As millennials continue to grow their presence in the small business (SMB) community, the dynamics of SMB finance are also changing. According to some experts, millennial small business owners no longer accept mediocre or sub-par services from their financial providers. They demand technology and an all-around better banking experience.
Whether financial institutions are ready or not, the millennial entrepreneur is a rising force in their customer base. New research from First Citizens Bank released last week found more millennials want to become small business owners, and more existing millennial small business owners are focused on growing their businesses.
The bank’s latest Small Business Forecast survey assessed 300 small businesses across California, Florida, South Carolina and North Carolina and found evidence that the younger generation of entrepreneurs has the potential for big impacts on the national economy.
“2017 continues to be a strong year for small businesses,” said First Citizens Bank Manager of Sales Effectiveness Kate Stackhouse in a statement announcing the research, “and small business owners are poised to use their ideas and accomplishments to have an even greater impact on the economy.”
Stackhouse added that the financial service providers of these entrepreneurs have to react appropriately to their needs in order to support this economic impact. Below, PYMNTS highlights some of the data points from First Citizens Bank’s latest report that offers insight into just what those needs are.
—82 percent of millennial entrepreneurs plan for their businesses to expand in the next six to 12 months, above the overall average of 71 percent across age groups. First Citizens concluded that millennial small business owners are generally more optimistic than their peers of other generations when it comes to business growth.
—68 percent of small business owners across age groups are optimistic about the economy, but millennial entrepreneurs are especially positive, with 81 percent noting they are optimistic about future economic conditions, an increase from 2016 levels, researchers noted. Outlooks on local state business climates were also generally positive, said First Citizens; North Carolina saw the greatest increase in state economy optimism this year compared to last.
—34 percent of all SMB owners plan to access bank loans, personal savings or a business credit card in the next six to 12 months in order to expand their businesses.
—One in five millennial small business owners say they didn’t expect employee retention to be as hard as it is, while 47 percent of millennial entrepreneurs say they plan to address their concerns about employee retention by hiring additional workers. Business owners that are in the skilled trade industry show a greater sense of responsibility than their staff compared to business owners that aren’t in this industry (42 percent versus 28 percent, respectively).
—64 percent of entrepreneurs say their customers find out about their businesses via websites, suggesting that small business owners are focusing on digital channels for their marketing efforts. Sixty percent added that their customers discover their businesses via social properties, while 49 percent said social media is also a crucial source to learn about small business trends.
—83.1 million millennials now make up more than a quarter of the U.S. population, according to U.S. Census Bureau statistics as cited in Small Business Trends, which covered the survey last week. Millennials now take up a greater portion of the population than baby boomers, and the numbers present a clear reason why the financial services industry will be keen to pay attention to this growing generation of small business owners.