasure trove of enterprise potential up and down the country, and it’s so sad to see that this isn’t yet being realised,” said Julie Fisher, UK CEO at Simply Business.

Young entrepreneurs face financial hurdles

Accessing finance is a major problem for young people hoping to launch or grow a business. According to the report, 20 per cent of young entrepreneurs struggled to get the funding they needed. Many young entrepreneurs rely on personal savings or loans from friends and family. 

Seven per cent of young entrepreneurs say they even use payday loans to fund their new or growing businesses. The number is higher for those living in London (12 per cent), male entrepreneurs (10 per cent), and disabled young entrepreneurs (10 per cent).

The report also found that: 

• a significant portion (28 per cent) of young people have a side hustle, with Londoners having the greatest percentage of side hustlers (40 per cent). 
• social media platforms are crucial for young entrepreneurs, with 65 per cent using them to promote their businesses. Instagram is the most popular platform, followed by Facebook and TikTok.
• Young entrepreneurs are overwhelmingly altruistic, with 14% starting or considering starting a business specifically to help their community. 

What do young entrepreneurs need to succeed? 

In response to the findings, the Federation of Small Businesses has tabled a number of recommendations to government, including: 

• promoting relevant free guidance and advice for young entrepreneurs, with efforts being led by The Competition and Markets Authority and the Advertising Standards Authority.
• embedding enterprise education in the National Curriculum, through a range of activities like entrepreneurship competitions, careers talks from local businesses, and internal fundraising.
• supporting schools, colleges, and employers to guarantee two weeks’ worth of mandatory work experience for every young person.
• doubling the trading allowance, which has remained frozen for over seven years, and re-branding it as the ‘Side Hustle allowance’.
• encouraging young entrepreneurs to consider international trade from day one.