The Great Recession made a deep impression on Generation Y (those age 24-35) and Baby Boomer entrepreneurs (those age 48-70), according to the American Express OPEN® Ages Survey. The study, which revisits an analysis first conducted in 2007, reexamines 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). 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 are 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%; 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% 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 YThe 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 (37%) than Gen Y overall (24%) or Baby Boomers overall (10%)
- Have a social media presence for their business (89%) than Gen Y overall (79%) or Baby Boomers over all (59%)
- Offer customers rewards or discounts for their repeat business (65%) compared to Gen Y overall (56%) or Baby Boomers overall (32%)
- Have a business mentor (52%) compared to Gen Y overall (41%) or Baby Boomers overall (23%)
Generations at Odds on Value of Social Media RelationshipsSocial 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%)
- 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.