40% of Gen Zers Plan To Start Their Own Business Within the Next Year, Survey Finds
Most Gen Zers would rather go into business for themselves than work for someone else — and many aren’t wasting any time getting started.
According to a new GOBankingRates survey of more than 1,000 people, a majority of the youngest adults would rather risk it all on an entrepreneurial endeavor than stay at their current jobs. Among those inclined to take the leap, nearly half of 18- to 24-year-olds plan to launch within a year.
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But with business plans to write, loans to acquire, company structures to choose, permits to apply for and bank accounts to open, that’s one busy year — and their plates will only get fuller once they’re up and running.
To ensure their ambition aligns with their expectations, GOBankingRates asked small business experts what the emerging generation of prospective entrepreneurs should expect and how they can prepare for what’s ahead.
The Entrepreneurial Fire Burns Hot in Gen Z
The study showed that 54% of Gen Z would rather launch a business than take the salary, benefits and days off their current jobs afford them — and all but 14% eventually plan to branch out on their own.
Among those who plan to start companies, more than 25% intend to do so within a year. Another 21% have a nail-biting six-month timeline. Even many with more distant entrepreneurial horizons aren’t wasting any time — about 23% think they’ll be ready within two years.
The smallest percentages are farther out. About 18% anticipate opening a business within five years and 13% don’t have a definitive timeline.
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You Haven’t Made Any Mistakes Yet — Keep It That Way by Getting Guidance From the Start
Jennifer Compton is the CEO of J&L Communications, a full-service business consultancy specializing in B2B clients. She recommends securing strategic counsel like the kind she provides from the outset — and not because she’s partial to her industry.
“When you’re working for someone else’s company you just show up every day and do great work without worrying about any of the administration that’s handled behind the scenes,” said Compton. “Benefits, 401(k), accounting, contracts and insurance are all managed for you. But when you’re a small company, you’re handling all of that in addition to your client workload. I quickly realized I couldn’t handle all those things on my own. Getting the support I needed in everything from financial to legal advice was a critical next step, but not an easy one.”
Chase Purpose Over Profits
Jared Bauman successfully founded and sold two photography companies and then leveraged his expertise to launch the digital marketing agency 201 Creative, which helps businesses boost their revenues. He was recently where today’s ambitious young would-be entrepreneurs are right now — and he beat the odds by selling what he obsessed over.
“My advice to young founders is to first get crystal-clear on your motivations,” said Bauman. “Build a business around something that energizes you. Passion will sustain you through inevitable struggles. Next, solve a real problem for people. Purpose-driven companies outlast profit-driven ones.”
Start Small While Learning Large
Your passion for your product, offering or industry is not enough to make you a competent business owner. To succeed, you’ll have to learn the fundamentals of the game, whether they interest you or not.
“To give themselves the best chance to succeed, Gen Zers should invest in acquiring essential business skills,” said Ascendly Marketing president Marshal Davis, an entrepreneur with several seven-figure business sales. “Learning the basics of financial literacy, negotiation and digital marketing can make a significant difference. These skills will not only help in the initial stages but will be invaluable as the business grows.”
They should also get their feet wet while they learn instead of plunging into the deep end all at once.
“Gen Zers should start by validating the market demand for their business idea,” said Davis. “Conduct small-scale tests to see if people are willing to pay for your product or service. This initial validation can save both time and resources in the long run. Before diving into business operations, focus on running small, cost-effective marketing campaigns and use these campaigns to gauge consumer interest and collect data. This initial focus minimizes financial risk and provides invaluable insights for future scaling.”
Brace For Frustrating Delays in Profitability — and Budget Accordingly
Passion is a hallmark trait of the entrepreneurial spirit — but it serves you best when tempered with reasonable expectations.
“New business owners believe they can start a company and be successful within a year,” said Business Owner’s MBA (BOMBA) founder Deb Purvin, a business consultant who started and sold two $50 million companies. “However, what I see is that it takes 15 to 18 months for prospects to feel comfortable in a new business.”
It’s great to strive for rapid success — but don’t let your fire outlast your cash just in case.
“To finance a successful startup, funds should be set aside for 24 months,” said Purvin, a former member of the U.S. Ski Team who graduated from Dartmouth and Harvard. “With a good plan, the company should turn a profit by the end of the second year.”
Entrepreneur, Regulations. Regulations, Entrepreneur.
No matter what you do or sell, you should expect to encounter a blizzard of frustrating, expensive and always-changing regulatory hurdles every step of the way.
If you let them sneak up on you, your business will drown in them.
“It’s crucial to understand local, state and federal laws that pertain to their specific business model,” said Min Hwan Ahn, owner of the Law Office of Ahn & Sinowitz in Pennsylvania. “This includes regulations regarding business licensing, taxation, employee rights and intellectual property. By preemptively understanding these, they can avoid any potential legal hiccups down the line.”
Remember, Your Business Structure Is Your Legal Body Armor
The factors Ahn described and many others will determine what kind of business you’ll establish — and the stakes of that decision are high.
“Setting up a solid legal structure for their business — such as deciding between sole proprietorship, partnership, LLC or corporation — is vital,” said Ahn. “The structure they choose will determine many factors, including personal liability, tax implications and the future of the business.”
Ahn is a passionate attorney — but he’s also a practical one.
“While passion is the driving force behind most startups, it is equally important to comprehend any contractual agreements before signing them,” he said. “Make sure they fully understand what they’re agreeing to. There’s no such thing as being too careful while reading the fine print.”
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