Here's Why Millennial CEOs Find Opportunity and Profit Launching Payroll Start-Ups

NEW YORK (MainStreet) — Some 89% of applicants who fail to land a job are unsuccessful due to attitude, according to Plum data. As a result, Plum CEO Caitlin McGregor assesses applicants for attitude instead of skill.

“This method helps us find the diamond in the rough that can outperform the candidate that looked better on paper,” said McGregor, who began assessing by attitude in her executive recruiting company three years ago. "We wanted to bring the science of measuring attitude to a broader market to help ensure the perfect hire every time."
Nearly 60% of Millennials consider themselves entrepreneurs with ideas, capital and plans, and these young upstarts like McGregor are using their start-ups to disrupt the traditional employment services industry, such as payroll technology, accounts payable, human resources and executive recruiting.

“Payroll software businesses are on the rise because of reduced labor intensity,” said James Berkeley, managing director with Ellice Consulting in London. “Time, not money, is the scarcest commodity today.”

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With only $70,000, 33-year-old McGregor was able to launch her four-person business and sustain it for six months. Government grants, convertible notes and $120,000 in annual revenue helped the firm stay afloat another two years.

“Entrepreneurs find success through trial and error,” McGregor said. “There isn’t a road map or one-size-fits-all approach that you can take to help you figure things out. You end up relying on yourself to get things done.“

A human resources tech company called Wagepoint created an online payroll app for small businesses that allows for direct deposits, government remittances and year-end reporting for both salaried and hourly employees.

“It’s easier than ever to become an entrepreneur,” said Shrad Rao, CEO of Wagepoint. “The cost of starting up is cheap and there are an abundance of resources with which you can potentially learn to code or build new businesses.”

Rao raised $1.4 million in angel funding.

“Since our launch 18 months ago, we have gained significant traction in the Canadian market and have now expanded into the U.S. market as well,” Rao told MainStreet. The challenge for young CEOs launching businesses today is competition, which makes it harder to sustain success.

“Clients have a greater range of choice,” Berkeley told MainStreet. “Your brand is competing in a noisier, multimedia marketplace. Word-of-mouth is a more powerful and riskier medium. New entrants can move into a market quicker because barriers to entry are lower overall today than they were in 1994.”

Despite the noise and competition, Allan Branch started up LessAccounting in 2007 with less than $500 to make bookkeeping for small businesses easier with online invoice tracking.

“Business is different in 2014, because there’s not only marketing noise but also more software choices and customers have higher expectations of their software,” said Branch. “Thank Apple for that.”

Although Millennials are typically more tech-savvy than previous generations, they are also overwhelmed with information.

“It makes us more disconnected from customers unlike the entrepreneurs before us,” Branch told MainStreet. “Their customers were people. Our customers are data. We can either connect with our customers in a meaningful way or turn them into faceless revenue charts.”

Branch defines a meaningful connection as listening to the customer before trying to sell anything.

“If you speak to customers like a friend, drop the sales speak, drop the robotic customer service tone and empathize with them about their real-life problems, they will not become data in a chart,” he said.

-Written for MainStreet by Juliette Fairley

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