As older entrepreneurs retire, the hope would be that younger generations would step up to replace them. But that doesn’t seem to be the case, as some recent reports have indicated that millennials in particular are starting businesses at lower rates than previous generations.
According to Federal Reserve data, the share of people under 30 who own a business has fallen by 65 percent since the 1980s. And that figure is now at a quarter century low.
Those figures seem to go against the popular notion that millennials are inherently entrepreneurial. In fact, reports have found that 60 percent of millennials consider themselves to be entrepreneurial. But setting up an Etsy shop or driving for Uber on the weekend isn’t exactly helping communities fill up the storefronts in their business districts.
What’s Behind the Low Number of Millennial Entrepreneurs?
Of course, there are many reasons why millennials might not be up for the task of filling up those main street storefronts. One of the biggest reasons is likely related to the huge amount of student loan debt that millennials find themselves struggling to overcome. There’s also more non-traditional options for aspiring entrepreneurs to consider that don’t involve spending big on a storefront — including everything from freelancing to renting out extra space on Airbnb. And finally, some millennials might just not be ready quite yet. According to a recent Forbes article, one’s 40s have been identified as the most popular time for starting a business. And millennials just haven’t reached that age yet.
There’s no simple answer for increasing entrepreneurship among millennials and other younger generations. And it’s entirely possible that most young people will simply opt for less risky forms of entrepreneurship. But as Baby Boomers and other older entrepreneurs retire or shutter their businesses, that leaves a lot of open space and opportunities for others.
So no matter your age, this generational gap leaves plenty of opportunities for entrepreneurs. If you have the means and the drive, you can grab hold of this opportunity to start a business and support your community in the process.
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The Federal Reserve data is for employer businesses (businesses with at least 1 traditional employee in addition to the owner) only. Non-employer businesses (freelancers, self-employed without traditional employees, solopreneurs etc.) are excluded. If you include non-employer businesses, the percentage of millennials who have their own business of some form is inline with what it has been in the past.
Thanks for the insight, Steve! So these numbers might have more to do with how newer Millennial-run businesses are being measured.
That’s because millennials are focused on just doing what they love while making money. They are not serial entrepreneurs whose goal is to make more and more money by growing their business. They are more like lifestyle entrepreneurs.
Another possibility, Aira! Thanks for your comment.
Dee K Dee
The millennials I follow on the internet complain about “adulting”. That’s any time they have to act like an adult and do something responsible as opposed to acting like they are still kids. Millennials live with their parents longer. Their home ownership is lower than previous generations at the same age. As Aira above
Starting a business where they are actually take care of employees and a bottom line is too much “adulting” for millennials. They’d rather get hired by a big firm and and, as Aira said “do what they love”, which is usually the same stuff they did when they were 15.