Are millennials ready to start their own business?
Updated: Dec 9, 2020
by Paula Anderson
Owning a business has been defined as a pathway to financial independence and a way to create wealth.
According to a recent study conducted by the Small Business Development Center, 61 percent of millennials said, "They would start a small business if they knew where to get help."
The study results show that millennials are faced with challenges such as a lack of training, access to capital and not knowing how to run a business.
Mike Hoffmeyer, Crews Center for Entrepreneurship director said, "Many studies show that the two greatest barriers to entrepreneurship are access to networks and access to capital. When a millennial doesn't even know where to start, those obstacles are even more overwhelming. However, resources and support do exist in Memphis to help overcome those issues. Fundamentally, though, and what is not mentioned in the study is that most people are not equipped with an entrepreneurial mindset."
Hoffmeyer works with student entrepreneurs and prepares them to understand what it means to be an entrepreneur.
Alexa Kintanar, Christian Brothers University (CBU) alumna and entrepreneur said, " As a millennial, I believe that passion drives everything I do. Most millennials no longer want a job for the sake of the salary, but they want to find fulfillment and purpose in their career.
Entrepreneurship embodies a spirit of building your dream from the ground up because it's ultimately your product, your customers and entirely your business. Yes, it's a long journey, but as a millennial, I can attest that it is worth balancing other elements of life to make your dream work. Of course, balancing or juggling these other elements of life - school, part-time jobs, internships and social life, come into play. However, asking for help and befriending peers that support your dream are key resources for myself. Finding a mentor in the most unexpected places was also key to directing my entrepreneurial experiences."
"Much of our education and society encourages and supports conformity - and conformity is the bane of innovation. Being successful as an entrepreneur requires a mindset that embraces challenging the status quo, one that is unafraid to try to be or do something different. In my experience, when millennials are symbolically "given permission" to do things the way entrepreneurs do, it is both empowering and potentially life-changing for them," added Hoffmeyer.
SCORE Memphis is another resource for aspiring entrepreneurs. They offer mentoring workshops to small business owners and entrepreneurs at no cost.
Although starting a business does present challenges, many millennials are not in a financial position to start a business.
Gary Robinson, chairman of Memphis chapter of SCORE, a nonprofit arm of the the Small Business Administration (SBA) said, "Our data shows that 30 percent of millennials have at least two sources of debt and 81 percent of college-educated millennials have at least one source of debt. Having that debt may be keeping some millennials from starting a business."
"Based on our data, only four percent of millennials at age 30 were self-employed, compared to 6.8 percent of (baby) boomers and 5.3 percent of Gen-X at the same age," said Robinson.
"I think this comes from the need to pay off their college expenses."
According to the study, "43 percent of American say that money is a barrier when starting a business," added Robinson.
Anthony Young, executive capital-in-residence said, "Traditionally, entrepreneurs have started businesses with conventional means of capital, such as bank loans (often using home as collateral, 401 (k) rollovers, personal savings, etc. Due to a variety of economic factors, millennials may face challenges obtaining bank loans and may not have adequate savings to fund their business."
"As a result, I've seen some millennial-owned companies turn to merchant advances (PayPal (R) and online lenders (Kabbage, OnDeck, etc) to get capital. Merchant advances and online lending can fund the loans relatively quickly, but the cost of capital can be extremely expensive. In fact, I've seen APRs as high as 48%. Some alternative capital sources millennials may consider exploring include crowdfunding, KIVA or CDFIs (Community Development Financial Instititutions)," added Young.
To learn more about entrepreneurial resources, contact Epicenter Memphis at epicentermemphis.org.