Britain is missing out on a generation of start-ups because entrepreneurs lack financial literacy, says a new taskforce of business owners and accountants.
The recently launched Financial Confidence Taskforce, led by accountancy firm Xero, is today calling on the Government to rethink financial literacy amid a ‘critical chasm’ in confidence.
Its research shows nearly two in five small business owners say they are unaware if they were profitable last month, with more than half struggling with cash flow management.
Younger entrepreneurs are most disadvantaged, with 35 per cent of 18-34 year olds agreeing that they do not have the financial skills to manage their business.
Lack of confidence: A new taskforce is calling on the government to simplify the tax system
A similar number say running their finances was ‘more difficult than imagined,’ compared to 16 per cent of those aged 55 and over.
The taskforce is calling on the government to impose a new strategy, which will help to boost productivity and growth and prevent ‘unnecessary’ business closures.
Chief among its recommendations is to integrate business and personal finances into the curriculum, with a dedicated minister for financial confidence to make departments accountable.
It is also calling on the government to create a ‘National Enterprise Badge’, similar to the Duke of Edinburgh Award.
Taskforce member and chartered accountant Grace Hardy said: ‘You can’t be what you can’t see.
‘It’s critical for young people to see relatable role models who show that financial confidence is a skill anyone can unlock, not a barrier to entry.
‘We need to normalise the conversation around finances and showcase founders who make entrepreneurship feel accessible to everyone.’
The launch of the taskforce comes as the government struggles with growth, and battles accusations that it is not doing enough or small businesses.
Business leaders have made it clear that government policies are doing little to help, particularly since the hike in National Insurance contributions (NICs) and the Employment Rights Bill.
Xero’s taskforce says the tax system is also creating ‘too many exemptions, allowances and cliff-edges which disincentivise small businesses and affect productivity.’
‘We’re a nation of small businesses, but not one that teaches people to be excited by entrepreneurship.
‘Fear of figures can quickly turn people’s aspirations into what might feel like an impossible dream,’ said Kate Hayward, UK Managing Director at Xero.
‘We’re calling for a radical rethink of how to improve financial literacy and show people that running a business is an amazing and rewarding career.
‘For everyone to have a fair chance at it, it starts with building financial confidence early and removing that fear. Unlocking this problem will unleash the economy.’
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