Starting a business is popular among young people, but do they understand the risks?
Starting up a new company is a popular choice for many young people in the modern world, but it is important to remember some of the risks involved.
A new report from UK Trade and Investment and the Economist Intelligence Unit show that starting from scratch is an enticing prospect for many 18 to 25 year olds.
Financial independence and personal satisfaction were the two leading factors for people who considered becoming an entrepreneur; named by 44% and 37% respectively. Yet, despite ambition being strong only 7% of this age group have already established their own business as many feel they need more support in their bid to get ideas up and running.
The UKTI’s Sirius Programme aims to provide some of this support but there are still plenty of factors to overcome.
With the UK being the most popular location in Europe for start-up businesses, the marketplace is highly competitive. This can make finding gaps in the market incredibly difficult as there are not many niches left to exploit.
This can also cast doubts over many business plans and ideas as lenders will be unsure of the corporate viability of the plans.
Large sums of finance are not readily available to many start-ups without plenty of personal investment either, so any expansion should be gradual.
It is not viable for new businesses to be all conquering from the very beginning and this level of misguided ambition can actually get many small firms into trouble. Many SMEs struggle in their early years and numerous studies have suggested that the first two or three years are often the hardest.
It is during this period that many of these small firms face administration and insolvency, often as sales figures falter and finances dry up.
Therefore, whilst it is very important that entrepreneurs in the UK are not deterred from starting their own businesses, it is vital that they understand some of the risks involved with it.
By Phil Smith