What Small Businesses Should Know About Millennials

By Kat Boogaard

5 min read

Entitled. Lazy. Unrealistic. Out of touch. Constantly connected, yet simultaneously disconnected.

Chances are you’ve heard adjectives and phrases just like those used to describe the millennial generation—which, according to the Census Bureau, includes people born between 1982 and 2002, making millennials the largest living generation in the United States.

Then there are those words that you don’t hear used as often (or at all) in relation to this specific age group—terms like entrepreneurial, driven, and brimming with big ideas.

According to a GenStudy conducted by America’s SBDC (PDF), many millennials fall into that latter camp. Despite the stereotypes, they’re eager to buck that perception, start their own businesses, and make their own contributions to the world around them.

Pretty surprising, right? Perhaps there’s a little more to this generation than many give them credit for. Here are five unexpected facts you should know about millennials and small businesses.

1. Millennials Value Small Businesses

Many assume that this generation is all about speed, convenience, and instant gratification. In reality, millennials also place a lot of value on community-mindedness and knowing exactly where their goods are coming from.

Some say that this perception is to blame on the Great Recession. Because of that fallout, millennials just don’t trust “big business” the way that their parents and grandparents did. Others claim that this might be more of a societal shift than a generational thing.

According to Gallup’s Confidence in Institutions poll, only 9 percent of respondents said they trust big businesses “a great deal,” and only 12 percent said they trust them “quite a lot.”

In comparison, 33 percent trust small businesses “a great deal,” and 37 percent “quite a lot.”

That’s a pretty big difference. And, it’s that very level of trust that inspires millennials to patronize small businesses far more than large corporations. In fact, a reported 40% of millennials state a preference for buying local.

2. Millennials Are Overwhelmingly Entrepreneurial

So much for that lazy reputation they’ve fostered for themselves. Believe it or not, millennials actually have tons of entrepreneurial potential.

According to America’s SBDC’s GenStudy (PDF), 49 percent of millennials intend to start their own business within the next three years. Even further, 62 percent already have a dream business in mind that they would love to start.

Think this is all nothing more than another millennial pipe dream? Think again. Nearly 7 out of 10 millennials have already owned or been part of a startup. And, studies show that millennials go beyond just wishes for their own companies—they’re actually launching these businesses.

Millennials are starting businesses much earlier than their predecessors (at an age of 27, instead of 35 for baby boomers), and they’re doing so at almost twice the rate. Today, some of the most profitable businesses (ahem, Facebook, Lyft, Stripe, Dropbox, Pinterest, and Instagram, just to name a few) are owned and operated by millennials.

3. Millennials Are Financially Realistic

If millennials are such dream-chasers, why isn’t the business landscape overrun with millennial-owned companies? Why aren’t they all taking the leap immediately?

As footloose and fancy-free as people like to think this generation is, they’re still acutely in-tune with their own limitations—mainly, finances.

Americans owe a whopping $1.2 trillion in student loans—a burden that’s mostly carried by the millennial generation. More than 6 out of 10 millennials have at least $10,000 in debt related to their educations.

While passion and entrepreneurship are important, millennials also value their financial security. Forty-six percent believe that financial stability is something that they need to have before starting a business (PDF), and another 45 percent say that access to capital is one of the biggest barriers to get a business up and running.

4. Millennials Are Committed.

Many think of millennials as unreliably and flighty—they always have one eye on the door in search of greener pastures.

It turns out that stereotype is also inaccurate. This generation is far more loyal and committed than people give them credit for.

When it comes to employers, millennials stick with companies for far longer than Generation X workers. In fact, Gen X is the group that should be labeled as job-hoppers—far more Gen Xers spent less than one year at any job.

What does this have to do with small businesses? Many write millennials off as lacking commitment and intensity—meaning they’ll simply abandon their dream of business ownership when the road gets rocky or when they simply tire of it.

However, that might not be the case. Despite their flaky reputation, millennials are surprisingly dedicated to the things that matter to them.

On the flipside of the business coin, this generation is comprised of surprisingly committed consumers, as well. Just over half of millennials report that they feel extremely or quite loyal to their favorite brands. Millennials make solid and dependable customers, in addition to business owners.

5. Millennials Are Passionate

Many view millennials as self-serving. While it’s true that they have certain expectations for how they want their lives to play out, this generation is incredibly passionate and community-minded.

More than 8 out of 10 millennials state that making a positive difference in the world is far more important to them than professional recognition. It might just be more important than salary too. Sixty-four percent would rather make $40,000 per year working a job they love than $100,000 per year at a job they think is boring.

What about when it comes to business ownership? Millennials believe that the success of a business comes down to more than just dollars—87% stated that business success should account for more than just financial performance.

Why Millennials Matter For Small Businesses

Millennials are a generation that has become the object of fascination for a lot of people. But, what exactly do all of these facts and figures mean for you?

Well, if you’re a small business owner yourself and you aren’t already actively marketing to millennials, it’s time to get started. Within that group you’ll find loyal, passionate, and savvy customers.

For the rest of us? We can prepare for a shift in the landscape as more millennials pursue their dreams of entrepreneurship and business ownership. After all, this generation already makes up the largest portion of the workforce. It’s inevitable that they’ll soon account for the majority of business owners, as well.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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