Sharing and networking are common among young entrepreneurs
Millennial entrepreneurs – those born after 1980 – are reshaping the business world. The way they make their money, spend it and invest it has broad implications for wider society.
Often millennial entrepreneurs have sidestepped university, choosing business instead. For many, technology is the key to success, enabling them to build their personal fortune at a speed that would have been hard to imagine even 30 years ago.
Smartphones, for example, have opened up new possibilities to make money from trading services, data and information. Young entrepreneurs are as likely to make money from developing a new mobile phone application or setting up an online dating service as they are to design or sell more conventional products.
Millennials are harnessing social media to build their profile, collaborate and make money
Technology has also made it easier for these entrepreneurs to access new markets. The internet means even small or niche companies can market their services globally, tapping into an overseas consumer base that would previously have taken years to develop.
In the past entrepreneurs tended to be self-reliant, preferring to build their business on their own. In contrast, the internet has fostered a culture of sharing and networking. Millennials are harnessing social media to build their profile, collaborate and make money. In some cases they are making it the focal point of their success: the most successful bloggers, for example, are able to convert their online following into a business that attracts significant advertising revenue.
Sharing and collaboration are also common when millennials go about raising money for their business. When entrepreneurs under the age of 35 create a start-up, they typically seek funding from a much wider range of sources than their older counterparts. They are not afraid to ask family first rather than wait to save the money. They are also more likely to use crowdfunding or peer-to-peer lending to get them started.
Starting a business is never easy: one in three typically fails. Within the millennials group, however, those who do succeed are typically wealthier than those over 35. This may relate to the sectors they operate in as well as their ability to scale up their business, using the internet to expand and diversify.
Millennial entrepreneurs who are lucky enough to be running a successful business are also more likely to be serial entrepreneurs, with stakes in several ventures. The most successful young entrepreneurs in Western Europe and the US can be involved in as many as seven or more businesses.
How entrepreneurs use the proceeds of their business and invest their wealth is also changing as the next generation looks to play an active part in shaping society. Over the past few years, for example, a number of social enterprises have emerged, notably in the UK and US. These companies, many of them set up by young entrepreneurs, create products that directly tackle social problems, aid communities or improve the environment. Young and successful entrepreneurs often strive to adopt sustainable working practices, too.
Of the most successful young entrepreneurs surveyed in HSBC’s recent Essence of Enterprise report – those with annual turnover of more than USD11.5 million – nearly 90 per cent said they had been actively involved in philanthropy in the past 12 months. That compares with 75 per cent of entrepreneurs over 55. Successful millennials are also more likely to make charitable grants with a specific purpose in mind, rather than simply hand cash over to charities, and many establish a trust or foundation to manage their donations.
Regardless of age, the rules of business still apply: successful entrepreneurs are typically passionate, hard-working and ambitious. Increasingly, however, the new generation of company founders are using the internet to expand their businesses at a speed not seen in the past. They are also creating businesses with a social conscience.