Posted August 16, 2021 by Mark Perna
Expectations, legacy, life after Covid and when it’s time to call it quits—a new study reveals four tough questions that entrepreneurs across all generations are asking themselves. Mark’s article, “Will My Business Leave The World A Better Place? And 3 More Soul-Searching Questions Entrepreneurs Ask,” published at Forbes.com on August 3, 2021.
As corporate America rebounds from the pandemic, how are all the small businesses out there feeling about life and work in a post-pandemic landscape?
Xero recently surveyed 2,400 small business owners across North America about their lived experience as entrepreneurs. Four distinct generations—Generation-Z, Millennials, Generation-X and Baby Boomers—expressed a range of feelings about their companies, with some optimistic about the future and others less so. Common to all, however, were the conflicting feelings that come with shouldering the cares and complexities of a business venture.
As an entrepreneur myself, I know the soul-searching that I’ve done regarding my business over the past 17 pandemic months. What follows are four questions that all entrepreneurs ask themselves at some point—and how the data shows we’re answering them.
Expectations versus reality—the two never match up as well as we think. A majority of business owners (45%) started their business so they could enjoy more flexibility and control in their professional lives. But having more flexibility and control doesn’t necessarily mean you’ll have less stress—a fact that a majority of entrepreneurs cite as the single largest misconception about starting a business (47%).
Other areas where expectations didn’t line up with reality include:
Digitization, especially of the customer experience, can alleviate some of these challenges. “Providing for modern customer needs allows small businesses to grow and compete against some of the largest brands in their respective industries,” says Ben Richmond, US Country Manager at Xero. “Small business management software, such as the accounting tools offered within Xero’s third-party app ecosystem, can help smaller entrepreneurs track their finances closely and efficiently without a significant commitment of time or effort.”
Embracing digitization where it makes sense can improve both profitability and stress levels—helping to move the experience a little closer to what you signed up for.
Xero found that more than half (58%) of small business owners are giving themselves five years or less to sink or swim. Newer businesses are cutting that time even shorter, with 60% of business owners that have been operating less than one year and 50% of those that have been operating one to two years, allowing themselves a maximum of two years to determine success or failure. Only a third have not set themselves a time limit to decide success or failure.
Since every business is unique, there’s no right or wrong timeframe to determine your company’s continued viability. In keeping with the seemingly accelerated pace of everything today, more and more entrepreneurs appear to be working against a short-term goal. Like the decision to start the business in the first place, soldiering on or calling it quits is not a choice to be made lightly.
Income versus impact is a key question for entrepreneurs. Achieving profitability was individuals’ highest motivation (48%) before they started their business, followed by 34% who wanted to make more money than they were in their previous job. Initially, creating a legacy through the business was not a major motivation for either Gen-Z (10%) or Baby Boomer entrepreneurs (3%).
Once the business was operational, however, things shifted. Profitability was still a measure of success for 30% of owners, but creating a legacy claimed second place at 28% and strategic growth came in third at 26%. “Gen-Z entrepreneurs are finding that fulfilling their own individual purpose and pursuing their passion is a stronger motivator than generating a lucrative income, though of course financial stability and freedom are still factors,” says Richmond.
“I predict many Gen-Z business owners will look at their success through the lens of the question, ‘Yes, I sold X amount of product and made X amount of money, but did I leave the world a better place?’”
Younger entrepreneurs are more likely to be positive about the future, with just 47% of Gen-Z believing the pandemic will have a long-term economic impact, compared to 79% of Boomers and 71% overall. Millennial small business owners are the most optimistic, with 50% expecting a strong economic recovery and 38% believing that people will go back to life as it was before the pandemic interrupted it. “Younger people are generally more predisposed to positive thinking, particularly when it relates to something they’re ambitious about and working toward,” says Richmond.
Experience may also color the lens through which each generation views the post-pandemic landscape. “While older entrepreneurs have worked through the Great Recession, the “dot com” bust and several others, Gen-Z business owners’ experience with recessions is strictly limited to the pandemic,” says Richmond. “Since many of these downturns have historically led to stagnant markets for multiple years, older entrepreneurs are predictably wary of an immediate bounce-back.”
But far from discouraging business owners, the pandemic has actually spurred some to a fresh passion for what they do. A majority (58%) say that the pandemic has not lessened their desire to continue running their business, with 29% saying it has actually increased their entrepreneurial vision, particularly 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 provided the impetus to start a business, as entrepreneur Lauren Brands found. “Before COVID, I would have never said I wanted to be an entrepreneur/business owner,” she says. “Having the opportunity to work from anywhere and be my own boss were really the biggest motivators for me starting my business during the pandemic.”
These four questions, revolving as they do around expectations, time, legacy and what the future looks like, have an infinity of different answers based on the unique factors of the business and the owner’s perspective and generation. But, varying as our responses may be, these decision points are part of every entrepreneur’s planning and projections.
One factor in the overall experience of entrepreneurship could be how much or little the owner collaborates with others to share the load. “When you’re a small business owner, it can often seem like there are never enough hours in the day,” says Richmond. “Small business owners are used to a ‘do it yourself’ mentality, but embracing a ‘do it together’ approach by partnering with a trusted advisor like an accountant or bookkeeper can give you a competitive edge.”
The pandemic has changed life and work for everyone, and small business owners are no exception. It’s up to them to demonstrate the same resilience, grit and persistence in building their business that got it started in the first place.