A recent study conducted by Wells Fargo focused on the state of small businesses owned by millennials has revealed that millennial small business owners are committed to their businesses for the long term and willing to take financial risk and incur debt to grow and expand those businesses. Here’s a summary of the key findings from the research.
- Millennial small business owners have a great deal of commitment to their small businesses, the survey found, with or 80 percent seeking to grow their business over many years and eventually pass it down to their children. In fact, 59 percent are happy to commit to their small business long term as long as they’re able to create a comfortable standard of living for themselves and their children. Additionally, the identification with “business owner” is strong, with 82 percent of owners citing the main driver for starting their own business as “wanting to be their own boss” and 59 percent viewing themselves as “business owners” versus “freelancers” (16 percent) or “contractors” (14 percent).
- Millennial small business owners are more willing to take on credit and debt, as they perceive these risks as necessary for growth and an investment in their future. In fact, while 75 percent are wary of taking on debt, 63 percent also view some amount of business debt as necessary for growth and 67 percent are willing to take on some financial risks in order to grow. At this point, millennial owners have relied more heavily on personal credit for business growth, with 14 percent opening a personal credit card, 27 percent carrying a balance on that card, and 16 percent maxing it out. Interestingly for this population group, at this time 17 percent are in the startup phase and 58 percent in the growth phase of their business.
- Millennial small business owners are optimistic about the future, but they are seeking support to fuel growth and boost success. Interestingly, although 77 percent are optimistic about the future of their business, only 48 percent rate themselves as “somewhat knowledgeable” and 52 percent as “successful” in the management of business finances. Thus, it’s not surprising that a whopping 76 percent report being willing to pay more for business support products and services.
The Wells Fargo Millennial Small Business Owner (SBO) study is based on a series of 1,005 online interviews conducted by research firm GfK between March 24, 2016, and April 13, 2016. In addition to being part of the millennial generation (1981–1997), survey participants had to be in business for at least six months, be a primary or shared financial decision maker, report annual business revenue up to $5 million, and own at least 50 percent of the business.