May 19, 2020

Study shows half of millennials are planning to start a business in the next three years

millennials business
America's Small Business Development Centers
America's SBDC
Center for Generational Kinetics
Catherine Rowell
4 min
Study shows half of millennials are planning to start a business in the next three years

America's Small Business Development Centers (America's SBDC) has partnered with the Center for Generational Kinetics to better understand how different generations view and approach entrepreneurship. The study has reinforced previously held beliefs such as a strong entrepreneurial inclination among millennials, while challenging preconceived notions about their motivations for starting a business.

Small Businesses play a huge role in the lives of Americans. One third of Americans (34 percent), have worked in a small business in the past and nearly a quarter (24 percent) of both Millennials and Gen X own or have owned a small business.

Charles "Tee" Rowe, President of America's SBDC said, "We were excited to embark on this important study to better understand how Americans across different generations are drawn to entrepreneurship and could not be more excited about the survey's results."

"It is clear that the entrepreneurial spirit is not only alive and well in America, but that people are eager to find help to build their dream business. We at America's SBDCs could not be more ecstatic or well positioned to help them grow with our nearly 1,000 locations across the country filled with dedicated professionals."

Administered to 1,011 US adults ages 21-65, the study found that the entrepreneurial spirit is alive and well, with 41 percent of Americans saying they would quit their job and start a business in the next six months if they had the tools and resources they needed. This number is higher for millennials, with 59 percent stating that they would be willing to take the entrepreneurial leap in the next six months with the right tools and resources.

All generations surveyed lived through the great recession, yet seemingly this hasn't dampened entrepreneurial willingness for most. The study cites that 62 percent of Americans have a dream business in mind that they would love to start, and close to half (49 percent) of millennials, intend to start their own business in the next three years.

Reasons for millennials to start their own business?  

Wealth creation was the number one rated catalyst to start a small business, according to the study. 47 percent of Americans listed the potential to make money as what would motivate those most to start their own business. The appeal of being your own boss is also a strong factor, with 40 percent of Americans listing it as their motivation, and 61 percent believe the best job security to be from running their own business. However, whilst there is a perception that millennials are, most interested in their work being fun, the survey reveals that 62 percent would rather have a business that makes a lot of money than a business that is a lot of fun.

Money was cited as the most limiting factor in entrepreneurship, with 55 percent of Americans rating access to money as the most difficult aspect of starting a business, with 45 percent stating access to capital is the biggest barrier to starting a business. When broken down by gender, women feel more challenged by this barrier, with 63 percent saying access to money is a barrier.

The lack of knowledge and small business savvy is another roadblock. Over half (61 percent), say they would be encouraged to start a small business if they knew where to go for help, with 51 percent stating they would want help with a business development plan. Even more striking, more than 13 million millennials cite not knowing where to go for help to start or run a business as the number one reason that keeps them from starting their own business. The study aims to raise awareness for millennials who have adapted an entrepreneurial mindset and wish to move forward with their ambitions.

New ways of working

Millennials have become the most adaptable with the entrance of social media, digital channels and services, which have enabled businesses to communicate and deliver services efficiently. Twitter has become the prime social media network for world leaders, governments and businesses, according to a recent study, with President Trump becoming an avid user of the social network, accumulating over 30,000,000 followers worldwide. Facebook is also used avidly used across the world, with the majority of governments and council members having platforms on the site.

The social media platforms have enabled businesses to gain a greater understanding to consumer demands, interact with customers and deliver more personalised services. Millennials have grown up viewing how technology has transformed traditional business models, such as Microsoft, who have had to compete against start-ups which have become multinational, such as Apple.  With this in mind, it is easy to see how the millennial generation are keen to take on the challenge of becoming their own boss, influenced by young billionaires, such as Snapchat’s Evan Spiegel and Facebook’s Mark Zuckerberg. It will be interesting to see how millennials will continue to be influenced within the corporate world and rise to these challenges.

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Jul 5, 2021

What’s Causing the Global Supply Crunch?

Supplychain
Logistics
Supplychainriskmanagement
Procurement
He Jun, Director of China Macr...
6 min
Empty Shelf
Global shortages are affecting everything from copper to coffee - but why are the shortfalls so acute and so widespread?

As the global economy gradually recovers from the impact of COVID-19 pandemic, worldwide supply crunch is intensifying, spreading not only from one country to another, but also from one industry to another.

A year ago, when the pandemic continued to spread, economies around the world were severely hit and there was panic buying among consumers. Today, it is companies that are trying to go on a stockpiling, buying more raw materials than they need to keep up with rapidly recovering demand. The panic buying is fuelling more shortages of raw materials, including copper, iron ore, steel, corn, coffee, wheat, soybeans, wood, semiconductors, plastics, cardboard, etc. As a result, inventories of seemingly every raw material around the world are running low. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said earlier, and he noted that his clients are “trying to get everything they can because they see high demand”.

Supply shortages have driven prices up significantly, with the impact of rising prices for some key raw materials being significant. The prices of various industrial raw materials such as crude oil, plastics, and chemicals are rising. Some of the impacts of higher raw material prices have already begun to be reflected in consumer goods. Reynolds Consumer Products Inc., the maker of the namesake aluminium foil and Hefty trash bags, is planning another round of price hike, and this will be the third for the increase this year alone. Food prices are also climbing. The price of palm oil, the world's most consumed edible oil, has risen more than 135% over the past year to record levels; soybeans have topped USD 16 a bushel for the first time since 2012; corn futures prices have touched an eight-year high, and wheat futures prices have risen to the highest level since 2013.

Changes in factory orders due to the impact of the pandemic have also tightened supply in some markets and pushed up prices for raw materials. Some knitting enterprises in Dongguan, Guangdong, said that affected by the pandemic, about 40% of the orders have come back to China from countries such as India and Southeast Asian countries, while the factory utilisation rate has increased by about 30% to 40%, and now it has reached 100%. In Jiangyin, Jiangsu, a bedsheet enterprise adjusted its production capacity to accommodate a USD 20 million order from Southeast Asia. Increased demand from the textile industry has led to tight supplies of raw materials. In Wujiang, Jiangsu, where polyester filament yarn is the most in demand, the shortage of raw materials this year has been unexpected, especially in the current off-season, when there is not much stock. In Suzhou, also in Jiangsu, the export of polyester filament yarn increased by nearly 60% from January to April, while the price increased by 40% to 60%. Compared with the same period last year, the price of filament yarn increased by RMB 2000-3000/ton.

Remarkably, this hoarding frenzy is pushing global supply chains to the brink of collapse. Inventory shortages, transportation bottlenecks, and price increases are nearing critical levels, raising concerns that strong global growth could fuel inflation. The supply disruptions in the past are simply incomparable compared to the severe inventory crunch of 2021. Industry insiders predict that both large and small enterprises will be affected by this supply shortage.

Why are current supply shortages so acute? 

Researchers at ANBOUND believe that instead of having one single factor, there are multiple reasons for the emergence of complex systemic problems.

First of all, there is the recovery in demand as the pandemic is brought under control. This year, as vaccination rollout efforts have brought the pandemic significantly under control in the United States and some European countries, the economy has begun to show significant momentum for recovery. This trend prompted a near-simultaneous recovery in most markets around the world. The collective recovery of global markets has led to a near-simultaneous increase in demand, exacerbating the mismatch between supply and demand. In the case of commodity futures, the capital was collectively bullish on commodities under such expectations, significantly driving up the prices of commodities (mostly upstream commodities) and spreading to midstream and downstream commodities. It should be noted in particular that the surge in demand for certain specific commodities under the pandemic has also exacerbated the supply-demand mismatch in some industrial chains. For example, the increase in the need of remote, online working and studying has increased the demand for all kinds of electronic products, leading to a surge in global demand for semiconductor chips, which affects several chip-requiring industries.

Another reason is that the pandemic has disrupted the global supply chain system, causing distortions in supply and demand in certain industries, which are transmitted along the supply chain, causing a wider supply crunch. As ANBOUND previously pointed out, the spread of the pandemic has dealt multiple blows to global supply chains. During the pandemic, China, as the "world's factory", was affected by the pandemic and its production side was disrupted. Then, the demand side of developed countries was suppressed by the impact of the pandemic. This is followed by the fact that the malfunctioning of the global supply chain system has exacerbated global supply distortions. To cite an example, the severe shortage of containers due to disruption of the supply chain has exacerbated the global supply distortions.

In addition, enterprises began to collectively increase their inventories, leading to the increase of inventories in the industrial chain and supply chain, amplifying the demand for all kinds of raw materials, intermediate products, and supporting products. In the past, in order to save costs and improve efficiency, many enterprises advocated zero-inventory production and tried to reduce the inventory in the production link, thereby reducing the capital occupation. However, the smooth operation of zero inventory production depends on the efficient global supply chain system. Once a problem occurs in the global supply chain system, it can lead to chaos in the whole supply chain system. The 2011 earthquake in Tōhoku, Japan has caused the shutdown of some key auto parts plants, which once led to the global auto supply chain being affected. Likewise, the global spread of the COVID-19 pandemic since last year has damaged, distorted, and even disrupted global supply chains.

Finally, geopolitical factors have also contributed to the tight supply of global commodities, resulting in the artificial disruption of part of the industrial chain and supply chain. For example, the U.S.-driven crackdown on chip supply to Chinese enterprises and related sanctions have seriously disrupted the global semiconductor industry chain.

How long will the supply crunch last? 

Overall, the global supply crunch is due to a variety of reasons, including increased demand from the post-pandemic economic recovery, distortions in global supply chains caused by the pandemic, collective stockpiling by enterprises around the world, and geopolitical disruptions. However, this does not represent a significant expansion of aggregate global demand, but rather a distortion of the existing system as it is disrupted and broken. Judging from the current situation, this tight supply situation will last for a long time, leading to the price rise of raw materials and components. Therefore, both enterprises and governments need to be prepared for this scenario in the medium- and long-term.

Mr. He Jun is Partner, Director of China Macro-Economic Research Team and Senior Researcher. His research field covers China’s macro-economy, energy industry and public policy.

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