From Kickstarters to franchises to freelancers making the gig economy work for them, there’s no question that entrepreneurship is on the rise in the United States. In fact, according to the Small Business Administration, the rate of new businesses being created has increased by almost 50% since 1982. Since the 1990s, while “big business” has dropped 4 million jobs across the country, start-ups and small businesses have added 8 million.
We all know that entrepreneurs tend to work long hours and struggle to balance the needs of their businesses and their families and personal lives – so what leads so many people to make this change? Why is entrepreneurship so tempting, especially to the Millennial generation?
Opportunity is knocking
We are only just now beginning to understand the ways in with the Internet is changing our society. The democratization of the Internet has meant that people can connect around niche interests and in diverse communities that were previously difficult to find in smaller communities. From groups that revolve around parenting practices to fandoms around TV shows and movie universes, if you have an interest, there’s probably a niche group devoted to it.
For entrepreneurs, this means that it’s possible to create unique apps, websites, and communities that collect around these specialized interests. From companies that revolve around sharing products instead of purchasing them to interactive software that facilitates communication and the sharing of ideas, the sheer number of people that can be contacted electronically means that most entrepreneurs can find the right audience for their product or service, if they look hard enough.
Flexibility and balance
While we acknowledge that many entrepreneurs work longer hours than their employee counterparts, when these entrepreneurs work those hours is a big part of why many of them choose to work for themselves. This reason for starting one’s own business is particularly relevant to women who have children.
While much attention has been paid to the struggles that parents, and moms in particular, face in the traditional workplace, not a lot of steps have been taken on a societal level to fix issues like lifetime pay gaps, family and maternity leave policies, and paid sick leave to care for family members. This has led many women of child-bearing age to choose to step out of the traditional workforce while their children are young. If they have talents as writers or graphic designers, for example, they might choose to freelance those skills, working when time allows. They might choose to start a small side business through one of the many direct marketing businesses that are becoming increasingly successful in the age of Facebook and Twitter. Or they could choose to develop a product that can be sold through other small companies in the area.
In 2007, the United States economy entered the period most economists now refer to as The Great Recession. The American economy shed jobs faster than it had at any point since World War II. Economic downturns have an interesting effect on the start-up rates of new businesses. When there are large numbers of workers being laid off, sources of funding like angel investors and bank loans tend to fall off – and yet, more small businesses tend to be created. In fact, a study conducted by the University of California indicated that in business creation rates were highest in metropolitan areas with high rates of unemployment.
To some degree, people become entrepreneurs because they see an opportunity. They also become entrepreneurs because they have no other choice for gainful employment.
This might be the most significant reason that the Millennial generation is embracing the ethics of entrepreneurship in a way no other generation has in recent memory. The only time that comes close is during the Dot Com boom in the early years of this century. Seeing their parents laid off and unable to find work, finding that they have degrees to pay for and no job prospects, they are taking advantage of the opportunities and options in front of them, which often means creating their own business.
Small businesses are a key part of the American economy, so much so that many developing economies are looking at ways to increase the numbers of home-grown entrepreneurs within their own borders. Small businesses are more agile than big ones, able to bring in new workers quickly and pivot on inventory opportunities rapidly. They are often called the backbone of the American economy. The path to entrepreneurship is far from easy, but it’s absolutely rewarding.