- Two thirds of Millennial entrepreneurs predict their business will grow over 2018
- Majority fear Brexit to hinder access new markets
- Nearly three-quarters (71%) consider equity finance
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, one of the largest independent venture capital investors in the UK.1
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%) predict their business will grow over the year ahead of which 18% are predicting dramatic growth compared to 61% and 7% respectively among older generations. As a result, over half (52%) of younger CEOs are planning to hire more staff compared to a much lower all-age average of 35%.
The biggest generational gap revealed by the report relates to equity finance; nearly three-quarters (71%) of under-35s said they will consider equity finance compared to under half (44%) 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.
Despite their bullishness, Brexit leaves the majority of younger entrepreneurs cold; over half (54%) think it will hinder their ability to access new markets compared to 41% of older business owners.
Brexit has failed to dampen millennials’ enthusiasm for exploring new business avenues with almost six – in – ten (59%) planning to expand into new markets in 2017 compared to 37% of their older peers.
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Reflecting their growth agenda, millennials have been over twice as likely as older and more established business owners to raise external finance in the past year (40% versus 19%) but with inexperience and lack of a track record meant they were three times as likely to see their applications rejected (18% vs 5%).
Not surprisingly, this has led to young entrepreneurs resorting to other means of accessing capital: a quarter (24%) has turned to their credit card compared to 12% of older CEOs and 13% have had to mortgage their property.
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% versus 12% and 20% versus 7% respectively).
One of the biggest obstacles to growth among millennial small business leaders is a lack of knowledge. Nearly a third (29%) said that a lack of mentoring is hindering their chance of making it, almost six times as many older businesses (5%).
Patrick Reeve, Managing Partner at Albion Ventures, said: “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.”