Providing a financial education and micro-loan programme and giving all school children access to entrepreneurship education are among the recommendations in a report that says the UK lacks a robust support system for entrepreneurs who have experienced economic hardship.
The Maple Review, an independent government-backed review, said entrepreneurship can boost social mobility for the 14.3 million people living in poverty in the UK, but existing support systems are falling short and failing to reflect the fears of instability and lack of safety nets experienced by this demographic.
The report said a key barrier to entrepreneurship is early life entrepreneurial skills but there are a lack of role models or training. It called for a universal provision providing school age young people with access to support, regardless of location, background, or local support infrastructure.
The study also said there are significant gaps in access to finance for aspiring entrepreneurs from disadvantaged backgrounds. It found that 63% of founders lacked personal savings to invest, while 50% did not know how to find funding. Almost half (47%) struggled to secure start-up loans or grants, and the same proportion lacked confidence in taking on debt.
Many respondents said small funding amounts of between £100 and £5,000 would help but they are difficult to access through mainstream finance options.
The review said a “national micro-capital system” should be introduced which positions micro-loans as “economic infrastructure rather than charity” as well providing support with budgeting, cash flow and forecasting.
Separate research from GoHenry said providing financial education at an early age could lead to an additional 76,400 new businesses being created each year, generate 123,000 extra jobs annually, reduce unemployment by 8% and add £6.98 billion to the UK economy every year.
Other recommendations by the Maple Review were redesigning welfare and self-employment rules so founders are not forced to take unsustainable risks before their businesses are viable, and addressing digital exclusion so everyone has the digital tools, connectivity and skills essential to running a business.
It also said there should be more long term mentoring from people with lived experience and enterprise support to reach women, single mothers, Disabled founders and people from ethnic minority backgrounds to recognise that “poverty and exclusion do not affect all groups equally and that neutral policy risks reinforcing inequality”.
Michelle Ovens, CEO and founder of Small Business Britain, which led the review, said:
“Economic deprivation at any point in life is the biggest barrier to starting and growing a business, and that is exactly what The Maple Review is looking to address. We believe that everyone should have the opportunity to be an entrepreneur, no matter their background or experience, but it is clear from the review’s data that is currently not the case.”
Kate Hayward, UK managing director at Xero, which supported the review, said:
“Too many people with the drive to start a business are still being held back by barriers they should not have to face alone. The Maple Review has shown clearly what needs to change, but the priority now is action.
“My particular concern is for founders without a financial cushion, where confidence around cash flow is fundamental to survival. We want to help open more doors to entrepreneurship and look forward to helping make these recommendations a reality.”
Small business minister Blair McDougall said:
“Entrepreneurship is a powerful driver of growth and social mobility. This review shows that too many with the talent and ambition to succeed are being held back.
“We now have a shared responsibility to act on these recommendations – as we are doing through our plan for small business – so that starting and growing a business is not a privilege for the few, but an opportunity for all.”