Britain’s young entrepreneurs most confident about growth prospects
Despite optimistic attitudes, business owners aged 35 and under are five times less likely to have their loan application accepted
Britain’s younger entrepreneurs are almost twice as optimistic about the future growth of their business compared to older peers, according to Albion Ventures’ third Albion Growth Report.
The report, which surveyed more than 1,000 small and medium-sized enterprises, found that 14% of entrepreneurs aged 35 and under expect to witness growth over the next two years – significantly higher than the proportion of business owners aged 45 to 54 (8%).
These growth ambitions of young entrepreneurs were reflected in the report findings on attitudes to finance. 29% of under 35 year-old business owners have attempted to raise funds within the last year, compared to 14% of middle-aged respondents. Yet the 45-54 age group were five times more likely to have their loan application accepted – 15% against 3%.
The report argued that a proven track record is a major advantage when it comes to securing finance. However, 42% of under 35 year-old business owners said they would look to raise equity finance, 7% higher than business owners of all other ages.
The report claimed that difficulty accessing funding has pushed young entrepreneurs to take greater risks, with one in four (23%) using a credit card to fund their business against just 5% of older respondents, and 15% of under 35s having mortgaged a property to grow their business versus 7% of 45-54 year olds.
In addition, younger entrepreneurs were much more likely to invest in research and development (14% against 5%), hire new staff (13 against 3%) and to facilitate an ownership change (13% against 6%) compared to their older counterparts.
Patrick Reeve, managing partner at Albion Ventures, said: “The younger generation is by far the most optimistic and ambitious about the future. This pro-growth sentiment is excellent news for the UK economy as the under-35s will become increasingly influential over the years to come.
“The greater willingness of younger business leaders to use equity rather than banks to secure the funds they need suggests we’re shifting towards a more entrepreneurial model as seen in the US.”
The findings follow Growing Business’ Young Guns 2015 Index which highlighted the UK’s most impressive young entrepreneurs aged 35 and under behind 30 fantastic fast-growth companies.