Engine of economy needs youthful fuel injection
Australia must persuade the next generation of small business entrepreneurs to get into the driving seat – and get us up to speed.
Australia’s small business sector has a young people problem and we need a public inquiry to understand why and suggest how to fix it. That’s the startling conclusion I reached when compiling the results of CPA Australia’s latest Asia-Pacific Small Business Survey.
Out of 11 markets and thousands of businesses surveyed, Australia has the most small business owners aged over 50. We’ve been running this survey since 2009 and this trend has endured. Unfortunately, it has long-term implications we can no longer ignore.
The small business sector is often described as the engine of the Australian economy but right now it’s sputtering. Productivity growth has slowed dramatically. Innovation is sluggish. The take-up of technology is idling.
Our survey found Australia is at the bottom of the league table on too many measures. Australian small businesses fall behind on implementing online sales, social media and emerging tech, like artificial intelligence. The nation also ranks low on innovation and exports. These are all characteristics of high-growth small businesses.
The inability to attract the nation’s young people to this sector is a big part of what is slowing us down.
Older Australians make a huge contribution to the small business sector and no one should discredit any of their effort, abilities or experiences. However, it’s the next generations who have the risk appetite and digital skills required to drive a wave of innovation and productivity improvements that the economy desperately needs.
So what can we do to re-ignite the interest of young people? How do we encourage the next generation of start-up founders and small business owners? What is holding them back from small business ownership?
These are important questions and we don’t have all the answers.
Our members are telling us that some young people who want to launch small businesses struggle to get access to start-up cash to finance their ideas.
Historically, small business owners have used equity in their homes to help fund their initial operations. However, high property prices are locking out young buyers while rising living costs and rents make home ownership more difficult.
The COVID-19 pandemic has also had a detrimental effect. It’s understandable that young people who watched small businesses suffering during lockdowns and global turmoil are thinking twice about the risks involved. And then there’s the long hours often associated with starting a small business and uncertainty, especially when compared to a regular pay cheque.
There are undoubtedly other barriers.
That’s why the first step to fix this issue should be a government-led public inquiry. We need a formal investigation into what is stopping young people from launching small businesses and policies to overcome these barriers.
An inquiry that produces concrete answers to these questions and practical solutions would give us a roadmap to steer us back on track.
The solutions might include the introduction of an incentive scheme that supports young people to open a business. It could include incentives to get advice and new ways to access start-up capital. We need to seek out the best ideas from across the world.
Small business truly is the engine of the Australian economy. Let’s get it firing on all cylinders once again. Let’s get young people back in the driver’s seat.
Gavan Ord is senior manager of business and investment policy at CPA Australia.
