A generational divide between millennial small business owners and their older counterparts exists in their long-term commitment and the financial risks those owners are willing to take, according to the recently released Wells Fargo Millennial Small Business Owner Study.
“We found that millennial small business owners have a much longer term horizon for their businesses than many may perceive them to have,” said Lisa Stevens, Wells Fargo’s head of small business. “They recognize an investment in their business is an investment in their future.”
The results of an online survey, conducted by research firm Gfk from March 24 to April 13, showed a high percentage of millennial business owners, 80 percent, hoped to grow their venture and potentially pass it down to their children — though it was noted that 59 percent did not yet have children. In comparison, 66 percent of small business owners of earlier generations considered passing their venture on.
These results come in spite of popular perceptions about millennials being focused on short-term investment, being more directed to be a serial entrepreneur, the study pointed out.
More than 1,000 U.S. small business owners were surveyed. Approximately 500 interviews were done across two age groups of small business owners: millennials, ages 19-35; and another group, ages 36 and older.
To qualify, respondents had to have been in business for at least six months, be the primary or shared decision maker of the venture and own at least 50 percent of a businesses that earn less than $5 million in annual revenue.
Another area where millennial small business owners differed was in their willingness to take on debt in order to grow their venture.
According to the results of the survey, about two-thirds of millennial small business owners said that taking on some amount of business debt is necessary for growth. That same amount were also willing to take financial risks in order to grow their business, compared to half of their older counterparts saying they would embrace the same risks.
The percentage of small business owners who were wary of taking on debt was comparable in both age groups: 75 percent of millennials and 78 percent of older generations agreed with this statement.
On top of an age difference, gender also played a role as to taking on business debt. While 72 percent of millennial men believed taking on business debt was needed in order to grow, 54 percent of women agreed. A similar result was found in the overall willingness of women to take on financial risks over men.
Millennials, as a whole, were also willing to take on personal debt to finance their ventures, with 43 percent of millennials agreeing versus 33 percent from older generations.
“Our research shows millennial small business owners to be thoughtful about credit, and their attitudes toward taking on debt have likely been shaped by the Great Recession,” Stevens said. “At the same time, it is encouraging to see them investing in their businesses and looking at entrepreneurship as a way to secure their future.”
On future forecasts, millennial small business owners were also more optimistic about their growth, with 75 percent saying they expected their business to improve in the next 12 months. Only half of their older counterpart were as optimistic.