The report from Venture Forward, a six-year-old international research initiative by GoDaddy that analyses data from more than 300,000 microbusinesses across Australia, found that 20 per cent of entrepreneurs who didn’t continue their education past high school reported an annual turnover of over $180,000, almost matching those with degrees (21 per cent).

Furthermore, eight per cent of entrepreneurs with no degrees reported that they earn a whopping $50,000 a month, compared to seven per cent who do have one.

The Australian Bureau of Statistics (ABS) previously reported a decreasing number of those studying beyond high school due to the rising costs of higher education. In 2023, the ABS reported that 61 per cent of people aged 15-24 years were at school or enrolled in further study compared with 63 per cent in 2022 and 65 per cent in 2021.

Another research revealed that the average student loan debt now exceeds $26,000 on graduation.

The GoDaddy research noted that the above factors may have contributed to the rise of younger entrepreneurs who have decided to side-step university altogether as they find entrepreneurship to be a valuable and rewarding path regardless of the educational level attained.

The research also noted that generational mindset shifts and lower barriers to entry as driving forces behind the rise of entrepreneurship. In fact, 17 per cent have left education after high school to entrepreneurship. When looking specifically at Gen Z entrepreneurs, this figure increases to 22 per cent.

In parallel, digital solutions and generative AI have lowered the barriers to entry for starting a business. 27 per cent of Aussie entrepreneurs shared that only less than $500 was needed to start their business, including 13 per cent who said that no start-up capital was needed at all.

Tamara Oppen Vice President Developed English Markets for GoDaddy commented, “With university costs rising against a challenging economic backdrop, GoDaddy’s research indicates a generational mindset shift has occurred or is taking place in the way young people look at entrepreneurial success.

“In many ways, it’s never been easier to set up your own business. From low start-up costs to revolutionary AI experiences like GoDaddy Airo now available, Australian entrepreneurs and microbusiness owners have a wealth of knowledge and resources at their fingertips to now build websites, online stores, logo makers, professional email and connect with their customers on social media easily and quickly,” Oppen added.

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In particular, 68 per cent of the respondents are motivated to start their own businesses out of a desire to improve their income. Other reasons include an outlet to enjoy their work (56 per cent), desire for work-life balance (48 per cent), desire for career control and creativity (37 per cent), and wanting to leave a toxic work environment (14 per cent).

The drive towards entrepreneurship is seen to be spearheaded by younger generations, with 38 per cent saying they would start a side hustle and 17 per cent would start a small business for their sole income. 

Small Business Loans Australia also noted that the younger the age group, the more likely they are to start a small business or side hustle in the next five years. In fact, 51 per cent of under-25s would start a side hustle, closely followed by 49 per cent of 35 to 44-year-olds.

Alon Rajic, Founder and Managing Director of Small Business Loans Australia, says: “Overwhelmingly, Australia’s high cost of living is driving the motivation behind a desire for an additional income. With financial pressures mounting and no sign of easing, people realise they need to find ways to meet their living expenses.” 

Rajic added, “Small businesses enable them to earn more in the hours available around their main job. There is a certain amount of freedom and flexibility in small business, and that’s essential when you are starting something new and working around other employment.”

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What it found was that 48 per cent are motivated by the desire to be their own boss, followed by flexibility of work hours (36 per cent), identifying a gap in the market (25 per cent), and being inspired by successful entrepreneurs (20 per cent), which was particularly relevant for Gen Zs (at a much higher 48 per cent). Side hustles are also a key motivator, with 19 per cent being driven by another income stream.

The research also found that for 35 per cent of SME leaders, their business was profitable within the first year. However, on average, it took 2.3 years to turn a profit. In the meantime, 63 per cent of SME leaders fund their current business through their own savings, nearly twice as many as those who used a loan from a financial institution In terms of support.

A total of 28 per cent said their family provided the most help when they first started their business, followed by partners, and then mentors. The finding corroborates previous research that one third of start-ups have turned to the ‘bank of mum and dad’ for funding.

While business owners can reap great rewards, the research also took note of the challenges they face. Cashflow was the biggest hurdle surveyed businesses had to overcome in the first two years of establishing a business (27 per cent), in addition to long hours (17 per cent) and operating without making a profit (16 per cent).

Westpac released the report in conjunction with the introduction of their business loan offerings for start-ups and scale-ups, as part of its commitment to support the next generation of business owners who want to be their own boss and contribute towards Australia’s economic growth and innovation.

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Why? Because non-bank lending is more willing to take a chance on entrepreneurship and innovation for businesses with strong bona fides. Now, the business community is waking up to the potential of the non-bank space – which in turn is driving growth in that sector.

As an expert in securing funding opportunities for business, I’m seeing this shift happen in real time. There’s been a seismic shift towards private and non-bank lending, driven largely by investors seeking higher yields of seven to ten per cent. Previously, this investor interest was from other sources such as commercial property, but with lower returns now in these types of investments, the focus has shifted. There are 2.5 million SMEs in Australia, which represents a significant proportion of the national economy.

According to the Reserve Bank of Australia (RBA), non-bank business credit is experiencing a sharp rise, reaching an annualised growth rate of 25 percent by early 2023. The Reserve Bank of Australia noted that “non-bank lending supports economic growth by providing an alternative form of funding and increasing competition for lending”.

This growth is fueled by several factors. Non-bank and private capital lenders have filled the void left by banks, especially in higher-risk lending sectors such as construction, property, and vehicle financing. Banks have retreated from these areas due to regulatory pressures and a strategic focus on minimising risk on their balance sheets.

Take the case of Providior, a company based in Queensland that specialises in funding for legal firms.

“Personal injury law is a sector that is largely overlooked by the big four banks because of the long tail cashflow cycle,” says Providior Managing Director and CEO Jo Cope.

“There is real financial pressure on a law firm running these cases as it’s at often 18 months before a law firms sees a cent of their professional fees.”

As a result, Providior turned to non-bank funders iPartners, who provided a significantly larger facility with scope to more than double the business over the next three years.

It’s an example of how non-bank lenders are stepping in to fill a void. When applying for funding from the banks, in many cases rejections are due to just one or two criteria not being met. It would be a case of ‘computer says no’ and once an application for funding was rejected, that was it.

It can be a difficult process to navigate, but non-bank lenders can take a more bespoke, collaborative process which is much easier for small and family businesses to handle.

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The research found that 70 per cent of Australians have a desire to own their own business if all other factors were equal. This interest spans across age groups, with younger demographics showing the highest entrepreneurial enthusiasm, with 84 per cent of 16-24s having entrepreneurial ambitions. And 21 per cent) already own their own business, while another 21 per cent have seriously considered starting one.

Among Australia’s aspiring entrepreneurs, the top reasons cited for starting their own business are the opportunity to earn more money (58 per cent), a desire to be their own boss (50 per cent), and work flexibility (40 per cent).

In addition, 13 per cent of those seriously considering owning a business are driven by concerns about perceived job obsolescence due to technological advancements. Exemplifying this issue is the fact that 16 per cent of business owners in Australia started their venture after being made redundant from their previous job.

Despite the prevalent drive towards entrepreneurship, many are being held back by high barriers to entry, with 50 per cent citing financial obstacles as a key issue, 35 per cent citing lack of confidence, 34 per cent citing lack of knowledge, and 24 per cent citing concerns about their skillset.

With regards to the financial challenges, the research found that 73 per cent would be prepared to invest their own money but 43 per cent expressed a lack of money to start. In particular, 20 per cent cited high interest rates on business loans as a key challenge

When asked which factors would make them more interested in starting a business, 58 per cent answered that government programs to support potential business owners could sway them, while 43 per cent said that a decrease in the cost of living would encourage entrepreneurship.

While the majority of Australians want to be their own boss, their ability to fund the business could be limiting.

“Australians are enthusiastic entrepreneurs, particularly younger Aussies,” Shaun Broughton, Managing Director for APAC at Shopify, commented. “Addressing financial obstacles is essential to unlock a vibrant entrepreneurial ecosystem and unearth the potential of aspiring entrepreneurs across the country. By enhancing access to funding, reducing financial risks, and encouraging people to start a business, we can help reduce barriers to entry for Australian entrepreneurs to drive stronger economic growth, innovation and employment for all.”

The research also found that despite the initial failure some business owners experienced in their entrepreneurial ventures, it has not held them back from building new businesses. In fact, 38 per cent of entrepreneurs previously started a business that was unsuccessful, while 46 per cent had at least one previous business before achieving success A further 32 per cent had two to three unsuccessful businesses first

Support networks and prior experience in their chosen field were seen as strong enablers for entrepreneurship. The research noted that 40 per cent of Australian business owners said that encouragement from people they knew was particularly helpful when they started out. Other enablers include support from family and friends (cited by 41 per cent of aspiring entrepreneurs), prior work experience (cited by 38 per cent), and personal and community networks (cited by 24 per cent).

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According to the research, 61 per cent of Australian entrepreneurs are running their side hustle business alongside their full-time job, citing lower barriers to entry thanks to the availability of a wide range of online tools and services that enabled them to set up new ventures.

Over a quarter, 29 per cent, of respondents said that their venture cost as little as $500 to start and 56 per cent managed to have spent less than 10 hours a week running their venture, yet more than half make at least $500 per month, supplementing their main income in the process. Meanwhile, 19 per cent are making more than $2500 per month, demonstrating the earning potential that side hustles can offer.

The research also shows that side-hustlers are an ambitious group, with 83 per cent planning to grow their revenue to a level that will enable them to quit their day job. Meanwhile, those who have already jumped into the entrepreneurial path are reaping significant rewards, with 63 per cent reporting revenues of at least $5000 per month while 22 per cent are generating more than $25,000 monthly or $300K a year.

On a more cautious note, the report also highlights the sacrifices Australian entrepreneurs are making to reach those figures, with 22 per cent saying that they work more than 40 hours a week on their business, and 47 per cent that they experience high stress levels. Despite these sacrifices, 64 per cent said that life for them has become better after becoming an entrepreneur.

The research also noted that 52 per cent of microbusinesses were set up after 2020 and 39 per cent employ at least one other person. This contribution is set to grow further, as 40 per cent expect to employ at least one other person in the next twelve months.

While only 25 per cent of Australian entrepreneurs feel optimistic about the national economy over the next six months, 71 per cent are positive about their business prospects. Moreover, 94 per cent say they are confident in their ability to run a business.

“Our Venture Forward data is unique in its ability to capture and analyse microbusinesses and demonstrates their enormous economic contribution to the Australian economy,” Tamara Oppen, Vice President of English Markets at GoDaddy commented. “Collectively, they have the power to add billions to the economy, while providing jobs, improving pay and increasing GDP in their local communities. Microbusinesses are the engine of both their local and the Australian economy.

“We have very few studies that focus specifically on companies with under 10 employees,” Oppen added. “They are under-researched, misunderstood and often under-served. We are determined to support and empower the everyday entrepreneurs.”

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And why not? With an established brand name, a tested business model, and a support system in place, owning a franchise can be a significantly less daunting proposition than starting from scratch.

The allure of a recognised brand

First and foremost, the chief attraction for many potential franchisees is the opportunity to associate with a well-known and established brand. Brand recognition is paramount in business success. Consumers, recognising and trusting a brand, are inclined to support its associated ventures. Rather than investing time and effort into building a brand from scratch, fraught with uncertainties, entrepreneurs can leverage an existing successful brand.

A blueprint for success

Starting a business is often compared to venturing into uncharted territory. However, with franchising, the territory comes with a map. Most franchises equip owners with a well-versed business model, covering store design, inventory recommendations, marketing, and operational norms. Instead of constraints, these guidelines are more like a secret sauce to success. They minimise the experimental phase that solo ventures often undergo, accelerating profitability.

Support every step of the way

Another compelling reason for the rise in franchise ownership is the unparalleled support that franchisors offer. This support can take many forms: training for the owner and staff, marketing and advertising assistance, ongoing operational guidance, and even financial support in some cases.

For new entrepreneurs, this is akin to having a safety net during their business initiation. Unlike standalone ventures that often tackle challenges in isolation, franchisees benefit from a larger supportive network.

Challenges and considerations

Of course, franchising is not without its challenges. Initial investment costs can be substantial. Ongoing royalties might weigh heavily, particularly in slow months. There’s also the potential trade-off in autonomy. Those seeking complete control might find franchising restrictive. However, when weighed against its advantages, these hurdles seem surmountable for many.

Looking ahead

With an increasingly saturated market, franchising’s appeal is set to surge. It provides a viable platform for a broad spectrum of individuals, even those lacking business know-how, to run their firms. Franchising isn’t limited to fastfood; it spans from fitness clubs to tech services. This versatility makes it more enticing to a wider range of entrepreneurs.

If you’re sold on the idea of franchising and are eager to explore this avenue further, here are five actionable tips to ensure a smoother entry:

1. Research & Self-evaluation: Ascertain your interests and involvement level. Assess your strengths, budget, and areas of interest. Match this with potential franchisors.
2. Consult with Franchisees: Interact with existing franchisees for invaluable insights into daily operations, hurdles, and perks of the franchise.
3. Financial Comprehension: Be aware of all financial requirements, including initial costs and ongoing expenses. Also, I recommend you seek both financial and legal advice, especially from professionals experienced in franchising.
4. Examine the FDD: Franchisors legally provide a Franchise Disclosure Document (FDD). Delve into it for information on operations, finances, and legalities. Consider hiring legal counsel for its intricate details.
5. Evaluate Cultural Compatibility: Ensure your values align with the franchisor’s ethos. A business thrives not just on profits but on shared values and mutual objectives.

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The program is open to all women with new business ideas for a chance to share in $60,000 equity-free funding so they can realise their business dreams in key areas that are critical to the Australian economy.

Supported by the Australian Government and launched in February by Minister for Women, Senator the Hon Katy Gallagher, this year’s Kickstarter Challenge is keen towards helping women-led business pitches in the sectors of STEM and technology; Health, wellbeing and the care economy; Climate change and sustainability; and Women’s economic equality.

The Kickstarter winner will be awarded $30,000 equity-free seed funding and the finalists will each receive $7,500 to develop their business, in addition to mentoring opportunities and introductions to a community of like-minded female entrepreneurs. There will also be a People’s Choice award will be decided by popular vote before entries close in mid-October.

Last year’s inaugural winner, 24-year-old Hailey Brown, used her prize money to expand her inclusive travel app Vacayit which provides immersive audio guides to travellers who are blind or have low vision.

“Joining the Accelerator for Enterprising Women was truly a pivotal moment for Vacayit,” Brown said. “Enterprising Women’s invaluable funding, resources, mentorship and community helped us propel our business to new heights.” 

Launched in January 2021, the Accelerator for Enterprising Women aims to empower women to turn their business dreams into reality with practical pathways designed to shape and grow ideas, providing them the confidence to take the leap into entrepreneurship.

The initiative seeks to address the ongoing gender gap in entrepreneurship. A 2022 Deloitte study found that despite recent growth in the number of female founders, only 22 per cent of Australian start-ups were founded by women with only nine per cent of capital-raising deals going to female founder teams. Another report by Xero noted that only 36 per cent of small-business owners are women, despite an increase of 40 per cent since 2001.

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The Shopify Entrepreneurship Index, a new global study in partnership with Deloitte, uses data on the millions of entrepreneurs in Shopify’s ecosystem and public data from the IMF, OECD, and the World Bank.

The report highlights the fact that, within the Shopify ecosystem, Aussie entrepreneurs collectively generated over AUD$42.1 billion in business activity in 2022 and contributed AUD$17.7 billion in the country’s GDP.

“Entrepreneurs are the fuel that drives economies forward,” Harley Finkelstein, President of Shopify, said. “They create jobs. They anchor communities. They make an impact that goes far beyond their own business.

“Previously, there wasn’t enough public data showcasing the superpowers and impact of entrepreneurship, and thats why we created the Shopify Entrepreneurship Index,” Finkelstein added. “Our goal is to give decision-makers the insights they need to reduce barriers and make entrepreneurship even more accessible to everyone.”

Shopify say that Australian entrepreneurs for ‘punching well above their weight’, managing to rank third in the world in terms of direct impact on GDP, behind only the US and UK, and for having directly created over 69,000 jobs as well as having supported over 151,000 jobs in total.

The report cites Australia’s success as being in part down to conditions that favour entrepreneurship. Businesses in Australia benefit from the country’s well-developed physical and digital infrastructure and highly-skilled workforce. The 2023 United Nations Conference on Trade & Development Technology & Innovation Report ranked Australia first globally for the skills needed to use, adopt and adapt frontier technologies.

“Australia has a digitally savvy population, and retailers have caught onto this by doing really innovative things with technology,” Shaun Broughton, Managing Director for APAC & Japan at Shopify, said. “We see this in the adoption of cutting-edge tools like AI, and virtual reality to enhance the customer experience. Australian entrepreneurs are already at the forefront of using technology to drive growth, so it’s exciting to see the impact they’re having on the country’s economic impact as a whole.”

The research cited the numerous government initiatives that encourage entrepreneurship, with programs to upgrade digital tools, cybersecurity, and energy efficiency, including those announced at the recent May Budget. It also identified some key opportunities for growth for Australia, one of them being regional and rural entrepreneurship. Currently, 71 per cent of Australian entrepreneurs run their businesses from inside a major city, which is considered exceptionally high, considering its geographical size.

“Australia is punching above its weight on many fronts, but there’s still significant untapped potential,” Broughton said. “As the majority of our business activities are concentrated in major cities, it fosters a dynamic atmosphere and creates job opportunities. However, the rise of eCommerce means businesses in regional Australia can now reach the same metro, or even global audience, as their big city peers, while spending much less on property than their counterparts.”

The report also cited exports as an untapped opportunity for Australian entrepreneurs. Australian entrepreneurs exported AUD$2.8 billion worth of goods in 2022, which represents a small decline of -0.8 per cent. Currently, Australian entrepreneurs are selling to an average of ten international markets, reaching 92 million international shoppers, which accounts for 30 per cent of online store visitors. Australia saw the most significant decline in growth, at 32nd globally. But the silver lining is that a more competitive investment in export strategies would have pushed Australia into the top five countries for entrepreneurship.

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CPA Australia’s latest Asia-Pacific Small Business Survey shows that while Australia has the highest percentage of small-business owners aged 50 and above in the Asia-Pacific region, the country only ranked ninth out of 11 when it comes to the proportion of small-business owners under 40. Furthermore, Australia is ranked among the worst in Asia-Pacific for attracting young people into small-business ownership.

“Where have all the young business owners gone? They’re ‘Generation MIA’ when it comes to small businesses,” CPA Australia Senior Manager Business and Investment Policy, Gavan Ord, remarked on the research findings, adding that the organisation has urged the Federal Government to hold a public inquiry to find out what is stopping young people from set up their own businesses.

“The survey results show that young business owners and founders are a necessary ingredient for Australia’s economic future, our digital capabilities and future innovations,” Ord said. “We need Australians of all ages running and owning small businesses. Diversity brings huge benefits to the economy. The absence of young people has long-term implications.”

The failure to attract young people to entrepreneurship has been attributed to the low level of digital capability of Australian small businesses compared to their Asia-Pacific peers and are among the least likely to innovate in 2023.

In fact, 30.4 per cent of small businesses in Australia are not using social media, compared to the Asia-Pacific average of 15.4 per cent. In addition, only 18.8 per cent of Australian small businesses sought advice from technology consultants last year. And the businesses that did invest in technology have focused more on updating their website and computer hardware rather than adopting new and innovative options such as artificial intelligence.

The lack of digital know-how within Australian small businesses extends into cybersecurity, with only a quarter considering cyberattacks to be a possibility in 2023, compared to an Asia-Pacific average of almost half.

“Australia’s small businesses are unlikely to innovate,” Ord lamented. “Only 14 per cent are intending to introduce a unique product or service to the market in 2023. This is the worst result in Asia-Pacific. A lack of innovation is a drag on economic growth and productivity that we will feel for years to come.

“Encouraging new talent to launch small businesses can boost long-term innovation,” he added. “The government needs to ensure running a small business is an attractive option for young people who can bring their digital skills to the sector.”

On a more positive note, the report notes that Australian businesses had their best year in five years in 2022, with 47.6 per cent of small businesses growing. This year is likely to be even better for Australia with more than 55 per cent of businesses expecting growth despite current and future economic challenges.

“It’s understandable that some young Australians are questioning whether business ownership is worth the stress and commitment. The pandemic, rising cost of living, high property prices and global uncertainty are adding to their doubts,” Ord said. We want young people to seize the opportunity to control their own destiny. This is a huge chance to inspire and encourage young people into the business community as Australia continues to recover. We want the government and current business owners to explore how to attract young minds into this critical sector.”

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