Small businesses are the backbone of the UK economy, representing 99.2% of the UK business population. They create jobs, serve communities, drive innovation and give people the opportunity to build something of their own. However, how far that legacy goes depends on how well equipped the next generation is to take advantage of it.
Current research suggests the nation is falling short, disappointing many young people by not incorporating business financial skills into their education. More must be done to address these gaps and ensure young people know where to access financial tools, knowledge and support at the beginning of their journey, ultimately helping small businesses not only get started, but survive and grow.
Ambition exists, but financial confidence is lacking
In today’s world of work, there is no shortage of entrepreneurial ambition. Research provides a reassuring indication that young people want to be self-employed: almost three quarters (72%) of 16-21 year olds like the idea of running a business.
The move away from an exclusive focus on traditional career paths is an important rebalance given the number of new recruits is the lowest it has been in five years. But ambition alone does not create sustainable companies. More than a third of young people say they lack the financial skills needed to start one, while two-thirds say entrepreneurship feels too risky in the current economic climate.
Many can imagine themselves running a business, but don’t yet feel ready to take the first step. Without that confidence to turn ideas into viable businesses, the UK risks losing a generation of potential entrepreneurs before they have even started.
Why this is important for UK small businesses
Despite the open-mindedness and optimism of future entrepreneurs, the barriers to starting a business are creating a sense of professional exclusion. Due to a lack of financial skills and confidence, six in ten young people surveyed believe that entrepreneurship is a path reserved for people with money or connections. This perception is reinforced by the fact that many young people are not learning the basics of business finance in education.
Understanding cash flow, budgeting, taxes, loans, or how to assess risk are practical life skills that can help people make informed decisions, whether they start a business or not. If too many young people believe that the decision to start and run a business is only available to those with money, connections or specialized knowledge, the future business becomes narrower than it should be.
Build long-term financial confidence
In the absence of formal support, young people are self-sufficient and increasingly look elsewhere for business and financial guidance. More than a quarter (28%) say they would turn to TikTok for business finance advice, while 23% would use AI-powered search to help. While these platforms can be helpful for quick answers or relatable advice, fundamental financial knowledge is essential to avoid costly mistakes in the first place.
The research found that almost two in five (38%) small business owners don’t know if their business was profitable last month, and more than half (55%) struggle with cash flow management. Without a financial foundation, it can be difficult to separate good advice from bad, or understand the warnings that accompany any financial decision.
Understanding the numbers ahead of time can help business owners avoid blind spots before they become costly. Helping the next generation feel confident enough to start and grow businesses and feel less cautious about financial management will require a collective effort across education, government, the private sector and the advisory community.
There are opportunities to offer work experience to young people, partner with schools or universities, or volunteer through ambassador or mentoring programs to share real business experiences with budding entrepreneurs and become trusted guides. It remains vital to continue championing accountants and bookkeepers as trusted business advisors.