Now is a good time to be a young entrepreneur.
In fact, millennials are starting more businesses at a younger age than any generation that has come before.
For millennials, or generation Y, the average age people found their first business is 27. For the Baby Boomers, the average age to have founded a business was 35.
Similarly, the average millennial entrepreneur will have founded 7.7 businesses, compared to the average Baby Boomer entrepreneur who will have founded just 3.5.
While it’s clear to see that young people today are prolific when it comes to setting up businesses – what’s really interesting is why they’re choosing to start their own business instead of choosing safer options.
The after-effects of the financial crisis
The global financial crisis of 2008 had a massive effect on the global economy, and while we are no longer in a recession, we are by no means back to where we were prior to the crash.
But why would this mean more young people choose to start businesses?
After all, surely while the economy is still relatively unstable it would be a better option for young people to come out of university, join a big firm, and keep their head down until retirement.
Well, the reality is that while that was an option for the Baby Boomers, a similar career path is simply unavailable to many of today’s young people.
Although unemployment rates in young people have recovered somewhat since the time of the financial crisis, youth unemployment in the UK is still above what it was 10 years ago, and it is still above the average for other developed countries.
And, those who do find work don’t have it much better.
Not only is there the increasing issue of zero-hour contracts for young people, but studies have found that young people generally have less job security, and on average will work 9 different jobs and have one career change over their working lives.
But how does this state of affairs affect young people’s decision to start a business?
It’s all to do with risk.
We all know that starting your own business is a risk. In the past, this risk compared to a job for life with a big corporate firm was massive, meaning less people were likely to take it.
Today, young people have much less job security.
Although setting up a business is still risky, today you’re far less likely to find a “safe job” so the risk of setting up your own business is comparatively less.
This is reflected in the fact that the number of small businesses founded grew year on year for 7 years straight between 2008 and 2015.
They are the social media generation
Millennials are more tech savvy than any generation that has gone before.
While Generation X may be responsible for the internet, Millennials were the first generation to grow up surrounded by social media, Google, and iPhones.
But how does this affect entrepreneurship?
Thanks to the technological advances of recent years, we are all part of a truly 24 hour global marketplace.
This makes the potential to start a new business even greater, as even though there’s more competition, there is a much wider audience for people to target.
For example, someone may leave college with a dream to set up a business selling Japanese car parts.
20 years ago, this would have been a difficult business to establish, as you would be reliant on finding a sufficient target audience and potential customers in the local area.
Today, thanks to social media, it is easy to market products to a global market place, which means even the most niche products can find their home.
In addition to this, thanks to websites like Etsy and Big Cartel, creatives and artists are better equipped than ever to make a living from the work they are passionate about – which means more people can pursue their dreams of setting up a business and becoming self-sufficient instead of having to join the workforce.
It is no surprise then that millennials are leveraging these market places to help them establish more small businesses than previous generations.
Another reason for the rise in entrepreneurship among younger people is the phenomenon of the social entrepreneur.
Social entrepreneurs are people who create businesses that do something to help the community, or even the planet.
A great example of recent social entrepreneurship is Blake Mycoskie and his company TOMS.
TOMS create and sell affordable, fashionable shoes, and for every pair of shoes they sell they donate a pair to an impoverished child.
This idea resonated with millennials in particular and resulted in TOMS finding a lot of success.
But why is Social Entrepreneurship so common with millennials in particular?
In general, millennials are a more socially conscious generation.
Recent studies have shown that 70% of millennials are willing to pay more for a product that makes an impact on issues they care about, and 90% of recent MBA graduates prefer working for organizations committed to social responsibility.
The tendency towards altruism in millennials across the board is reflected in the rise in social entrepreneurship – and the success of socially conscious businesses compared to other entrepreneurial enterprises.
Studies from Social Enterprise UK have shown that social enterprises are growing their turnover faster than other SME’s and that they’re creating more new products and services.
This shows that not only are more people setting up socially responsible businesses, it shows that the general public want more of these businesses – so they are likely to become more common in the future.
Over the next decade, millennials will become the dominant group both in the workforce and as consumers. Thanks to the technological advances millennials have grown up with, they are more individual, better connected, and more socially conscious than any generation that has gone before, which makes them the perfect candidates to become entrepreneurs.
As millennial ideals become the driving force in business and our marketplaces, it will be interesting to see how much the role of entrepreneur changes to reflect that.