A semiannual report that takes the temperature of small-business owners (SBOs) across three age groups yields survey data about the youngest small business owners (ages 18 to 34) that may poke holes in some assumptions about them – and provide a much-needed marketing opportunity for banks that can understand their goals and needs.
The survey, Bank of America’s Small Business Owners Report, was conducted by a third-party organization, Braun Research. The responses were anonymous, so it wasn’t possible to determine which if any had BofA ties, or even their business sector. Millennial (ages 18 to 34) respondents may have been more weighted toward those in their early 30s rather than younger. The other designated age ranges were Generation X (35 to 49), and Boomers (50 to 68). The survey quizzed 1,000 national respondents and also 300 in each of nine smaller submarkets, New York and Boston among them.
The findings: Millennial SBOs are the most optimistic of the three surveyed age groups about expansion and hiring prospects over the next five years. Seventy-eight percent of national Millennial respondents said they expect revenue increases over five years; 68 percent said they planned to expand locations over that time. Nationally, 82 percent said they expected their local economies to expand; in the Boston market, that total was 44 percent, as compared to 30 percent in the same report done a year ago.
This may be part of the zero-to-sixty dynamic in which for startup businesses, any short-term gain is measured in full. Also, the economy is improving. To explain the difference in local stats, the 82 percent national response encompasses local economies that likely crashed more profoundly than the Boston economy, and then rallied back, relatively stronger, as a result.
For anyone who has ever been asked the dreaded five-year question by a job interviewer, they know our identities. But the BofA survey was anonymous.
Millennials reported that they were more likely to fund their businesses by credit card. Hardly new, but it may reflect reluctance to borrow from family or outside investors, or that their businesses don’t require big capital outlays at startup, but may do so later.
Or, it may be that Millennial SBOs are drawing on alternative funding sources like Kickstarter or GoFundMe. Additionally, they may be serial entrepreneurs, on track to sell their businesses to a bigger player, and start another one. So much for the “where-in-five-years” response.
If a bank can participate in another early stage of business development, it would be the bank’s equivalent of zero to 60. Banks seeking to serve Millennial SBOs will need a lending staff who can understand the types of businesses that Millennials start – and the technologies they use to get there – and realize that helping with an early-stage business sale can be as lucrative as the five-year question, particularly in terms of long-term loyalty.
