sources -- including CNBC, the Kauffman Foundation, US News & World Report,
and others – have published articles about the boom in entrepreneurship. While
it may make for a great story, a quick look at the numbers shows otherwise.
recently published statistics from the U.S. Labor Department, just 3.6% of Americans under 30 own equity in a
business, a drop of over 66% since 1989, when the US population was 247 million
compared to the current 327 million. That’s a drop of almost 15 million
A number of factors can help explain this long-term trend.
student loans Money
spent to repay student loans means it takes longer to save money to self-fund a
business. With high student loan default rates and flat or minimum increases in
wages it’s difficult to save enough money to start a business.
fallout Prior to
the Great Recession, Millennials had generally grown up in an economy
which was stronger than the historical average. Seeing job losses and company
closings is scary for those undergoing their first economic downturn. Safety
and stability often become more desired than controlling one’s destiny by
starting a business. It takes time and maturity to understand that the economy is cyclical.
social scientists have pointed out that over-protective parents with a
risk-averse mentality cannot possibly create a home environment conducive to
the curiosity and joy of discovery needed by entrepreneurs.
exposure to conventional business models
Starting on a shoe-string budget, slowly building revenues, taking
on little or no debt or investor capital, and being profitable from the
beginning are business attributes seen as boring by many Millennials. Ignoring
business models in non-tech industries reduces the number of opportunities
available to potential entrepreneurs.
political environment Anti-business
activist groups ignore the many positive contributions made by small and
startup businesses. Lack of exposure to positive contributions by businesses
reduces the desire to be an entrepreneur.
workers and more independent contractors
As companies outsource more jobs to independent contractors,
many workers are self-employed yet have few or no benefits and low pay, factors
which contribute to an inability to grow their independent contractor businesses.
this don’t turn around overnight but there have been positive signs lately.
Lower gas prices have increased American’s confidence in the economy according
to the University of Michigan’s Index of Consumer Sentiment, up 13.5% in 2014
compared to 2013 and up 5.4% in December, 2014 compared to November, 2014.
Confidence in the economy generally means an increase in the number of business
Millennials are moving from their parent’s homes into their own dwellings. This
requires the purchase of household items which gives an overall general boost
to US GDP. This also contributes to
of Things”, which brings technology to items typically thought of as non-tech,
opens many opportunities for those who have grown up with, and are comfortable
and universities are now offering degrees in Entrepreneurship which can
hopefully give potential entrepreneurs some of the skills and confidence they’ll
need to start businesses.
Just as the
Depression spawned the mindset of The Greatest Generation, I’m confident the
Great Recession and the slow recovery have taught potential entrepreneurs how
to be resourceful, which is one of the most powerful skills an entrepreneur