If you were to draft a pen portrait of a successful entrepreneur, a number of characteristics might come to mind: they like to be the boss; their word is their bond; they have an instinct for judging character; they are experts at identifying and managing risk.
Research shows that these are all qualities that are strongly associated with the personality of entrepreneurship. However, most important of all, psychologists say, is the desire for autonomy and the desire to make money.
Autonomy is the urge that many entrepreneurs have to be the boss, to run the show and to step away from the corporate hierarchy. In fact, psychologists suggest that it is this characteristic that ultimately drives entrepreneurs to accept the risks of entrepreneurship: a heavy workload and an uncertain financial future.
The desire for profit is clearer and has long been the decisive factor that tips the balance for many to go into business for themselves.
Yet, many recent studies, including research undertaken by HSBC Private Banking among 4,000 successful entrepreneurs, have found that attitudes are changing. In particular, the next generation of entrepreneurs in their 20s and 30s are much less driven by the desire to be the boss and to make money than those in their 50s.
Instead, this digital generation of Millennial entrepreneurs is emerging with a much stronger emphasis on seeking influence rather than autonomy, and social impact rather than personal wealth.
This raises the interesting question of whether the future businesses of Millennial entrepreneurs will have the same economic impact as those of entrepreneurs in their 40s and 50s?
What is clear is that getting the right blend of entrepreneurial qualities is important for success and the Millennial generation are experimenting with that formula.
Millennial entrepreneurs – new generation, new priorities
Millennial entrepreneurs in America are at the front of this curve. Here, the emphasis on autonomy is sharply in decline in the new generation of entrepreneurs. While, 49 per cent of American entrepreneurs in their 20s say they went into business to be their own boss, this is substantially lower than the 64 per cent of American entrepreneurs in their 50s.
Instead, the Millennial generation of entrepreneurs in America is more focused on building their influence For example, 47 per cent said they were motivated to go into business by the desire to better themselves, 29 per cent wanted to have a positive impact in their communities and 32 per cent wanted to build a name for themselves. This compares to 43 per cent, 17 per cent and 19 per cent of American entrepreneurs in their 50s respectively.
|To build a name for yourself||32.1%||26.6%||24.4%||18.6%|
|To have a positive impact in your community||28.5%||27.3%||17.9%||16.6%|
|Age||To build a name for yourself|
|Age||To have a positive impact in your community|
At the same time, Millennial entrepreneurs are spending considerably less time on business activities like developing new business, delivering products and services, and business administration.
In fact, American Millennial entrepreneurs are spending on average 42 minutes less each day on delivering solutions to clients when compared to those over 50.
While they might be spending less time on delivering solutions to clients, theirs is increasingly a culture of “working smart, not hard”. They spend more of their time focused on the strategy of their companies and managing the teams around them when compared with the Baby Boomer generation.
For them leadership is as much about inspiring and educating others as it is about leading from the front and being accountable for business decisions. As a consequence their leadership style is more di use and they are less hands-on in the day to day running of the business.
A similar pattern can be seen in Europe, where in the UK, France, Germany and Switzerland, entrepreneurs in their 20s are half as likely as those in their 50s to say the main reason they went into business was to be their own boss. They are also more focused on having a positive impact on their communities; although in the European context this is often expressed in terms of creating employment rather than having a broader social impact in their communities.
Like their American counterparts, Millennial entrepreneurs in Europe also report spending less time and effort on business administration tasks when compared to those in their 50s, and more time on strategy and sta management than those in their 30s and 40s.
The psychology of success
What is clear is that in America and Europe in particular there is a changing balance of priorities between the generations. Those from the Baby Boomer generation emphasise self-determination and personal profit.
Millennial entrepreneurs, meanwhile, are placing more emphasis on the social capital required for successful entrepreneurship, such as relationship building and reciprocity.
When considering the balance between these qualities, psychologists agree that the traits of self-determination are essential to kick-start entrepreneurs into business ownership. It is the autonomy that comes from being the boss that spurs many entrepreneurs to accept the risks of potentially lower earnings and greater uncertainty. In other words, for entrepreneurs the benefits of self-determination trump the fear of failure.
Social qualities, like trust, reciprocity, relationship-building and optimism are also important. These factors combine to enable successful entrepreneurs to do deals, to build and sustain networks and keep going against the odds. What is less clear is whether these qualities in isolation can generate economic success. In this context it is interesting to compare and contrast Millennial entrepreneurs around the world.
Notably, entrepreneurs in their 20s from the Asia Pacific region show a greater balance between the six traits of entrepreneurship. On the one hand, they are aligned with the global Millennial trend that being the boss is not their primary motivation for going into business.
However, they have a stronger profit motivation than their counterparts in America and Europe. Forty five per cent of entrepreneurs in their 20s across Mainland China, Hong Kong, Singapore and Australia say they went into business to increase their personal wealth. This compares to just 29 per cent in Europe and 40 per cent in America.
This drive to make money influences their approach to the working day. Indeed, entrepreneurs in their 20s in the Asia Pacific countries on average work one hour and 24 minutes more than entrepreneurs in their 50s across the region.
They are spending similar amounts of time on developing new business and delivering solutions, but they are also committing much more time to tasks like leading company strategy and team management. In fact, on average they commit almost half an hour more each day to corporate strategy than entrepreneurs in their 50s and they are strongly focused on inspiring and educating others.
The journey of an entrepreneur is filled with so many beautiful moments and obstacles. Don’t be afraid of failure. Failure will teach you the most amazing things, that’s when you know you went wrong, but also when you know what you need to do to make it right. - Masoom Minawala, founder of StyleFiesta
Perhaps most interesting of all, while the businesses run by Millennial entrepreneurs in the Asia Pacific region are not as large as those run by their counterparts in America or Europe – the average turnover is $9 million – their growth aspirations are higher, with a 14 per cent annual growth rate target, versus 10 per cent and 12 per cent in America and Europe respectively.
These future leaders in the Asia Pacific region may not want to be the boss to the same extent as older entrepreneurs, but they want to achieve financial rewards. More than that, they are emerging with a strong blend of the wider traits associated with successful entrepreneurship and are putting in long hours to achieve their goals.
The hive mentality
By contrast, in America, Europe and Asia, Millennial entrepreneurs are digging deep to hone their socially-oriented entrepreneurial style.
When asked which skills gaps are most likely to hold them back, Millennial entrepreneurs highlight networking, public speaking, creative thinking, people management and strategic acumen as the areas for personal development. These are all activities linked to the ability build relationships, share ideas and do deals.
In other words, their strategy for success is to refine their social capital. Moreover, their hive mentality makes them more open to other individuals and other ideas who can help nurture their talents.
On one level this is unsurprising for this most globally networked and digitally social of generations. On another level, it is generating a whole new model for entrepreneurial drive.
Where the older generation looked inward to find the resilience to withstand the rigours of entrepreneurship, the Millennial generation is looking outwards.
My business adventures have been a rollercoaster, there have been huge soaring highs and crushing lows. You have to treat those as battle scars; they’re valuable learnings that can help you going forward. When you get knocked down, you have to pick yourself up, dust yourself o and keep going.” - Michael Acton Smith, founder of MindCandy
Perhaps most interestingly, this can be seen in their strategies for coping with failure. Where the Baby Boomer generation was self-reliant in the face of failure, the Millennial generation is more comfortable building their confidence in a network.
Many business schools now include learning from failure courses as part of the entrepreneurship curriculum and self-help networks have formed in the physical and digital worlds allowing business owners to share their experiences and learn from mistakes.
These emerging trends and attitudes among Millennial entrepreneurs globally point to the dawning of a new age of entrepreneurship, where social networks are as important and potentially more important than self-reliance.
It is hard to judge right now what the economic impact will be of this changing culture over time. Entrepreneurs who go into business at an early age often come from business owning families, which can provide a head start both in business and financially.
It is therefore not surprising to find that successful Millennial entrepreneurs are already running businesses that are on par with those in their 40s and 50s. The average turnover of businesses run by successful entrepreneurs in their 20s in America, for example, is USD14.5 million, compared to USD9 million of turnover for businesses run by American entrepreneurs in their 50s.
However, harnessing future economic growth will mean not just recognising, but also working to develop this new potential.
It is only by understanding the dynamics of entrepreneurship through the generations that business leaders can be supported most effectively to achieve their goals – personally, professionally, financially and, of course, socially.