Expectations, legacies, life after Covid and when to stop – a new study reveals four tough questions entrepreneurs of all generations are asking themselves.
Entrepreneurs are cautiously optimistic about the future
As American business recovers from the pandemic, how are all the small businesses out there feeling about living and working in a post-pandemic landscape?
Xero recently surveyed 2,400 small business owners across North America about their experiences as entrepreneurs. Four different generations – Generation-Z, Millennials, Generation-X, and Baby Boomers – expressed a range of feelings about their companies, with some being optimistic about the future and some less. What they all had in common, however, were the conflicting feelings that come with overcoming the worries and complexities of an organization.
As an entrepreneur myself, I am familiar with the soul searching that I have been undertaking in relation to my business over the past 17 pandemic months. What follows are four questions that every entrepreneur asks himself at some point – and how the data shows that we answer them.
1. Is that really what I signed up for?
Expectations versus reality – the two never go together as well as we think. The majority of entrepreneurs (45%) started their business in order to enjoy more flexibility and control in their professional life. Having more flexibility and control doesn’t necessarily mean you have less stress, however – a fact cited by the majority of entrepreneurs as the biggest misconception about starting a business (47%).
Other areas where expectations did not match reality include:
- You have more control over your time (29%)
- More fun than working for someone else (25%)
- You will make more money than before (23%)
- They spend a lot more time being creative / innovative than doing everyday things (31% of newer business owners versus 21% overall)
Digitization, especially the customer experience, can alleviate some of these challenges. “Delivering modern customer needs enables small businesses to grow and compete with some of the biggest brands in their respective industries,” said Ben Richmond, US country manager at Xero. “Small business management software, like the accounting tools offered within Xero’s third-party app ecosystem, can help smaller business owners keep track of their finances accurately and efficiently without spending a great deal of time or effort.”
Digitizing where it makes sense can improve both profitability and stress levels, and help bring the experience a little closer to what you signed up for.
2. How long should I give my business to succeed or fail?
Xero found that more than half (58%) of small business owners give themselves five years or less to sink or swim. Newer companies cut this time even further, with 60% of business owners being in business for less than a year and 50% of those who have been in business for a year or two, leaving a maximum of two years to decide on success or failure. Only a third did not set a deadline for deciding on success or failure.
Since every business is unique, there is no right or wrong time frame to determine the continued viability of your business. In line with today’s seemingly accelerating pace, more and more entrepreneurs seem to be working against a short-term goal. Like the decision to start the business in the first place, it’s not an easy decision to move on or to give up.
3. Will my business make the world a better place?
Income versus impact is a key question for entrepreneurs. Achieving profitability was the top motivation among employees (48%) before starting their business, followed by 34% who wanted to make more money than their previous job. Initially, creating a legacy through business wasn’t for Gen Z (10%) or Baby Boomer (3%) entrepreneurs.
However, when the business was up and running, things changed. Profitability was still a measure of success for 30% of owners, but heritage creation came second at 28% and strategic growth came third at 26%. “Gen Z entrepreneurs are finding that fulfilling their own individual goals and pursuing their passions are stronger motivations than making a profitable income, although financial stability and freedom are, of course, still factors,” says Richmond.
“I expect many Generation Z business owners will see their success through the lens of the question: ‘Yes, I sold X products and made X money, but did I leave the world a better place?'”
4. What will my business be like after the pandemic?
Younger entrepreneurs are more positive about the future, as only 47% of Gen-Z believe the pandemic will have long-term economic effects, compared with 79% of boomers and 71% overall. Millennial small business owners are the most optimistic: 50% expect a strong economic recovery and 38% believe people will live again as they were before the pandemic interruption. “Younger people are generally more inclined to be positive thinking, especially when it comes to something they are ambitious for and are working toward,” says Richmond.
The experience can also color the lens through which each generation sees the post-pandemic landscape. “While older entrepreneurs have weathered the Great Recession, Dot-Com Bankruptcy, and a few others, Gen Z business owners’ experience of recessions has been strictly limited to the pandemic,” said Richmond. “With many of these downturns in the past resulting in stagnant markets for several years, older entrepreneurs are predictably cautious about an immediate recovery.”
But far from discouraging business owners, the pandemic has spurred some new passions for what they do. A majority (58%) say the pandemic hasn’t diminished their desire to continue their business, with 29% saying it actually improved their entrepreneurial vision, especially among younger business owners (43% of Gen-Z, 38% of millennials). and 18% of boomers) and women (34% versus 24% of men).
In some cases, the pandemic even gave the impetus to found a company, as entrepreneur Lauren Brands discovered. “Before COVID, I would never have said that I wanted to be an entrepreneur / business owner,” she says. “The ability to work from anywhere and be my own boss has really been the biggest motivator for me to start my business during the pandemic.”
Four questions, infinite answers
There are myriad answers to these four questions, which revolve around expectations, time, legacy and what the future will look like, based on the unique factors of the company and the perspective and generation of the owner. But as different as our answers may be, these decision-making points are part of every entrepreneur’s plans and forecasts.
One factor in the overall entrepreneurship experience could be how much or little the owner works with others to share the burden. “As a small business owner, the day often feels like there are never enough hours,” says Richmond. “Small business owners are used to a ‘do it yourself’ mentality, but a ‘do it together’ approach by working with a trusted advisor like an accountant can give you a competitive advantage.”
The pandemic has changed life and work for everyone, and small business owners are no exception. It is up to them to demonstrate the same resilience, perseverance, and persistence in building their business that they began with in the first place.