When considering the differences across age groups of entrepreneurs, digitization and technology adoption often come to mind first, with younger small business (SMB) owners typically more likely to embrace cutting-edge tools.
However, tech adoption isn't the only difference between age groups. A new report from bookkeeping solutions provider Bench suggested that comparing and contrasting entrepreneurs offers insight into a new generation of small business owners, and how they're introducing changes in the ways American businesses are run.
In "The Age of the Entrepreneur" report, published last week, Bench surveyed more than 1,000 entrepreneurs in the U.S., including freelancers and owners of businesses with up to 10 employees. Analysts uncovered some stark differences between business owners under age 30 and those aged 45 and above.
For starters, younger small business owners tend to have grander visions for their businesses: One in five of those under age 30 said they started their enterprises with a vision to make a positive impact on the world. Seventeen percent of young SMB owners said they have ambitions for their firms to become big companies, compared to just 4 percent of entrepreneurs aged 45-plus who said the same.
Considering those goals, it is perhaps unsurprising that younger entrepreneurs are more likely to be operating businesses with annual revenues of $250,000 and above: 16 percent of young entrepreneurs, compared to just 12 percent of those 45 and older.
Interestingly, however, younger entrepreneurs are less likely to be well-versed in the finances of their own companies. Bench found that 20 percent of those young business owners said they don't understand their business finances, and agree that bookkeeping, taxes and other financial administrative tasks are the most stressful parts of running a business — more so than even firing an employee.
What accounts for young entrepreneurs' financial successes, despite the lack of financial expertise? It cannot be said for certain, but Bench's data also found that young entrepreneurs are more likely than those aged 45 and above to outsource their bookkeeping (17 percent versus 9 percent).
With a younger generation ushering in new breeds of businesses (and ways to run them), Bench CEO Ian Crosby noted that the data suggests entrepreneurs aged 30 and below are proving that technology can tackle some of the biggest challenges of entrepreneurship.
"It's easier than ever to start a business. This generation understands that you don't need to be an expert in finances to run a successful business — technology can do that for you," he stated. "Younger entrepreneurs are comfortable outsourcing anything from web development to bookkeeping online, and that allows them to focus on what's most important, which is servicing their customers."
Even with the age differences, there are commonalities between entrepreneurs across all age groups in the Bench survey.
The majority of entrepreneurs surveyed agree that starting one's own business does not necessarily mean quick riches, and most agree that entrepreneurship does not guarantee personal freedom — despite most noting that they decided to start their own businesses to obtain freedom and a sense of control in their career.
While young entrepreneurs are less likely than those aged 45 and above to understand their business finances, only 30 percent of small business owners across age groups said they are confident in their understanding of company finances. Regardless of whether business owners outsource financial jobs or not, bookkeeping ranks number one as the administrative job they would like to see taken off their plates. Even so, 72 percent said they still do their own bookkeeping.
In other words, while younger entrepreneurs may be more aware than their older peers that technology can address key pain points, there remains a significant gap in the overall understanding of tools to automate processes like accounting and bookkeeping, regardless of age.