It seems as if every day, I hear about another Millennial entrepreneur launching an innovative new business. Indeed, more than half (51 percent) of Millennials (ages 18-34) either own or would like to own a business someday, according to a recent survey by the Small Business Majority.
But apparently, those numbers could be even higher — if only financial concerns weren’t holding would-be Millennial entrepreneurs back.
Here are some of the disturbing numbers the survey found:
Nearly half (48 percent) of Millennials paying off student debt who currently own or have plans to own a business say their student loan payments have hurt their ability to start a business. And 38 percent of the Millennials interested in starting a business but who have no current plans to do so say their student loan payments affect their ability to start a business.
Student debt is also making it more difficult for Millennials to invest in their businesses or to hire employees. Among those who are still paying off student loans, 43 percent of those who own or have current plans to own a business, and 38 percent who would like to own a business but have no current business plans, say their student debt affects their ability to invest in the business or hire new employees.
Even more than student debt, concerns about retirement are hindering Millennials from starting businesses. A whopping 75 percent of Millennials who either own, plan to own or would like to start a business one day say the lack of an employer-sponsored retirement plan is a barrier to entrepreneurship. More than one-third (36 percent) say it is a “serious” concern. Not surprisingly, those who are still paying off student debt are more likely than other respondents to be worried about not having an employer-sponsored retirement plan.
We've all heard a lot in recent years about the problems that student debt is causing for young people, their families and their futures. But if student debt continues to hinder Millennials from following their entrepreneurial dreams, our country’s role as a leader in innovation and entrepreneurship will suffer, too.
The good news is that Millennial entrepreneurs still have the DIY spirit startups are known for: Almost three-quarters (76 percent) started their businesses themselves. Just 12 percent inherited the business, while 8 percent received it as a gift or through marriage.
Tapping into that attitude, here are some suggestions for ways that young entrepreneurs can overcome the hindrance of student debt.
- If possible, see if you can live with your parents while starting your business. This makes it more feasible to pay off your student debt or, if it's currently deferred, to invest in your business.
- Do you have parents or other relatives who are willing to invest in your business? Consider asking if they are willing to help repay your student debt instead. This enables you to put earnings back into the business, without having two types of debt hanging over your head.
- Set up your own retirement plan. No, you won't get an employer match, but there are retirement plans designed for the smallest businesses, even those with just one employee (you).
- Buddy up. Consider starting your business with a partner or partners to share the burden of startup costs.
Need more advice, suggestions or just moral support? You can get all three for free any time from your SCORE mentor. Visit www.score.org to learn more.