Young entrepreneurs accounted for the majority of new business account openings at Commonwealth Bank (ASX: CBA) in FY23 at 63.3 per cent, citing extra income and freedom over their careers as key motivators.
The number of new CBA business transaction accounts increased by 10.4 per cent year-on-year, with Millennials making up almost half (48.5 per cent) of new openings while Gen Z opened 14.8 per cent of new accounts.
The traction in new business account openings appears to have picked up the pace more recently though, with new account openings in the September quarter up 26 per cent year-on-year.
CBA's executive group manager for small business banking, Rebecca Warren, said while it had been a challenging year for small business owners, the significant growth in the number of people starting their own small business revealed a strong Aussie entrepreneurial spirit.
Warren said more women were taking advantage of opportunities to start or run their own business or side business, with women opening up 43.2 per cent of new business transaction accounts in the 2023 financial year.
"An increasing number of younger Australians and women are choosing to start a small business or side hustle to supplement their primary income or as an avenue to pursue new ideas to fill market gaps or build experience and skills in industry segments of interest such as photography or graphic design," Warren says.
"In fact, the creative services were the third most common type of small business/side hustle that entrepreneurs have created in the last three years.
"Aussies are demonstrating great entrepreneurial flair, determination and drive, using fresh approaches to attract customers or target niche areas."
She says the research reveals 51 per cent of new business owners are looking for extra income, and 23 per cent are looking for new opportunities that give them more control, freedom and independence over their careers.
"Women are more likely than men to have started their small business or side hustle because they needed some extra income (56 per cent compared to 48 per cent), while men are more likely to have done so because they saw a gap in the market (17 per cent compared to 8 per cent)," she says.
"Many young people have decided they don’t want to work for anyone else and are looking for greater autonomy to pursue their career dreams and are keen to excel quickly. Starting their own business allows them to take control of their financial future and build a career on their own terms.
"Living in a fast paced, digital world has had a unique impact on Generation Z and the way they approach business and innovation. It’s no surprise that their most common type of small business or side hustle is an online one."
The research revealed strong trends in online retail, the most common type of small business or side hustle (16 per cent), followed by professional services such as accounting or legal (13 per cent), and creative services including graphic design and photography (12 per cent).
The data showed men are more likely than women to have a small business or side hustle in professional services (16 per cent compared to 9 per cent) or handyperson services (9 per cent compared to 3 per cent).
Finding and retaining customers was mentioned as the top challenge for 37 per cent of respondents, followed by not having enough time to run or manage the business how they would like at 32 per cent, which was unsurprising given that entrepreneurs personally spend 19 hours a week on average working on their small business or side hustle.
Dealing with competitors (26 per cent) and managing cash flow (24 per cent) were other common challenges.
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