When we think of an entrepreneur, we often picture a 40 or 50-something professional with years of business skills and experience. However, a recent study by American Express discovered that an astonishing 67% of 18–27-year-olds (Gen Z) aspire to start their own business.
Most respondents said they have the collaboration, innovation, and leadership skills needed to become an entrepreneur. They also cited some challenges that could disrupt their plans, such as restricted access to funding and self-doubt.
But the company formation experts at 1st Formations know exactly what it takes to start and grow a successful business. Below, they highlight some common challenges young entrepreneurs face and how to overcome them.
Lack of funding
Access to funding is one of the biggest obstacles for young people looking to start a business. Every startup needs capital regardless of age, but this task could be more challenging for Gen Z than any other generation.
Finder.com research found that the average savings across the UK increase with age. This leaves 18-27-year-olds with the lowest average savings of just £4,759. What’s more, 12% of Gen Z Brits have no savings at all.
Personal savings are crucial when starting a business. Many entrepreneurs invest their own funds in the early stages to get their ventures off the ground before securing formal investment.
Some also opt for startup loans. However, with little to no credit history, assets, or previous business experience, many traditional lenders hesitate to approve a loan to founders under 25.
Finance options for young entrepreneurs
Savings and loans are not the only ways to start a company. Young entrepreneurs should also consider:
- Asking family members for financial support
- Crowdfunding
- Angel investment
- Government startup programmes
Skills gap
Another challenge facing young entrepreneurs is a skills gap. Compared to older business owners, they have less work experience to apply to their ventures.
Even though most claimed they have some key skills required to start a business in the American Express survey, launching a startup takes more than a great idea and leadership skills (although these are essential). Entrepreneurs should also possess skills like:
- Strategic planning
- Decision making
- Financial literacy
- Communication
- Problem solving
- Resilience
- Adaptability
It’s also wise to have some practical skills, like sales, marketing, customer service, and basic accounting. You don’t need to master everything, but gaining a solid foundation of core business functions is key.
How young entrepreneurs can develop their skills
Some of these abilities are developed naturally through life experience. However, that doesn’t mean young people can’t obtain them earlier in life. They can:
- Take online courses – Platforms like Udemy and Coursera (or even YouTube) offer plenty of free or low-cost tutorials on vital business processes like digital marketing and bookkeeping.
- Network with experienced business owners – Expanding your professional circle is an incredible way to learn from others, gain valuable advice, and develop the skills to make you a successful entrepreneur.
- Find a mentor – Learn from an experienced entrepreneur and find exciting opportunities through someone who’s been in your shoes.
Work/life balance
Starting a business as a young person could create a work/life balance you’re not used to. Most entrepreneurs find it difficult to ‘switch off’, and studies have found that many lose sleep because of work pressure and never take annual leave, or work through it if they do.
But this is precisely why business owners face an enormous risk of burnout, and this is something young entrepreneurs should weigh up before taking the leap. Your work/life balance will decrease as your business will require more time and attention than when working for someone else.
Tips for looking after your health
You should be prepared to spend your evenings and weekends on your business, especially in the early stages. That said, it’s not impossible to take a guilt-free step back. Here are some tips to keep in mind:
- Set strict boundaries – Allocate specific working hours and personal time, even if you work from home.
- Use automation – Apps like Trello and Zapier take care of repetitive and time-consuming tasks, helping to free you up.
- Prioritise your health – Your business requires energy and a clear head, so try to stay active, eat well, and get enough sleep to fuel productivity.
Confidence and credibility
Whether it’s your first business meeting or investment pitch, being surrounded by seasoned professionals can make you lose confidence and self-belief as a young entrepreneur. You might even experience impostor syndrome, and some may underestimate you because of your age.
But remember that, at some point, most successful entrepreneurs were exactly where you are now. Confidence grows over time, and your passion for your business idea will help drive it, so give yourself time and credit.
How to build entrepreneurial confidence
If you lack confidence and self-belief, you’re not alone. Some business owners even struggle with this years down the line. Here’s how you can boost your confidence as a young entrepreneur:
- Project professionalism from day one: This includes having a registered office address, a custom email address, and a well-designed website. These small touches make a big impression.
- Preparation is key: The more preparation and research you do, the more confident you’ll feel. Anticipate questions investors and clients might ask and prepare a response.
- Boost your knowledge: Knowledge is power. Become an expert in your field and never stop learning.
In summary
Entrepreneurship can present challenges at any age. For young business owners, this is often reduced access to funding, a skills gap, a drastic change in their work/life balance, and a lack of confidence. However, there are numerous ways for young aspiring founders to overcome these challenges, and they should not feel restricted by their age.
For guidance and helpful business resources, visit the 1st Formations website. 1st Formations is the UK’s best company formation agent, guiding business owners before, during, and after launching their companies.