Boomers vs. Gen Y Business Owners — Survey by Amex
We report on economic conditions and other issues that affect the Small Business Community and its future outlook. This survey is important because it is essentially an interview with the generations that hold, in their hands, the future impact of small business on our economy. The outlook is encouraging.
Let’s preface the Survey with why Small Business is so important to our economy.
- Small Businesses make up 97% of America’s exporters and produce 26% of all export value. (Fred Smith, FedEx Corp. CEO May 2006)
- Small Businesses employ 50 percent of the country’s private sector workforce (U.S. SBA June 2006)
- Small Businesses have generated 60 to 80% of net new jobs annually over the last decade (U.S. SBA June 2006)
- The estimated 25.8 million Small Businesses in the United States represent 99.7% of all employer firms. (U.S. SBA June 2006)
In a Head-to-Head Match-Up Generations Agree Experience Gives Boomers the Advantage in Business; Gen Y More Passionate but Baby Boomers More Energetic.
Baby Boomer and Generation Y entrepreneurs share optimism about the economy and confidence in their ability to succeed in business, according to the OPEN Ages survey from OPEN from American Express®, a new survey examining the attitudes of Baby Boomer and Generation Y business owners. Large numbers of Generation Y and Baby Boomer business owners are optimistic about the U.S. economy over the next year (64% and 62%, respectively), and most are certain that the decision they made to go into business was the right one, with Baby Boomers being the most assured (90% vs. 76%). Passion, rather than money, fuels the success and entrepreneurial drive of both generations, Generation Y and their parents’ generation, the Boomers.
“Small businesses are responsible for 60 to 80 percent of the net new U.S. jobs created annually over the past decade,” said Susan Sobbott, president, OPEN from American Express. “It is good news for the economy when both the established generation and the generation representing the future of small business are optimistic about economic growth and their own success.”
The two generations diverge, however, on a host of issues from career influences, risk-taking and serial entrepreneurship. More Generation Y owners say ‘having fun is a priority in my business’ (75% Generation Y, 66% Baby Boomers), and Generation Y also has more trouble letting go. According to the OPEN Ages survey, Generation Y business owners are more likely to find it ‘very difficult’ to leave their work to go on vacation (39% vs. 26%). They are also more likely to put in the long hours – 10 or more hours a day (66% Generation Y vs. 58% Baby Boomers), and less likely to describe their business culture as ‘casual or relaxed’ (66% Generation Y vs. 77% Baby Boomers). Surprisingly, Boomers also report having more natural energy than their younger peers (60% vs. 50% Generation Y).
Passion is the Primary Motivator; Money is Down the List
Passion is the leading driver for both Generation Y and Baby Boomers in starting their businesses (55% Generation Y, 40% Baby Boomer), followed by the perception that they are “natural” or “born” entrepreneurs (35% Generation Y, 37% Baby Boomers). Money was not an important factor for either generation (18% Generation Y, 14% Baby Boomers), and is less of a source of satisfaction than family and friends, their own independence, and personal accomplishments.
In the area of risk, nearly three quarters of Generation Y entrepreneurs (72%) say they like to take risks compared to just over half of Baby Boomers (53%). Fifty-nine percent of Generation Y believes they take more risks than the average person compared to 50% of Baby Boomers. Generation Y is almost twice as likely as Baby Boomer small business owners (59% vs. 33%) to be or plan to be ‘serial’ entrepreneurs, owning or planning to own more than one business. Among this generation, men take the lead for serial entrepreneurship with two-thirds owning or planning to own more than one business (67% vs. 46% of women).
Working Harder to be Their Own Boss
Valuing their independence, Baby Boomers and Generation Y business owners are both prepared to work more in order to be their own boss. On average both groups spend 10 hours per day working on business, and typically conduct some type of business activity 6 out of 7 days.
Generation Y entrepreneurs are more likely to have started their business right out of school (27% vs. 9% for Baby Boomers). They are also more likely to look to their parents’ experiences as life-shaping influences, with 55% citing their fathers’ work experiences as a factor in starting their own business vs. 44% Baby Boomers. According to the survey, many Baby Boomers (26%) started their business because they were financially unable to retire.
Societal Concerns Shape Small Business Decisions
There is broad agreement across the generations on key issues directly affecting small businesses, including the net benefits of free trade (72% Gen Y, 69% Baby Boomers) and the use of private investment accounts to save Social Security (72% Gen Y, 62% Baby Boomers). Surprisingly, the majority of both generations agree that raising minimum wage would not hurt small businesses (60% Generation Y vs. 58% Baby Boomers).
The generations differ, however, on the benefits of immigration. Fifty-two percent of Generation Y believes that immigration is beneficial to the economy compared to only 44% of Baby Boomers.
Experience Trumps Technology for Business Success
Despite Generation Y’s perceived greater ease with technology– two-thirds (66%) of Generation Y entrepreneurs consider themselves tech savvy compared to less than half (47%) of Baby Boomers–both age groups agree that experience trumps tech savvy in terms of business success. More than half (59%) of Generation Y think that older entrepreneurs have an edge based on their years of experience, and the vast majority of Baby Boomers agree (88%).
Nonetheless, Gen Y owners are more likely to agree that ‘technology is vital to my business’ (86% vs. 76% Baby Boomers) and that ‘technology is vital to my personal life’ (69% vs. 54%). Despite some discrepancies over the importance of technology in their lives, both age groups agree that ‘it is important to disconnect from technology during parts of their day’ (71% Gen Y, 74% Baby Boomers). More than half of small business owners in both generations believe that ‘technology intrudes on their personal life, but benefits their business’ (56% Gen Y, 58% Baby Boomers).
Different Media Influences
Each generation favored unique preferences for news and information sources that shape their decision making. Baby Boomers, not surprisingly, are most likely to get their news from traditional sources such as television (50% vs. 27% Generation Y) and newspapers (19% vs. 6% Generation Y). Generation Y owners are more likely to get their news from the Internet (31% vs. 9% Baby Boomers) and word of mouth (12% vs. 3%). Generation Y entrepreneurs are also more likely to start a blog to discuss their business (8% vs. 1%).
The OPEN Ages Survey, released for the first time this spring, is based on a nationally representative sample of 602 small business owners of companies with fewer than 100 employees. Half of these owners are from Generation Y (ranging in age from 18-29) and half are Baby Boomers (ranging in age from 42-64). The survey was conducted via telephone by International Communications Research from March 8-March 23, 2007.