What fuels entrepreneur passion? American Express Open took up the banner to answer this question and looked at the attitudes and differences between the Millennial Generation (Gen Y ages 24-35) and the Baby Boomers (ages 48-70).
Clearly, the Great Recession has made a deep impression on both Millennials who found it difficult to find work during the recession and Baby Boomers who were slashed out of the workforce once the economy plunged. According to the American Express OPEN® Ages Survey, the study revisited an analysis first conducted in 2007. The result is a reexaminations post-recession opinions and finds that the younger generation’s first economic downturn has made them more risk averse (just 56% say they like taking risks, down from 72% in 2007), while Boomer entrepreneurs’ appetite for risk remained unchanged (54% vs. 53% in 2007). For Boomers who watched their retirement savings dissolve into poofs of smoke, risk was already extreme.
“Younger business owners channeled their passion through innovative thinking and thrived in the face of adversity while older entrepreneurs relied on experience to weather the storm and find a better life balance.”
Factors ranging from the reality of living at home to being saddled with more student loans, has translated into fewer Generation Y’s launching new businesses straight out of school (16% vs. 28% in 2007), perhaps choosing to get other work experience instead. As a result, they might also less likely to be interested in serial entrepreneurship (44% vs. 59% in 2007).
Surprisingly, enduring economic turbulence has uncovered some benefits. Eight-in-ten entrepreneurs from both generations (81% Gen Y and 80% Baby Boomers) attribute managing their businesses through the recession as the reason they became better entrepreneurs. In the process, they have become more creative in their marketing (50% Gen Y; 40% of Baby Boomers) and improved their financial management (83% Gen Y; 77% of Baby Boomers). Over the last three years, Gen Y-owned small businesses found opportunity despite the recession, having experienced 24% revenue growth, compared to revenue growth of just 10% experienced by Baby Boomers.
“Resilience is a trait shared by both generations of entrepreneurs,” said Susan Sobbott, president American Express OPEN. “Younger business owners channeled their passion through innovative thinking and thrived in the face of adversity while older entrepreneurs relied on experience to weather the storm and find a better life balance.”
In contrast to the younger generation, Baby Boomers have been impacted by several economic downturns and have become more prepared to weather marketplace volatility and the recent climate has made them more optimistic. Less than half say growth is the top priority for their businesses (47% Baby Boomers vs. 66% of Gen Y). This time around, Boomers are more at ease, achieving better work-life balance: working an hour less per day (9 hours per day vs. 10 in 2007), cutting back on caffeine (2 beverages per day, down from 3 in 2007) and making fun a priority in their businesses (73% up from 66% in 2007).
Passion Plays Important Role in Success of Gen Y
The generations diverge on a host of issues, but none is more seminal than what motivated them to start their businesses. The primary reason Gen Y became entrepreneurs was to do something they are passionate about (26%). For Baby Boomers, it was a tie between being their own boss and making money (each 28%). With passion as their motivation, Gen Y entrepreneurs are focusing on activities that will grow their businesses. Gen Y small business owners who were motivated by passion to start their businesses are more likely to:
- Have experienced higher revenue growth over the last three years — Gen Y overall (24%) and Baby Boomers overall (10%)
- Have a social media presence for their business — Gen Y overall (79%) and Baby Boomers over all (59%)
- Offer customers rewards or discounts for their repeat business — Gen Y overall (56%) and Baby Boomers overall (32%)
- Have a business mentor — Gen Y overall (41%) and Baby Boomers overall (23%)
Despite Difficult Times, Entrepreneurship Still Rewarding for Gen Y and Boomers
While the recession may have been a bigger challenge for Gen Y, both generations are less optimistic about the U.S. economy over the next year than they were in 2007. However, Gen Y actually has a slightly rosier outlook (53%, down from 64%) than Baby Boomers (50%, down from 62%). And more entrepreneurs from both generations say they are “somewhat happy” with their lives rising 16 percentage points for both Gen Y and Boomers. Both groups agree that their satisfaction is fueled most by their relationships with their family and friends (74% for Baby Boomers and 72% for Gen Y.). However when asked what else fuels their enthusiasm, Gen Y say doing what they are passionate about is the next most influential factor (56%) while Baby Boomers claim their independence is responsible for their happiness (64%). From a Boomer perspective, building trust in oneself is far more secure than relying on leaders who would slash heads and cut budgets at the next income blip.
Generations at Odds on Value of Social Media Relationships
Social media has created a technology divide between the generations. Generation Y entrepreneurs are much more likely to use technology to market their business (81%) compared to Baby Boomers (61%). Since 2007 the impact of technology on running a business has meant more entrepreneurs have:
- Established a company presence on a social networking site (51% of Gen Y, up from 19%; 30% of Boomers, up from 11%)
- Established a relationship to sell products online (33% of Gen Y, up from 19%; 23% of Boomers, up from 17%)
- Started a blog discussing their business (23% of Gen Y, up from 8%; 6% of Boomers, up from 1%)
While both generations use social media for their businesses (79% of Gen Y and 63% of Baby Boomers), their preferred tools and the value they find in using these media channels vary greatly:
- Gen Y entrepreneurs place a higher value on social media than the Baby Boomers.
- Half of Gen Y (50%) believes business relationships made through social media are as valuable as traditional business relationships.
- For Baby Boomers, it’s only slightly more than one-third (34%).
- Four-in-ten (41%) Baby Boomers believe business relationships made through social media are less valuable than “real/actual” business relationships.
The American Express OPEN Ages Survey, was conducted among a nationally representative sample of 600 small business owners/managers of companies with fewer than 100 employees. The sample was split evenly between Generation Y small business owners (ranging in age from 24-35) and Baby Boomer small business owners (ranging in age from 48-70). The survey was conducted online by Echo Research from June 5-14, 2013. The poll has a margin of error of +/- 4.0% when reporting in total (n= 600) or +/-5.7 when reporting on each segment independently (n=300). The OPEN Ages Survey was previously conducted in 2007 via telephone among small business owners from Generation Y (ranging in age from 18-29) and Baby Boomers (ranging in age from 42-64).
Copyright TIGERS Success Series, Inc. by Dianne Crampton