Young entrepreneurs are more than twice as ambitious about their company’s growth prospects but far more negative towards Brexit than older generations of business owners, according to a new report launched by Albion Ventures.
The fourth annual Albion Growth Report, designed to shed light on the factors that both create and impede growth among over 1,000 SMEs, reveals that two-thirds of business owners aged under 35 (66 per cent) predict their business will grow over the year ahead of which 18 per cent are predicting dramatic growth compared to 61 per cent and 7 per cent respectively among older generations. As a result, over half (52 per cent) of younger CEOs plan to hire more staff compared to a much lower all-age average of 35 per cent.
The biggest generational gap revealed by the report relates to equity finance; nearly three-quarters (71 per cent) of under-35s say they will consider equity finance compared to under half (44 per cent) of other age groups, underlining the cultural sea-change among young business owners towards a Dragon’s Den style approach and away from traditional bank debt.
Brexit leaves a sour taste
Despite their bullishness, Brexit leaves the majority of younger entrepreneurs cold; over half (54 per cent) think it will hinder their ability to access new markets compared to 41 per cent of older business owners.
Brexit has failed to dampen millennials’ enthusiasm for exploring new business avenues with almost six in ten (59 per cent) plan to expand into new markets in 2017 compared to 37 per cent of their older peers.
Reflecting their growth agenda, millennials are over twice as likely as older and more established business owners to raise external finance in the past year (40 per cent versus 19 per cent) but with inexperience and lack of a track record meant they are three times as likely to see their applications rejected (18 per cent vs 5 per cent).
Not surprisingly, this has led to young entrepreneurs resorting to other means of accessing capital: a quarter (24 per cent) have turned to their credit card compared to 12 per cent of older CEOs and 13 per cent have had to mortgage their property.
Millennials are more ambitious
Millennials’ appetite for finance shows they are significantly more ambitious for change than older CEOs: they are three times more likely to use new capital to hire more staff and bring about a change of ownership (36 per cent versus 12 per cent and 20 per cent versus 7 per cent respectively).
One of the biggest obstacles to growth among millennial small business leaders is a lack of knowledge. Nearly a third (29 per cent) say that a lack of mentoring is hindering their chance of making it, almost six times as many older businesses (5 per cent).
Patrick Reeve, managing partner at Albion Ventures, says, ‘Long-term economic outperformance relies on ensuring the next generation of business owners has a strong pro-growth mind set and this is clearly borne out from this year’s report findings.
‘Notwithstanding their concerns about Brexit, most young entrepreneurs have ambitious growth objectives and if successful, this means they will hire more people and enter new markets. They are also far hungrier to fuel their growth through equity finance than the older generations, which underlines the shift towards a more entrepreneurial culture.
‘Younger entrepreneurs are also honest about their skills shortages and are in most need of mentoring. It is in our collective interests to encourage their long-term success and we need to take suitable steps to provide the structure needed to meet this demand. As the UK looks to find its new place in a post-Brexit world, it will be millennials that will be setting the course.’