The economic news in the United States seems ever more frustrating. One often-ignored bright spot, however, is the 40 percent of Americans in their 20s to 40s starting their own businesses. These small businesses are responsible for 80 percent of new jobs and 50 percent or more of all employed workers.
The trend of Gen Y entrepreneurs
Population estimates put the number of “Gen Y” individuals in the United States at 77 million. Gen Y is loosely defined as individuals born between the mid-1970s and mid-1990s. Some reports put the number of Gen Y entrepreneurs at 20 percent. Some researchers say that up to 40 percent of the generation want to or are planning to start up their own businesses. The reasons are varied, but experts point to everything from a distrust of Wall Street and big businesses to life experiences, such as watching parents be laid off during an economic downturn.
Creating jobs, one business at a time
The statistics for job-creation by younger small businesses owners can be difficult to parse, as the Small Business Administration does not specifically track the age of business owners. The “Our Time” organization, which is an invitation-only group for young entrepreneurs, estimates that the 125 member businesses have created more than 7,000 jobs. This difference is especially marked in rural areas and inner cities, where small businesses account for between 66 percent and 80 percent of all new jobs created.
The financial challenges facing entrepreneurs
For many young entrepreneurs, the challenges that keep them from starting up their businesses are comparatively small. Student loans and start-up costs are two of the most often-cited reasons for not moving forward with their plans. The average start-up costs for business vary according to industry, but the average in 2006 was $10,000. Most small-business owners pay their start-up costs themselves, with savings or from their day jobs. Some entrepreneurship groups are lobbying congress to help young entrepreneurs by doing everything from forgiving student loans to helping with startup costs. Some entrepreneurs, however, are not waiting and are instead turning to alternative funding sources such as Kickstarter to start their businesses.
Sources
CNN Money http://money.cnn.com/2006/08/17/smbusiness/wells_fargo_study/index.htm
NSBA http://www.nsba.biz/vote/70_MAV_Factsheet.pdf (PDF)
Small Business Administration http://www.sba.gov/advocacy/7495/8420
USA Today http://www.usatoday.com/money/smallbusiness/columnist/strauss/2011-08-08-small-business-can-save-america_n.htm
Our Time http://www.ourtime.org/
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