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What will small business look like in 10 years? And just who will be starting businesses? A comprehensive new study has some surprising predictions
Within a decade, entrepreneurs are going to be older, younger, more feminine, and more global than they are today. So says an Intuit-sponsored study from the Silicon Valley-based Institute for the Future. Brad Smith, senior vice-president and general manager of the small-business division of Intuit (INTU), spoke recently to Smart Answers columnist Karen E. Klein about how the study was conducted and what it means for entrepreneurship. Edited excerpts of their conversation follow.
Small-business owners generally fly under the legal and regulatory radar, and as such are notoriously difficult to study. What prompted you to sponsor this report, which is called The Future of Small Business?
We had been in the process of working on an 18-month strategy study with the Boston Consulting Group that turned up some surprises. One was that 10 million people said they are considering starting their own businesses in the future. That's the biggest number we've seen in 25 years. The second surprise was that 6 million people actually followed through and started those businesses, and one-third of them are doing business globally. We thought those figures merited further study.
How do you get those numbers?
We get them from surveys we do when selling our consumer products, like Quicken and TurboTax. We ask people who are buying those products whether they own businesses, whether they plan to start their own businesses and when, and additional questions.
What methodology did the Institute for the Future use to predict what small business will look like in 10 years?
They did the study over six months. They did 9,500 interviews with small-business owners, university professors and teachers in entrepreneurship programs, authors and bloggers who write about small business, and Intuit business leaders. They also spent a lot of time trying to get their arms around all the third-party research that's been done on this topic, and they did 10,000 hours of in-person observation, where they follow a small-business owner to his office and see what he's doing.
What are some of the findings from the interviews and observations that surprised you?
One is the phenomenon we called "accidental entrepreneurs." There are 20 million businesses—out of the 26 million businesses total in the U.S.—that have no employees. We found that a good portion of them don't call themselves small-business owners, but freelancers or hobbyists.
There's a tremendous wealth of economic activity happening in these sole-proprietor, home-based businesses—whether the owners consider themselves entrepreneurs or hobbyists or a little more than that (see BusinessWeek.com, 1/10/07, "Best Home-Based Business Ideas").
Let's go through some of the key predictions for 2017. The first concerned demographic trends that are shifting already and will continue to shift.
Right. So while middle-aged, white males are most likely to start their own companies now, we're going to see more new entrepreneurs coming from the edges of the age spectrum. The fastest-growing entrepreneurial age group right now is 55 to 64 years old, and that's going to continue to grow.
These are baby boomers who have the capital, the expertise, and the acumen to run companies, and they have the desire not to cash out of the workforce just yet. They recognize that most of us have longer life spans, and they want to do something new at this stage in their lives (see BusinessWeek.com, 1/16/07, "Lure of Entrepreneurship Beckons Boomers").
The other age group that's going to be pushing into entrepreneurship in a big way is the Gen Y demographic, which is people born after 1982. We call them "mods" because of the way they modify and customize everything, from their cars with the spinners on the wheels to their unique cell phone ringtones to their MySpace accounts, none of which are exactly alike. They're configurable, customizable markets of one as consumers, and as adults they want to be independent from the beginning of their careers and never work for an established corporation. We also believe they're fueling a huge trend toward increasingly sophisticated business technology (see BusinessWeek.com, 10/30/06, "Young, Fearless, and Smart").
Aside from age, how will gender figure into the small-business mix in a decade?
We will see the continuing and strengthening presence of women in entrepreneurship. The study puts them into two groups. There's the classical, professional woman who's networked and experienced but decides to break through the glass ceiling by creating her own empire. Kind of what we called the Oprah phenomenon.
And then there's the reality that we've been a dual-income society for more than 15 years and many women are trying to balance work and their life responsibilities. That's where we get the "mompreneur," the woman who starts a business to get flexibility of access to her family. They will be working in the evenings and the early mornings, and their most valuable resource is going to be time and finding a way to fit their [personal] needs around their business needs. We also find that these entrepreneurs are the most networked of any business owner segment and they succeed by working in teams and supporting each other (see BusinessWeek.com, 1/8/07, "Women Entrepreneurs").
The study also mentions immigrants and their role in small business. Isn't that an ongoing phenomenon?
Absolutely. Successful immigrant entrepreneurs are not at all a new phenomenon, but we find that they are and increasingly will be driving global business and redefining global business. It used to be that immigrants would come to this country and choose to do business inside the U.S. Now, with technology making this possible, immigrant business owners remain in contact with their home country, where they have suppliers, a business network, relationships, and language skills.
Already, 37% of our U.S. small-business customers are doing business globally, and those stats are driven very much by immigrant entrepreneurs (see BusinessWeek.com, 1/3/07, "Open Doors Wider for Skilled Immigrants").
Is the full study available online?
Yes, it can be downloaded here.