Generation Y, retirees, women, immigrants well-suited for entrepreneurial ventures

by Mary Paulsell

May 5,2007

As a true reflection of our nation, the face of small business is poised to undergo some vast transformations in the coming decades. Entrepreneurs will be far more diverse than their predecessors in age, origin and gender—a change that will have an impact on both the U.S. and the global economies.
No longer will entrepreneurs come from the ranks of the middle-aged. The entrepreneurs of the future predominantly will be younger or older than their mid-life counterparts and will be either just embarking on their careers or exiting other careers while still wanting to engage in some activity for either fun or profit.

Young Businesspeople

Generation Y—made up of Americans currently ages 5 to 25—has been described as the most entrepreneurial generation ever. These young people, alternatively called the "digital generation" or "net generation," are the first group to have come of age in a purely digital world. As a result, their approach to communication, information and work is dramatically different from that of their parents and grandparents.

Where the older generations engaged in a social contract with an employer to sign on at a young age and invest in a career with a business, the digital generation is distrustful of large organizations and long-term commitments. They are more informal. And they are accomplished multi-taskers. It's not unusual for a member of this generation to be plugged into an MP3 player while playing a video game, surfing the Internet or text-messaging a friend. They live in the moment, in the current situation and within a close network.

Because of their adaptability, flexibility and autonomy, they have one of the key ingredients for successful entrepreneurship: the ability to bob and weave and adjust to ever-changing circumstances. Their optimism and ability to creatively conceptualize new ideas will stand them in good stead as they enter the work world, particularly if that work is as an independent business owner.

Baby Boomers

At the other end of the spectrum are the baby boomers, the oldest of whom turned 60 last year. This group is the single largest cohort in our nation's history, making up more than 25 percent of the nation's population. According to research done by the Kauffman Foundation, baby boomers are creating businesses at the highest rate of any age group—28 percent.

While perhaps not as flexible as their younger counterparts, these entrepreneurs are blessed with a broad range of life experiences, expertise, lessons learned and patience. They have larger personal and social networks. And they have capital—or at least the track record with which to get it. Many have retired from other careers and are investing retirement dollars in new enterprises. Those who have been displaced by corporate downsizing or offshoring will be eager to hire others who have experienced the same fate but bring marketable and valuable skills to the workplace. They will create jobs for others like themselves, and those jobs will be needed.

Business ownership also offers boomers the flexibility they crave to enjoy more late-in-life pleasures, such as grandchildren, recreation, volunteer work and political involvement. A recent USA Today/Gallup poll revealed that 63 percent of non-retired adults plan to work during retirement. Business ownership is a logical way for many of them to stay active and involved while generating some income for the future.

Women

Entrepreneurship will become less and less a male-dominated sector. Women who have either hit the glass ceiling or decided to explore opportunities as home-based "mompreneurs" will create companies at an increasing rate.
The trend is already moving in that direction. Between 1997 and 2006, the number of women-owned firms grew by 42.3 percent. Currently, 40 percent of all U.S. firms are owned or controlled by women—a total of 10.4 million firms. Those firms employ more than 12.8 million and have annual sales totaling $1.9 trillion.

Because the corporate world is still a male-dominated arena at top leadership levels, entrepreneurship offers opportunities for women with experience and ambition. The 2005 Catalyst Census of Women Corporate Officers and Top Earners of the Fortune 500 states that "women held only 6.4 percent of the top earner positions, up just 1.2 percent from 2002, [and] 75 percent of the Fortune 500 companies reported no women as top earners."

Most research indicates that middle-aged women are most likely to be very successful in starting and managing a business. Women are far more successful at building networks, seeking assistance and investing personal, as well as professional, resources adeptly in their enterprises. For most women, a business is another child, and they devote equal amounts of concern, time and nurturing to it. It is precisely that kind of cultivation that makes women successful entrepreneurs, growing profits at twice the rate of all businesses combined.

Immigrants

Immigrants to the U.S. will continue to globalize our economy with the creation of businesses, many of which will be focused on exporting to the owners' home countries. Immigrant entrepreneurs are the fastest-growing segment in the small business arena. Since many immigrants encounter barriers to workplace entry, entrepreneurship is a way for them to avoid many of those issues and create their own enterprises. For instance, immigrants often lack corporate contacts, language skills and the corporate experience to easily find positions in larger firms. For them creating a job is often less complicated than finding one.

Technology has leveled the global playing field, and immigrant-owned firms have ready-made global markets, allowing the firms to be both local and international.

All of this drives home the point that entrepreneurship is—and will increasingly become—a vital component of our economic development. It's hard to deny the impact that the hundreds of thousands of businesses created by these demographic groups will have on our lives in coming decades. The entrepreneurial economy will continue to grow and thrive in its diversity and competitiveness. And we will all reap the rewards of those exciting developments! v

Mary Paulsell is the director of operations at the University Center for Innovation and Entrepreneurship at the University of Missouri-Columbia. Her e-mail address is PaulsellM@missouri.edu.

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