Borrowing from the so-called ‘Bank of Mum and Dad’ is nothing new when it comes to buying your first home, but new research suggests that the latest generations of school and university-leavers are now turning to the parental moneybox to fund a new business venture.
Research by WorldPay suggests that as many as one in ten entrepreneurs has secured funding from their parents and other relatives. That figure equates to half a million young people using funding from their parents to launch their own businesses, with those aged under 35 twice as likely as older generations to ask to borrow money from family members.
With the number of young people in self-employment having doubled since 2001 according to Government figures, another interesting finding of the research was that over a third of young people believe that starting a business is a better investment than getting a degree. Among millennials, that figure is 43%, suggesting that the soaring costs of university tuition fees have led many to question the real value of a university education versus getting straight onto the career ladder.
This attitude ties in with a wider shift in the way we view work. The traditional 9 to 5 job is more unattractive than ever in the wake of technology that’s facilitated other ways of working, from flexible working to digital nomading. In fact, the UK start-up scene is bucking the economic trend in the UK, growing 5% in the last year, reflecting the fact that more of us are turning to self-employment to take our careers into our own hands in the face of economic uncertainty.
Although starting your own business takes a lot of hard work and dedication, it’s little wonder that the freedom it offers presents an attractive prospect to young people when compared with the limitations of a regular desk job. When the mounting debts faced by young university-leavers are factored in, the decision to enter higher education or start work is one that requires serious thought. Either way, with or without financial support from parents, getting into the entrepreneurial spirit can be a great way to start earning big bucks whether you’re a recent graduate or skipping university to launch a start-up.
If you’re thinking about taking the plunge and starting your own business, however you’re planning to fund it, take a look at our guide to becoming self-employed and find out what insurance you need when you’re self-employed.