The U.S. Small Business Administration has released the first report in a series on “trends in entrepreneurship.” The first report is called The Missing Millennial Entrepreneurs. It is an interesting read that is highlighted by the declining self-employment numbers overall.
After reading the report, there were two things that stood out to me the most. First, self-employment has increased for individuals over the age of 55 which has been called “encore entrepreneurs” by the SBA. Second, the “startup” hype that has flowed from the media touting big money and venture capital interest is not as prevalent as it may seem.
It Gets Better with Age
The report did not issue any suggestion as to why entrepreneuship is on the decline overall. While the decline has been more generational, the report suggests that at some point Millennials could outpace baby boomers in the self-employment numbers.
Even with this being the case, the truth is that for generations, the idea of getting a good “steady” job was part of the ongoing discussion between parents and children. Especially for Generation X (yes, that is me), this means having a stable income, climbing the corporate ladder, and creating a nice retirement.
After the financial crisis in 2008, Generation X learned that “steady” jobs no longer existed and employment is at the will of the employer no matter how good you are at your job. Moreover, learning how to be self-sufficient became a necessity and a way of life. This is something that baby boomers may have learned earlier in life due to the time period in which they were born.
More importantly, as the change in the economy shifted the need to earn “your own” money become a way of life for many Generation Xers. This means that the age at which you decided to become self-employed may be related to the age at which you realized that this was the best avenue for your life. It would make sense that becoming self-employed later in life would be the result of changes in the workforce.
Things Are Not Always as They Seem
The report made an interesting analysis. “The spectacular entrepreneurial success of some Millennials and the proliferation of the programs designed to replicate that success together create that impression of a generation in which entrepreneurship is thriving. However, our examination of survey data exposes a different reality.”
I found this interesting because if you keep up with all of the ins and outs of the startup and crowdfunding news, you would believe that money is flowing from the skies and that the barriers to funding have been removed. However, this is not the case and it is just as hard to start a business now as it has ever been. Perhaps even harder.
One reason for this hardship is how noisy the consumer world has become. Everyone has become so consumed with being heard in cyberspace that you may have to go back to the 1800s and figure out how to use carrier pigeons to get your message out. The numbers suggest that it is not as noisy as you may think.
The declining numbers in self-employment mean that there is less competition not more. The feeling that there may be more is the megaphone that is called the World Wide Web. Can you be loud enough to be heard?
Who Cares and What Does Any of This Mean?
As business owners, we have to be aware of how we are impacted by economic trends. Big business continues to monitor and follow trends in the market. That is how they stay in business. Small business owners need to do the same.
The report states that “low entrepreneurship among Millennials implies fewer new businesses and may therefore have negative implications of economic growth.” The relationship between business ownership and the economic growth of the country is closely related.
Concern about how many new businesses are being started (and staying in business) is legitimate. It directly impacts how your business is run and the ability of consumers to purchase goods and services.
The good news is that the millennial generation is on track to surpass baby boomers in numbers. This means that even if they are not becoming self-employed today, that they will at some point and understanding how they engage in business now will make a difference in how you address them as consumers. Many of them have dreams of owning their own business and are not necessarily tied emotionally to their employer.
As an employer, you will want to create that feeling of empowerment and ownership in your young employees. In addition, if you service business owners, you want to make sure that you are giving future business owners a way in. Be a place to come once they decide to enter the world of self-employment.
Lastly, it means that you should be aware of what is happening in and around your particular industry. Things change quickly and you do not want to be left behind because you were not knowledgeable enough about the changes taking place in your industry.