Young entrepreneurial Australians wanting to start new businesses are falling behind their US counterparts and continue to struggle to access funding, according to the Foundation of Young Australians.
In its post-draft submission to the Productivity Commission’s inquiry into the barriers of starting and closing businesses in Australia earlier this month, the Foundation for Young Australians (FYA) said while Australia might be among the top nations globally when it comes to fostering entrepreneurship, young entrepreneurs aged between 18 and 24 were lagging behind.
The submission also follows recent reports that access to finance remains a significant barrier for many small businesses in Australia, with many resorting to using credit cards and relying on loans from family and friends.
Citing new 2014 Global Entrepreneurship Monitor data for Australia, the FYA told the commission the peak age for early-stage entrepreneurial activity in Australia is occurring among 25-34 year olds, which is consistent with other countries around the world.
However, in the earlier cohort of 18 to 24 year olds, only 8.7% of young Australians are starting new businesses, compared to the average rate of 13.1% across all age groups.
This group was also found to be the age group most lagging behind the US when it comes to the percentage of those engaged in entrepreneurship.
“This data reveals a gap in the PC’s Draft Report, which includes no analysis of young entrepreneurs despite their current and future potential as a driver of jobs growth, self-employment and innovation,” the foundation said.
According to the FYA submission, common challenges and barriers faced by young Australian entrepreneurs include access to finance, human resources and people management, and knowledge and education about legal and regulatory structures.
The foundation, which also conducted its own survey of young entrepreneurs in its Young Social Pioneers accelerator program, found more than three quarters of young entrepreneurs experienced difficulties accessing finance, 40% lacked knowledge about legal structures and regulations and two-thirds were using personal savings to keep their business afloat.
“Access to finance is a major barrier for young people in starting or growing a business,” the foundation said.
“For young entrepreneurs without significant asset holdings (including housing), obtaining commercial loans is difficult.”
The FYA argues to boost the level of entrepreneurship in young Australians, education and accessible investment options are needed.
“Australia is one of the only advanced economies without dedicated youth entrepreneurship initiatives, supported wholly or partly by government. Countries like the United States, Canada and Germany all have initiatives to back youth entrepreneurship,” the FYA said.
Read the rest of this article at Smart Company, where it originally appeared