Number of firms started by 18-25 year olds increases by nearly a third since 2008
It’s always nice when we’re supplied with some new stats which reinforce a recently-penned article by a member of the Elite Business team. Those of you who read Inspiring a generation, our esteemed editor’s fantastic piece on the rise of young entrepreneurs in the UK, will already know that our 18-25 year olds have been making waves in the entrepreneurial pool since the recession took hold in 2008. Indeed, ‘going your own way’ has never seemed more appealing such is the age of austerity and problematic youth employment in which we currently reside.
Now, thanks to business insurance giant Simply Business, we have an accurate picture of how our young guns are contributing to a resilient start-up sector. Most notably, this year’s Simply Business Start-Up Index reveals a 29% rise in the firms started by 18-25 year olds over the last five years. It comes as youth unemployment approaches the one million mark, according to the latest figures from the Institute for Public Policy Research. Indeed, this is made all the more significant when considering the fact that new businesses accounted for 38% of all insurance applications (though Simply Business) in 2012, based on up to 750,000 individual quote requests annually. This represented a 3.4% increase on the previous year. Compare this to a decline of 8.7% for all start-ups since 2008, and you can get an idea of how the tide is turning. That said, it does still serve to demonstrate the state of the job market at this moment of time.
Far be it from us to turn our noses up at the ambition of the younger generation, but further figures highlight to expose the limited resources our bright sparks have to get their own enterprises off the ground. As part of the annual report, Simply Business conducted a start-up capital poll on a cross-section of 500 customers, to review the current landscape of finance and lending. It revealed that the majority of businesses start on a shoestring, with 58% raising less than £1,000 to clamber on to the first rung of the business ladder, and 39% managing on less than £500. Most start-ups are self-funded, it added, relying on savings (84%) and/or family (12%), with just 5% receiving bank funding to launch their enterprise. This latter stat is hardly news nowadays, but that doesn’t stop it from sticking in the throat of many of our SMEs.
Meanwhile, at the other end of the age scale, the trend for retiree-age entrepreneurs continued in 2012, with a 7.2% increase in applications from those over the age of 65 – the biggest annual rise of all age groups. Over 65s now account for more than 4% of all new business owners, gaining ground on the most prolific start-up age of 35-44 year olds (30%). A deeper delve into the report shows that the increase in new business is by no means cross-sector, with some industries suffering a lot more than others, particularly those on the high street. Whilst the entertainment & arts and transport sectors enjoyed a respective 10.8% and 10.4% start-up boost, restaurants were hit by a 24.4% drop in new openings, with shops (-18.5%) and pubs (-15.9%) also bearing the brunt.
And where would a set of stats like this be without a regional focus? For the geographically-minded among us, North Yorkshire enjoyed the biggest start-up rate increase, with an impressive 15.76%, closely followed by the Scottish Borders (14.86%). However, it all looks pretty miserable for South Gloucestershire, which recorded a hard-to-ignore 54.51% decline in new businesses, way ahead of Newcastle Upon Tyne where the fall was 18.07%.
So what can we learn from all of this? Simply Business CEO Jason Stockwood offers the following thoughts: “The start-up figures for 2012 are encouraging as they show that enterprise is not being unduly suppressed by ongoing negativity in the economy. This has been among the most difficult periods ever faced for young people, with many traditional routes to employment now closed, so it is especially pleasing to see a new generation of entrepreneurs emerging and hopefully building the household names of the future.”
Of course, the real measure of positivity will be how successful our young aspirational types’ ventures turn out to be. Needless to say, we wish them all the luck in the world. They are the future of British business.