Why small businesses are the backbone of regional Australia

From cafés to saddleries, clothes shops to influencers, bakers to car washers, regional Australia is built on small business.

More than 406,000 new businesses entered the national economy last year - an upswing of 19,000 in just 12 months.

The next generation of entrepreneurs is rising but the challenges in city and regional areas are very different.

For Young and Regional: We Mean Business we spoke to 12 young people across regional Australia to find out how they became integral to their community and built a successful business along the way.

Three key issues are shaping how people under 30 approach a new business: having a financially viable idea, making the business visible, and accessing quality training.

A report from the Organisation for Economic Co-operation and Development (OECD) found youth-led social enterprises face a "double bind" of being change-driven and youth-led that makes it hard to access funding and skills.

Nearly 80 per cent of young participants in the OECD survey were concerned about the financial viability of their start-ups.

Despite the rate of financial failure among new ventures, the number of regional Australians setting up small businesses for the first time was growing, chief operating officer of the Australian Centre for Rural Entrepreneurship (ACRE), Clayton Neil, said.

This suggests more people feel confident investing money in novel ideas than they did before.

And, unlike their city counterparts, most young regional entrepreneurs are not willing to sacrifice their social conscience to make a dime.

"We believe entrepreneurship isn't just a great way for rural communities to create jobs, it's also about social change," Mr Neil said.

"We are seeing a real shift with this next generation around their connection to social issues."

Lloyd Meadows in Castlemaine, Victoria refuses to sell takeaway coffees in order to foster social connections, while Ellen Burns pioneered compostable packaging in her state.

"And it's powerful," Mr Neil said. "[Entrepreneurship] is a key driver of social change in regional areas."

The same OECD report revealed youth-led enterprises often lack visibility.

Professor Sujana Adapa from the University of New England (UNE) has studied regional small business trends extensively.

She found people under 30 often nail social media marketing but lack real connections in their communities.

She believes this is because many young people are balancing entrepreneurial activities with other jobs - exacerbated by rising cost of living pressures.

Many do not have time to market themselves "organically", Professor Adapa said.

"They are studying or doing something else and their start-up idea is something where .. they are trying to find their feet," she said.

Arden Jarrett, in Newcastle, NSW, is a business manager at green start-up MGA Thermal by day and a podcast producer on weekends, for example.

The Regional Australia Institute (RAI), led by chief executive Liz Ritchie, has found choosing the right physical location and early funding are crucial, but this can be difficult when combined with mounting property prices.

Increasingly, young entrepreneurs are turning to temporary ventures to get a foot in the door.

"It could be a fantastic platform for growth to get a small pop-up shop in a high street of a really vibrant regional centre and launch from there," Ms Ritchie said.

"It is much more affordable, it's less risky. These are things people have to consider [early on]."

Solid enterprise training remained a challenge for young people, too.

Unlike older millennial counterparts, who, RAI data has revealed, move back to regional areas after a time of metropolitan living, people under 30 often move to cities for good or stay where they grew up.

ACRE's Clayton Neil said it was "so important" training was offered to the right age groups in the right places.

"That is actually the main focus of [ACRE's] work at the moment - to get enterprise skills and the learning and development programs that are needed, and making them available and accessible for young people right across rural Australia," he said.

Data-tracking, analytical problem-solving, and increased digital literacy were among key areas to be addressed.

Mr Neil hoped this approach would start to "shift the culture" across country Australia so the ideas of young people were "welcomed".

Despite the hurdles, young people are forging their own path.

Mariam Rehman's Habibi Chicken in Wagga, NSW is going so well she's franchising it, while social media is helping others create web-based enterprises using just their smartphone.

Under its Rebalance the Nation framework, RAI hopes to increase the population of people aged 15 to 39 in regional Australia by four per cent over the next nine years.

Strong small businesses from young players will be key to this.

"These changes depend on people moving," RAI chief executive Liz Ritchie said. "If you're starting a new business there is nothing to say it can't be successful in rural and regional Australia."

"The vibrancy that was once believed to only be available in capital cities is absolutely available in rural and regional communities - and that's what these small businesses bring."

RAI data released in July revealed 46 per cent of workers in capital cities would move to the regions for better pay. Two in five would move if a financial incentive was involved.

Increasing numbers of young people are set to move to the bush from overseas, too.

"Lots of migrants are moving," UNE academic Professor Sujana Adapa said.

"As the infrastructure in terms of internet speed, bandwidth increases, I think there will be a lot more start-ups and entrepreneurial ventures," she said.