Money management struggles for young business owners
THE next generation of entrepreneurs are finding it difficult to keep on top of their business finances, with around 60 per cent of millennial business owners stating that financial administration is one of the most stressful aspects of their role.
That’s according to a new study from Nesta, which found that young business owners – those aged between 18 and 34 – are spending between five and eight hours a week on money matters on average. That’s significantly more than business owners aged 35 or over, who are spending between one and three hours on average.
A notable number, 40 per cent, of young business owners have concerns around the cashflow management of their business, while almost a quarter have previously owned a business that collapsed due to poor financial management.
More than half, 59 per cent, of millennial business owners admitted they would benefit from extra support with their financial administration.
Nesta conducted the research as part of its Open Up Challenge, a £5m prize fund which is backing next-generation tools which have the potential to improve small business banking and financial management with the launch of Open Banking early next year.
Financial management app Bud and peer-to-peer lender Growth Street are among the 20 winners of the prize.
Chris Gorst, challenge prize lead at Nesta, said the fact that so many young entrepreneurs are struggling with money management was “concerning”, but noted that 2018 had the potential to be “game changing” for small businesses.
“If young entrepreneurs don’t get the help they need to take control of their finances, there is a serious risk that a number of businesses will fail,” he added. “This will harm the UK’s small business sector and potentially put off the next generation of young entrepreneurs thinking about starting their first business.”