Young entrepreneurs face financial skills gap

Xero has warned that young people in the UK are attracted to entrepreneurship but feel held back by funding constraints, low confidence, and gaps in financial education.

New survey findings from the global small business platform show that nearly three-quarters, at 72%, of surveyed students aged 16 to 21 are attracted to the idea of running their own business. Yet the same research points to a strong sense of exclusion, with 61% believing entrepreneurship is reserved for people with money or connections.

The findings show that half of respondents, at 51%, see lack of funding as a barrier. Almost as many, at 49%, cite a lack of confidence, while 37% point to a lack of financial skills. That gap is larger than the proportion citing a lack of business acumen, such as sales or marketing skills, which stood at 23%.

Financial freedom remains a major motivation. Six in ten students, at 61%, said it was what drew them to entrepreneurship. However, financial anxiety is tempering that ambition: 67% agreed that starting a business feels too risky in the current climate, and a third said they were worried about their personal finances.

The research lands against a difficult employment backdrop for young people. Xero cited May 2026 labour market data showing youth unemployment at 16.2%, up from 14.2% year on year. Only one in five respondents said they were planning a traditional career path.

Kate Hayward, UK Managing Director at Xero, said: “We’re letting our young people down by not building business financial skills into their education. We have a generation who are ambitious and driven to build something of their own, yet we’re failing to give them the skills and confidence to make it happen.

“We’ve been pushing the Government on this because we see what happens when small businesses don’t have access to the tools, knowledge or support at the start. We hope that the launch of The Maple Review and the headline recommendation of a Business Skills Guarantee marks a turning point for young people and entrepreneurship. The UK can’t afford to leave this talent and ambition on the table.”

The survey suggests young people know the kind of support they need. More than a third, at 34%, said better exposure to real-life business scenarios would help them pursue entrepreneurship. More than a quarter, at 27%, wanted help understanding digital business tools, while 26% pointed to better financial education in schools.

In the absence of formal support, many are turning to informal sources. Parents and family members remain the most likely source of financial business advice, at 42%, but 28% said they would turn to social media platforms such as TikTok, and 23% would use AI-powered searches for support.

Xero is supporting The Maple Review, an independent, government-backed initiative run by Small Business Britain, which has examined economic barriers to starting and running a business. Its final report includes recommendations designed to give young people access to business skills, entrepreneurial role models, and pathways before they leave education.

The gap identified by Xero is not simply about enthusiasm for start-ups. It points to a wider question about whether schools, colleges, employers, platforms, and advisers are giving young people the financial confidence needed to build viable enterprises. For a generation weighing unstable labour market conditions against the appeal of self-employment, basic financial fluency may determine whether entrepreneurial intent becomes a business or remains an aspiration.

Kate Perry, Founder of Chase Canines, said: “I started my business at 21 and quickly realised that running a small business means wearing many more hats than most young people might expect. The extent of the financial skills I was taught at school was learning how to budget, which, while helpful, doesn’t help to pay, claim and file my taxes. If young people were given more exposure to business and financial management earlier on, it could make entrepreneurship feel far more achievable – and it certainly would have given me more confidence when I was starting out.”