Gen-trepreneur Z is making its mark on the future of small business

[Guest Microsoft Store Team]

[HEADING=1]How Gen Z is flipping the career paradigm on its head and navigating the entrepreneurial world independently. [/HEADING]

The data featured in this post is from an internal study, the "Small Business State of Mind" report, commissioned by Microsoft Corporation in April 2022 and conducted by Wakefield Research. In 2021 alone, Americans submitted over 5.4 million applications to start a new business. With the U.S. experiencing a small business boom, Gen Z, the generation known for bucking traditional paths, is shaping its future. They’re showing us their entirely unique perspective on work and success and shaking up the world as we know it with their social media prowess, value of self-expression and heightened social consciousness. With 62% of Gen Zers[ii] indicating they have started—or intend to start—their own business, Gen Z is making its mark poised to become the most entrepreneurial generation the world has seen. So, what does the state of small business look like today and how is Gen Z shaping this evolution? Microsoft Store’s "Small Business State of Mind" report—a survey of 1,000 small business owners with 0-24 employees—digs into the mindsets of today’s entrepreneurs to understand their work motives, lifestyles and vision for the future as they lead, navigate and plan for the opportunities and obstacles that lie ahead.

[HEADING=2]Key Findings[/HEADING]

A look at five small business trends shaping entrepreneurship as we know it:

1. 9-to-never. Gen Z small business owners are redefining the workplace hustle.
   
2. The do-good effect. Small business owners investing in social good are seeing the benefits.
   
3. Risky business. Small businesses are letting data breach prevention fall to the wayside.
   
4. Road to retirement. Why is Gen Z set on small business ownership? Early retirement.
   
5. TikTok over textbooks. Gen Z small business owners are leaning into TikTok for business advice while debating the necessity of a higher ed degree.
   

The workplace hustle experienced by Millennials—typically consisting of long work weeks and endless hours at a desk in front of a computer—has simply taken on a new form with Gen Z. The Gen Z grind may look similar to the Millennial hustle, but it has some key differences. Survey results show that 91% of Gen Z small business owners work unconventional hours outside of 9 a.m. to 5 p.m., and 81% of Gen Z small business owners work while on vacation, compared to 62% of small business owners overall. They wear multiple hats: nearly half of Gen Z (48%) and non-Hispanic Black small business owners (49%) have multiple side hustles, compared to 34% of small business owners overall. Additionally, a clear majority of Gen Z (64%) and Black, Indigenous and People of Color (BIPOC) small business owners (58%) operate at least half of their business on their phone, compared to 48% of small business owners overall. Not only does Gen Z hustle, but they’re fueled by a purpose. Half of Gen Z small business owners (50%) rank social good as among their top three business priorities compared to 39% of small business owners overall—more on this in the next section. “At Microsoft Store, we know technology is critical to supporting a flexible and mobile work lifestyle,” says Travis Walter, vice president of Microsoft Store. “It allows small business owners the ability to manage a business at anytime from anywhere, reach customers where they are at, and gives them space to focus on what really matters to them and their business.” As the world continues to navigate a two-plus yearlong global pandemic, and a period of vast change at a societal level, Microsoft Store found Gen Z small business owners adopting non-traditional priorities when it comes to their small business—social good. On top of that, the data exemplifies a “do-good effect”—positive impacts were reported as a result of these social good investments. The survey reported that half of Gen Z small business owners (50%) rank social good as among their top three business priorities, out of a list of options including financial stability, business growth and expansion, brand image/reputation, environmental sustainability and achieving fame. In fact, while 88% of small business owners overall put financial stability in their top three priorities, and 77% put business growth, that figure falls to 73% and 65%, respectively, among Gen Z small business owners. The focus on social good doesn’t stop with Gen Z—nearly two in five small business owners (39%) placed it in their top three business priorities. And it has made an impact in more ways than one. The data shows a “do-good effect,” with 88% of small business owners who prioritize social good in their business saying it helps their business grow and 44% saying it has positively impacted their mental health. Interestingly, 82% of Gen Z small business owners say prioritizing social good has helped their business grow, and 52% said it positively impacted their mental health; and 86% of BIPOC small business owners who prioritize social good in their businesses said it helped their business grow, and 56% said it positively impacted their mental health. The pandemic drove many small business owners to adjust their operations or invest in technology to maintain business and reach their customers. With every pivot comes risk. The survey found that nearly half (47%) of small business owners haven’t invested much in data security and are rolling the dice hoping to avoid a data breach. “This underscores the importance of investing in the right technology and taking proper precautions,” says Walter. “Technology has the power to open doors for small business owners—allowing them to efficiently run their business, more easily reach their customers, improve their productivity and increase output—but preventative security measures are a must. A recent study from Microsoft[iii] found there are now 921 password attacks per second, that’s 79.5M attacks per day—a data point that has nearly doubled in the last year. It’s critical to put proper data security measures in place, take the time to safeguard devices and arm employees with the knowledge to prevent data theft.” Small business owners can access cybersecurity training and resources for free at Microsoft Store’s Small Business Resource Center. There are many motives to opt for small business life, and Gen Z acknowledges one additional reason: the potential for early retirement. Sixty-one percent of Gen Z small business owners believe pursuing entrepreneurship will lead them to retirement sooner than if they had gone corporate, compared to 40% of all small business owners. Early retirement offers the opportunity to pursue personal passions while age is still on their side. One thing is for certain, Gen Z is not afraid to write their own playbook. Gen Z is entering the workforce at a tumultuous moment in the evolution of work, following recent years of pandemic-fueled online schooling. Historically, graduating from college was seen as a rite of passage, an achievement previous generations expected and longed for. Gen Z, however, believes other paths are possible to achieve their goals. Seventy-eight percent of Gen Z small business owners say obtaining a college education is not very necessary for running their own business. What are they turning to instead? TikTok, of course. TikTok has risen as a career resource for the next generation of entrepreneurs, ushering in a new wave of mentorship as the social platform teaches them new entrepreneurial skills they may not have had the chance to learn in a classroom setting. Microsoft Store found that while a third (33%) of small business owners overall use TikTok as a resource to learn about business, that percentage nearly doubles for Gen Z small business owners (65%). In fact, small business owners who use TikTok as a resource (48%) are more likely to have multiple side hustles than those who do not (27%), more evidence of today’s workplace hustle.

[HEADING=2]What’s next for small businesses?[/HEADING]

“It’s your local coffee shop, florist and barbershop you’ve been visiting for the past 10 years—it’s these small businesses that are driving our economy forward,” says Walter. “Small businesses [with fewer than 20 employees] make up 89% of all businesses in the U.S.[iv] Supporting these businesses is crucial, especially as they face no shortage of obstacles today.” Half (51%) of small business owners ranked inflation as the biggest threat to their businesses right now, followed by COVID concerns (21%) and supply chain shortages (18%). Despite that, a majority of small business owners (59%) surveyed are optimistic, expecting business growth in the next 12 months, including Gen Z (55%) and BIPOC (67%) small business owners. And they aren’t looking to trade in their “boss” title for a badge: 86% of small business owners stated they are more likely to keep their small business in favor of quitting and going to a corporate 9-to-5 job. The state of small business will continue to evolve as our world evolves, but what we can expect is for Gen Z and its entrepreneurial and non-traditional mindset to fuel the future of it. This is only the beginning. We invite small business owners to visit Microsoft Store’s Small Business Resource Center for free access to trainings, tools, products and business solutions to connect with teams, reach new customers, safeguard their businesses from data security threats and grow their businesses. (United States Census Bureau, 2022). Business Formation Statistics. [ii] Engine, W. (2020). Generation Influence: Reaching Gen Z in the New Digital Paradigm. [iii]Microsoft. (2022). This World Password Day consider ditching passwords altogether. [iv] Small Business & Entrepreneurship Council. (2019). American Business is Overwhelmingly Small Business.

 

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