In November, George & Company released findings about two generations, Baby Boomers and Millennials, and the changing of the guard of small business owners from the former to the latter. While an ideal time now as businesses shake off the last of the Mortgage Crisis recessions, some have voiced concerns about a lack of Millennials showing interest or being able to make serious offers. Thanks to a survey just released by the Small Business Majority and Young Invincible advocacy group, there is now insight into the lack of Millennial business buyers, and it is not due to any of the pejorative descriptions laid at the feet of this young generation, but instead college loans.
This North Star survey, which was released on January 27th, showed two major results: a majority of millennials were interested or currently owned a business or organization, and that their biggest concern or roadblock to their entrepreneurship was college debt. Millennials represent the best educated generation in terms of college attendance, but due to rising tuition prices are also on the cusp of a debt crisis. According to another survey by State Data, seven out of ten college graduates from public and non-profit college have student loan debt on average of almost $30,000, a number which has been rising each year.
Almost half (48%) of Millennials in the survey for Small Business Majority and Young Invincible say that student loans have impeded their plans to own a business, while 38% of those who would like to own a business currently have no plans due to college debt. These reasons are one of the reasons businesses are seeing 20% less in small business ownership rates in the 20-34 age range than two decades ago in 1996, according to the Kauffman Foundation.
One of the major ways student debt interferes with starting a business is getting a business loan for a startup. With possibly poor credit from college and little to hold in lieu of the loan, many banks are not willing to provide funding, with the Millennial themselves unable to save money due to loan repayments. Those young entrepreneurs interested in owning a business should look at buying an existing business as a firmer investment for themselves and the bank, with assets available for leverage against the loan. Many of these options can be opened by using a business broker.
"One of the reasons to approach a business broker early in your planning phase", said Chris George of George and Company, an M&A Firm and Business Brokerage. "Is the financial options they can provide to buyers. Not only can a brokerage help you secure previously unknown and favorable rates from a bank, but they can also work with the seller to provide seller-side financing and investment when buying their business."
The national scientific opinion poll was conducted on behalf of two advocacy groups which represent the two sides to problem: the Small Business Majority, a national small business advocacy organization founded and ran by small business owners to discover and solve the biggest problems facings small businesses; and the Young Invincible organization, a by-Millennials, for-Millennials group working as a platform to engage and educate young adults on multiple topics, including higher education, health care, and entrepreneurship. The survey was conducted by North Star Opinion Research.