How do Millennial small business owners differ from their older counterparts?
A recent study by Wells Fargo examined some generational differences. But first, some similarities: 59 percent of Millennial entrepreneurs and 51 percent of older entrepreneurs say they started their businesses because they felt passionate about them.
Older entrepreneurs are more likely than Millennials (55 percent vs. 43 percent) to say they started their companies out of a need for challenge and growth. This makes sense, because older entrepreneurs are more likely to feel a bit stagnant in their jobs simply because of their age and experience.
While Millennials may have a reputation as flighty, the survey shows that when it comes to business ownership, this generation is focused on the long term.
In fact, 80 percent of Millennial entrepreneurs say they hope to pass their businesses onto their children someday — even though most of them don't yet have children! By comparison, two-thirds of older entrepreneurs hope to pass their businesses down to their kids.
Millennials also have big plans for their small businesses. Nearly eight out of 10 older small business owners (79 percent) say they would be happy for their businesses to stay small — all they want to do is create a comfortable living for themselves and their families. Among Millennials, however, just 59 percent are satisfied with the idea of keeping their businesses small; 41 percent hope to grow their businesses as big as possible.
Perhaps it’s because of their big plans and long-term horizons that Millennials are more likely than older entrepreneurs to be willing to take on debt in order to grow their companies. Two-thirds of Millennial entrepreneurs believe that some amount of business debt is needed for business growth and say they are willing to take on financial risks to expand their businesses. Among older entrepreneurs, however, only about half agree with these opinions. Millennial men are even more likely than Millennial women to be willing to take financial risks in order to grow (77 percent vs. 55 percent).
Putting their money where their mouths are, 43 percent of Millennial small business owners say they have already taken on some personal debt in order to finance their companies, compared to one-third of older small business owners. Many have maxed out their credit cards, on top of the student debt that three out of 10 Millennial entrepreneurs are already dealing with.
Millennials in the survey are more optimistic than older business owners about the prospects for their businesses in the next 12 months. Three-fourths of them believe their businesses will grow in the next year, compared to half of older entrepreneurs.
However, Millennial small business owners admit they have some shortcomings.
For instance, fewer than half of them say they are “very knowledgeable” or “successful” in managing their business finances. They are willing to learn, though: Millennial business owners in the survey are more likely than older entrepreneurs to ask friends and family, peers, social media contacts, online sources and even competitors for advice to help them grow their businesses.
Entrepreneurs of all ages can learn a lot from Millennials’ willingness to admit when they don’t know something and to ask for help. If you need help with your business, one of the best places I can think of to get it is from the mentors at SCORE. Visit www.score.org to get matched with a mentor today.