Millennials. Generation Y. Digital Natives. Generation Rent. Echo Boomers. The Me Me Me Generation. Chances are if you’ve read an article about customer engagement or entrepreneurship in the last few years, you’ll have heard at least one of these terms – millennials are the hot audience that everyone wants to tap into. But who are millennials really? And is the reputation that they have for being one of the most entrepreneurial generations ever a valid one? What’s making them tick in entrepreneurship?
Meet the millennial. Born between approximately 1980-2000, millennials span a generation currently making up the largest percentage of the workforce; it’s believed that there are around 80 million millennials in the US alone!
Most commonly, millennials are characterized in the following ways:
- Connected and tech savvy
- Able to multitask well
- A generation that sees work life balance as extremely important
- Easily distracted
- In need of reassurance
- Prioritize work life balance
Some of these skills, coupled with the fact that they’re one of the first generations with a wealth of entrepreneurial and startup role models, seem to leave millennials well-primed to explore entrepreneurship. As millennials are digitally native and technologically savvy, they have more opportunity than ever before to operate in a global market, to be flexible and have more opportunities to reach a wider customer base than ever before – all good news, right?
“Only 2% of millennials in the US classed themselves as self-employed in comparison to around 8% for Gen X and Baby Boomers.”
Another common perception of the millennial generation is that they are dynamic, entrepreneurial and far less likely to follow a traditional career path in the way that the previous generation did. They’re expected to change jobs, be agile and open to change. And part of that is making their foray into working for themselves. Britt Hysen, the editor-in-chief of MiLLENNiAL magazine claims that “60% of millennials consider themselves entrepreneurs, and 90% recognize entrepreneurship as a mentality.” Another study claims that around 62% of millennials “have thought about starting their own business”.
However, the statistics outlining actual self-employment say otherwise. In 2014 only 2% of millennials in the US classed themselves as self-employed in comparison to around 8% for Gen X and Baby Boomers. According to an analysis of Federal Reserve data by the Wall Street Journal, the share of people under 30 who own a business has fallen by 65% since the 1980’s and is now at a quarter-century low. These statistics don’t seem to stack up with the millennial reputation for being one of the most entrepreneurial generations of all time.
According to the Kauffman Foundation – a think tank that focuses on education and entrepreneurship – the average start-up founder is about 40 years old and the only age group with rising entrepreneurial activity in the last 20 years is between 55 and 65. Of course, there are exceptions to this, as demonstrated by many of the young, millennial entrepreneurs operating today.
Let’s explore some of the potential reasons for the differences between expectations and actual uptake of entrepreneurship in this generation:
Increase in student debt
In the last 10 years, there has been an 89% increase in students taking up student debt as part of their education. In the same vein, the amount borrowed by students has increased by 77% during the same period. With these additional commitments, there’s a likelihood that millennials will have less spare cash going forward to invest in a new business. And because of these commitments it might be more difficult for them to raise investment elsewhere. They may also be looking for additional financial stability to repay these outstanding loans which again could steer them away from entrepreneurship and into a job where their salary is guaranteed.
Less home ownership
Tying in with the increase in student debt combined with a rise in house prices and the cost of living has meant, in simple terms, that there are barriers to being able to offer collateral in exchange for financial backing. 30-40% of millennials still live with their parents and many millennials see home ownership as an unaffordable dream.
Less stable economy
Millennials admire startup founders and entrepreneurial role models but are wary of starting a business in an unforgiving economic environment – probably rightly so. 54% of millennials believe that their standard of living will be much lower than that of their parents.
The financial instability that millennials have experienced has led to a more risk adverse generation – over 40% of 25-34 year old Americans said a fear of failure kept them from starting a company in 2014 compared to just 24% in 2001.
The simple fact is that there are less original ideas and concepts around to tap into than there were several decades ago and a lot of the time in entrepreneurship it’s about being first to market. You don’t need to be unique as long as you’re the first and the best in your industry to outlast the competition.
Corporate monopolization can make it more difficult for new startups and independent businesses to break through as a handful of large, global firms dominate sectors within the US economy. Three drug stores (CVS, Rite Aid, Walgreens) own 99% of the national market in the UK. Two companies sell half America’s books (Amazon, Barnes and Noble). This monopolization is even happening in innovative industries such as technology with Facebook owning Instagram, Messenger, Facebook and Whatsapp – four out of five of the most downloaded apps.
Work-life balance is very important to millennials. And work-life balance doesn’t always come hand in hand with entrepreneurship, particularly in the early stages. This could be a factor in millennials’ reluctance to move into entrepreneurship.
However, despite these factors millennials are still embodying entrepreneurship without quitting their day job or sacrificing their stability. Through part time side startups and embodying the entrepreneurial mindset in their career paths through collaboration, innovating and making connections millennials are still getting their startup fix whilst still protecting themselves.
To end on a high note – the good news is that 72% of millennials feel that startups and entrepreneurship are “essential for promoting innovation and jobs.” Let’s hope that as Generation Y moves forward, they take this belief and translate it into action that goes beyond just theory.