2019 Trends – Millennials in Business
A look at millennials in business in 2019
Current Trends and Statistics for Millennials in Business
We’ve taken a comprehensive look at the results from our State of Small Business survey to gain insight into trends and statistics among millennial small business owners. Read on to learn more about these young entrepreneurs, what their businesses, challenges, and tendencies are, and how these differ from other age groups.
Who are Millennial Small Business Owners?
Women account for 28 percent of millennial small business owners, 12 percent higher than the national average. In addition, millennial entrepreneurs are 22 percent more likely to be women than boomer entrepreneurs, with women making up 28 percent of millennial small business owners versus 23 percent of boomers. While the majority of millennial small business owners are men, at 72 percent, the increase in younger female small business owners does indicate a strong potential for a greater share of women as more millennials open their own businesses.
Millennials demonstrate that higher education isn’t required to be a successful small business owner. Forty-five percent of millennials reported a high school degree or GED as their highest level of education, while only 28 percent of boomers have only a high school degree or GED.
The Millennial Small Business Outlook
When it comes to confidence in the state of small business in the political climate, millennial entrepreneurs averaged seven on a scale of one to 10 (10 being the most confident), the same average as their boomer counterparts. However, 19 percent more millennials than boomers answered in the one to five range, denoting lower confidence, and three percent more millennials than boomers answered in the nine to 10 range which indicates very high levels of confidence. Meanwhile, female millennial entrepreneurs are 13 percent less confident in the state of small business in the political climate than male entrepreneurs.
What are Millennial Businesses Like?
Millennial businesses trend towards higher profitability, with 80 percent of businesses reporting a profit, 3 percent higher than the national average. Millennial entrepreneurs prefer independent businesses to franchises, with 67 percent owning new, independent businesses and 27 percent having purchased existing, independent businesses. Comparatively, only 36 percent of boomers own new, independent businesses, while half purchased existing independent businesses.
The industries of millennial businesses are broad and varied. Millennial men open businesses in an especially wide breadth of industries, while millennial women are more concentrated, with a 39 percent plurality of women having opened health, beauty, and fitness businesses.
While the top challenge of the last year for both millennial and boomer small business owners was a lack of capital or cash flow, millennials are 14 percent more likely to be challenged by money issues – at 36 percent of millennials compared to 32 percent of boomers. Other notable challenges for millennial entrepreneurs include marketing and advertising, administrative work like booking and payroll, time management, and the recruiting and retention of employees.
Recruiting and retention can be a particularly tough challenge; with 52 percent of millennial businesses employing only two to 10 employees. Forty percent of millennial businesses are solely owned and operated by the owner, compared to 31 percent of boomer businesses.
When asked what they would do if they had access to more funds to invest in their businesses, millennial small business owners demonstrated a hunger for bettering their businesses in big ways. New equipment was the top investment at 21 percent, but both marketing and advertising and expansion followed close behind at 19 percent.
Millennial-Owned Small Business Financing Trends
Many millennials may have trouble gaining small business financing. Traditional bank loans may open the entrepreneur for hefty interest rates and monthly payments. Avenues of funding like SBA loans or Rollovers for Business Start-ups require collateral, usually a home, or at least $50,000 in an eligible retirement fund.
These financial challenges may be why the vast majority of millennial small businesses, at 76 percent, were acquired for under $100,000 and why the top form of funding, at 43 percent, was cash. Meanwhile, 32 percent of boomers used cash to finance their businesses, and 59 percent acquired their businesses for under $100,000.
Other popular forms of financing for millennial small business owners include help from friends and family and a line of credit. Non-traditional financing options such as unsecured loans, equipment leasing, and peer-to-peer lending could be a huge help to aspiring millennial small business owners.
An Optimistic Outlook
Millennials are the future of small business in America, a future that is diverse, driven, and determined. Though they are a generation who came of age during the struggles of the Great Recession, millennials are notably optimistic. Their optimistic outlook on embracing change, business innovation, and entrepreneurship means millennials are poised to take over for retiring boomers and welcome the burgeoning Gen Z into small business.