Starting a business at any age can be quite daunting. But starting as a young entrepreneur, or the “millennial” generation in today’s age, presents itself with a unique set of driving factors and barriers.
Although millennials have gotten more entrepreneurial training than that of older age groups and exposed to the startup culture, they are actually on track to be the least entrepreneurial generation in recent history. They have established fewer companies since the early 2000’s and also tend to be less successful in terms of surviving, as many of these ventures fail to endure the first three years. Surprised? Below may help explain some of the challenges of young entrepreneurs today:
Financial and Economic Factors
The financial crisis from the Great Recession and subprime mortgage lending have forced millennials to start up businesses in negative economic conditions. Thus, one of the major challenges of young entrepreneurs is the lack of financial means to enter into business. Compared to older people who have had more time to accumulate savings or build investment wealth, young entrepreneurs struggle to find capital and are more likely to owe more in loans and credit card debts. To avoid this situation, young entrepreneurs should arm themselves with a solid business plan, which they can pitch to friends, family, investors, local banks, or credit unions. They should also have realistic expectations about the time it takes to make a profit (it can take around two years or so) and factor this into their liquidity plans.
Lack of Networks and Experience
Compared to the older generation who have had more investment experience and business connections, millennials have smaller or fewer personal networks that can help in the startup process. Although millennials are the most educated generation in US history (with high post-secondary education achievements), young entrepreneurs also have less time to develop their business competence, which tends to improve over the course of someone’s life. However, this generation admires entrepreneurs and has access to information technology which they should utilize to connect with early adopters and build great mentoring relationships.
Lack of established brand and customer base
Customers tend to flock to more established and experienced brands. However, being a small company with a small marketing budget has its advantages when it comes to pricing, and sometimes a lower price point can be enough to attract customers.
Young entrepreneurs can build their brand by ensuring that they put their customers first and providing quality goods and services to keep them coming back for more.
Making Decisions for the First Time
Unlike being an employee who has the safety cushion of a larger company structure, being an entrepreneur means being responsible for the decisions that will make the company profitable. This includes hiring staff and delegating tasks, which are two of the most challenging roles for young entrepreneurs. They may find it difficult to give up some degree of control. Making big decisions that could affect the future and the direction of the company can lead to moments of stress and self-doubt. However, this is where entrepreneurial skills, confidence, and sound judgment come into play.
Some millennials hate the term “millennials” because of the negative stereotypes attached to it, such as being a generation that is “lazy” or “self-entitled.”
However, closer scrutiny would indicate that millennials actually value hard work and are willing to make sacrifices to get ahead. It’s just that coming of age in this economic environment has conditioned them to be risk-averse and skeptical about the payoff for all their hard work—as they have yet to experience the expected benefits.
The best way to deal with negative stereotypes is to prove them wrong. Young entrepreneurs should behave professionally at all times and build their reputation for maturity. They should continue to persevere amidst negative criticism and remember why they started the business in the first place.