Difficulty obtaining finance and a shortage of skilled workers continue to undermine the ambitions of young UK entrepreneurs. Surveys by the Institute of Directors and other business bodies have long flagged these issues, and the latest evidence shows they remain the two biggest barriers for founders under 35. Women entrepreneurs often face the steepest climb.

The UK still ranks as one of Europe’s most entrepreneurial countries. The government-backed Start Up Loans programme, which includes targeted support for women through its Female Founders initiative, had lent more than £1.1 billion to over 110,000 businesses by early 2025, with around four in ten loans going to women, according to British Business Bank figures. Yet the journey from start-up to scale-up is fragile. Beauhurst data shows equity investment remains subdued after the 2021 peak, and the number of high-growth companies has flattened.

The skills squeeze is now the top barrier for young UK entrepreneurs

For young entrepreneurs, recruiting people with the right skills is now one of the most commonly cited barriers to growth. ONS data from early 2025 put UK job vacancies at around 800,000, while employer surveys by the Chartered Institute of Personnel and Development and the Federation of Small Businesses repeatedly identify shortages in digital, engineering, green technology and artificial-intelligence roles. For founders building tech-led or service businesses, this talent squeeze pushes up wages, slows product development and can force them to take on specialist work themselves.

The shortage is particularly acute for small employers. CIPD research from 2025 found that more than two in five UK employers have hard-to-fill vacancies, with small firms least able to compete on salary or benefits. Growth Hubs, apprenticeships and sector-specific bootcamps can help, but many young founders do not know where to find them.

Why women founders feel the shortage most

The skills shortage is not evenly felt. Women remain under-represented in STEM education and careers, which limits the pipeline of female founders and employees in the fastest-growing sectors. Research from the British Business Bank and the Alison Rose Review of Female Entrepreneurship, summarised in our Women in Business: Key UK Facts page, shows that women-led businesses are more likely to operate in retail, care, hospitality and professional services. These sectors have lower margins and slower access to high-value networks. Closing the gap therefore requires more than training: it needs visible female role models, flexible apprenticeships and targeted support for women returning to work or switching careers.

Access to growth finance remains the second major hurdle

The British Business Bank’s Small Business Finance Markets report found that around four in ten smaller businesses sought external finance in 2023/24, yet many were discouraged by perceived affordability and complex application processes. Bank lending to SMEs has tightened, and equity finance is still concentrated in London and the South East.

The funding gap for women founders

For women founders, the funding gap is stark. All-female founding teams receive only around 2% of UK venture-capital investment, and women are less likely than men to apply for equity or debt in the first place. The Alison Rose Review estimates that closing the gender entrepreneurship gap could add up to £250 billion to the economy. Women are also only half as likely as men to start a business, so improving access to finance is not just a fairness issue, it is an economic priority.

Five practical steps to reduce the barriers

• Map your skills needs early. Use free government skills assessments, local Growth Hubs and sector bodies to identify gaps before you recruit. Knowing whether you need a developer, a marketer or an operations manager six months ahead changes how you budget and hire.
• Build a diverse talent pipeline. Offer apprenticeships, internships and flexible roles, and partner with universities, coding bootcamps and women-in-STEM networks. Flexible working is no longer a perk; for many young founders it is the only way to access talent outside London.
• Prepare your finances like an investor. Keep clean management accounts, a clear cash-flow forecast and a concise investment deck. Update them monthly so you can respond quickly when a grant window or investor conversation opens.
• Explore the full funding mix. Do not rely on a single source: combine grants, loans, equity and customer revenue where appropriate. Start Up Loans, peer-to-peer lending, revenue-based finance and angel networks all offer alternatives to traditional bank debt. Tax-advantaged schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme remain valuable, though founders should take professional advice before structuring a raise.
• Join a network. Women in business networks, mentoring programmes and sector communities provide peer support, introductions and credibility. They also surface opportunities, from pitch competitions to procurement frameworks, that are rarely advertised openly.

Turning barriers into a growth plan

Skills shortages and access to finance are no longer just start-up teething problems; they are structural challenges that shape who can scale a business in the UK. For young UK entrepreneurs, and especially young women founders, addressing both simultaneously through better skills planning, smarter funding strategies and stronger networks is the clearest route from ambition to sustainable growth.