More young people are choosing the school of life over higher education, as a new report records a rapid increase in the number of student entrepreneurs starting a side hustle.
Student accommodation provider Fresh analysed Companies House data to find that a total of 4,093 businesses were registered by students in 2022. The vast majority of these were launched by Gen Zers (those aged between 18-25).
The figures represent an astonishing rise year-on-year since 2019, suggesting they could be a legacy of the COVID pandemic. In 2021, just 847 companies were created by students, signalling an uplift of 400%.
The pandemic has severely disrupted the jobs market and school careers of young people. The Fresh data suggests that many are now taking matters into their own hands by turning their side interests into a new business opportunity.
Students excel in dropshipping and ecommerce industries
The research revealed that 16-25-year-old entrepreneurs are overwhelmingly in favour of starting an ecommerce business.
The online retail industry boomed during COVID. Office for National Statistics (ONS) data shows that in May 2022, internet sales accounted for 26.6% of all official retail sales, compared with 19.7% in February 2020.
But young people are also more attuned to the digital technologies required to run an online firm. Dubbed the ‘iGeneration’, this age group has grown up with the internet and is well-poised to reign supreme in the world wide web.
One recent GoDaddy survey shows that 92% of young people place great importance on online channels, compared to 88% of all other age brackets. They also consider having a website and using social media marketing to be important for their business.
Another draw for this industry could also be the cheap starting costs of running an online business, such as starting a dropshipping firm.
Other popular areas for young entrepreneurs include advertising agencies, as well as hairdressing and beauty treatment businesses.
Dissatisfaction with higher education could trigger side hustle boom
The rise in the number of young entrepreneurs is likely a result of growing dissatisfaction with higher education degrees amongst students.
Post-COVID, many universities have switched to a remote learning model, with courses being run online. Academic tutors have also been striking throughout the year, leading to many hours of learning time lost.
Alongside the cost of living crisis, which has seen accommodation fees skyrocket, many undergraduates are now questioning the return on investment for their tuition fees.
Startups research shows that university students expect around £5,000 more from a starting salary that the average employer offers. As a result, employers are turning away from hiring graduates, as higher pay stipulations become unaffordable for cash-strapped businesses.
Starting a business is a natural solution to the issue, as a way to boost income while also gaining important skills and experience for a graduate career or venture.
Entrepreneurial uplift set to continue
The upward trend for entrepreneurship looks likely to continue. According to research from freelance marketplace Fiverr, 36% of Generation Z employees say their ultimate work goal is to run their own company.
Shifting work norms – such as the advent of flexible and remote working – mean young people are increasingly starting a side job, taking advantage of shortened commute time and great work-life balance to freelance.
Their reasoning is sound. Side hustle entrepreneurs can earn more than the annual living wage – without even leaving your full-time job.
Sam Scott, managing director of Fresh, said: “The spike in numbers following the pandemic shows a desire for increasing numbers of students to carve their own path.
“The ambition and talent displayed by the student population as they pursue their own businesses is hugely impressive. Starting any kind of business, whether it’s to pursue a hobby or grow it into a larger company, requires digging deep for determination and focus.”
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