It seems that the news is full of millennial-entrepreneur success stories. Rightly so, as there are many. That doesn’t mean that millennial entrepreneurs are common, though. The media appear to present the millennial generation as extremely entrepreneurial, but the hard, cold facts say otherwise.
What accounts for such a discrepancy? How can millennials be extremely entrepreneurial while also being far less so than prior generations? The answers may surprise you.
The Least Entrepreneurial Generation?
In 2016 testimony before Congress, the Economic Innovation Group’s cofounder John Lettieri stated that millennials are the least entrepreneurial generation in recent times. This statement is well supported by research:
Fewer millennials are opening businesses than prior generations did when they were the same age.
So where does this idea of millennials being extremely entrepreneurial come from?
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The Great Data Disconnect
The data discrepancies are relatively easy to dissect. Looking at the overall picture, it’s fairly easy to see how millennials can open more businesses than prior generations, but still have a lower percentage of them doing so than prior generations did. The answer is that many of those millennial entrepreneurs who open businesses open more than one. Fewer millennial entrepreneurs, but more businesses.
It’s easier than ever to open a business. I qualify that, as it’s easier to do in that you can often do it online. It may also involve greater work in terms of regulatory requirements, permits, and disclosures. But there’s less running around and meeting with lawyers.
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So if a media outlet says that millennials are very entrepreneurial because they’re opening many businesses, but doesn’t tell you that millennial entrepreneurs make up a relatively small portion of the generation, then the media outlet is misleading you. Perhaps unintentionally, but still misleading.
Millennial Entrepreneurs and the Self-Identification Problem
Millennials self-identify as being entrepreneurial. This doesn’t mean that they actually are. Perhaps they admire the qualifications and risk-taking of entrepreneurship.
Perhaps millennials have simply grown up idolizing entrepreneurs such as Bill Gates and Mark Zuckerberg. But the numbers say that they aren’t doing it themselves.
There should be another qualifier here. Perhaps many millennials are doing side hustles on a cash basis, flying under the taxman’s radar. While I don’t see any indication of this being overly prevalent, it could be partial justification for the disconnect between millennials saying that they're entrepreneurs and the actual number who start bona fide businesses.
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And we should further qualify what makes an entrepreneur. Having the best business idea in the world does not make you an entrepreneur. Having plans to open a business “soon” does not make you an entrepreneur. Nothing that remains in the idea or concept realm makes you an entrepreneur.
To be an entrepreneur, you must at least try to monetize your idea or concept. It takes real work and a real business. Entrepreneurs create revenue. Those who go through the motions without revenue have a hobby, not a business.
The Great Risk Disconnect
If there’s a common theme to opening a business, it’s that no matter what the business, there’s risk. Far more risk than managing a cubicle.
Millennials see risk differently than prior generations. They tend to be slower to invest. After all, they saw prior generations get burned in the markets. They don’t necessarily see businesses and capitalism as solutions. But that also means that they don’t see a cubicle as so secure, either.
3 Factors That Shape the Future for Millennial Entrepreneurship
Perhaps it is too soon to call in the jury. There are three factors that may define how history views millennials and entrepreneurship.
Age is a big factor. The 40s are the peak years for people to open businesses. No millennials are there yet.
While they’re behind for their age, it isn’t an insurmountable deficit. There seems to be a discontent with business in general, yet a respect for those who approach business from a social perspective. People change when the fear of change is less than the fear of staying where they are. Many millennials don’t like where they are, so perhaps a small and as yet unforeseen catalyst will drive more of them to seek an independent way to earn a living and become entrepreneurs.
2. Traditional Trades
Traditional trades are another factor. Not many millennials want to be tradespeople. But there’s time. Disillusionment with post-college employment and all its headaches may yet drive millennials to see value in the trades.
There is a great opportunity for tradespeople to make very good money. Many successful businesses started by prior generations were trades-based.
This generation in which everyone was going to get a college education and work from home in some tech field may find the old way of earning a living as an unforeseen opportunity. The trades are hungry for workers, and millennials are hungry for something different. Perhaps there will be a wave of millennials revisiting trades, followed by them ultimately opening businesses.
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Finally, there is the issue of risk. This generation has a different perspective on risk, not to mention a low appreciation — and low trust — of being “taken care of” by a company.
Millennials tend to be willing to pay for value. They hold entrepreneurship in high regard. But they may limit themselves, as they don’t see huge opportunities before them. This is a perception issue, and perceptions can change overnight. Risk prevented prior generations from opening more businesses. It may ultimately hold back fewer millennials.
The Bottom Line on Millennial Entrepreneurs
The data makes a lot of sense when taken in whole. Examining small pieces can lead to erroneous conclusions. The millennial generation holds entrepreneurship in high regard, yet relatively few of them have made the leap — so far.
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That said, conditions thus far have not been such that you could fault millennials for lacking enthusiasm. The factors that will ultimately shape their attitudes are still playing out, and will continue to do so for years to come. But don’t write off this generation as non-entrepreneurial. Change is gonna come.