When it comes to the future of small business, the year 2017 promises to look dramatically different, with the most diverse pool of entrepreneurs ever emerging over the next decade, a new study finds.
The profile of small business is already beginning to change, with women, immigrants, baby boomers, and Generation Y -- those born after 1982 -- becoming the new face of entrepreneurship, replacing the white middle-aged men who have traditionally been responsible for the majority of start-ups. (Check out this list of start-ups run by college students who fall into this demographic group.)
In the first installment of the Future of Small Business Report, a study sponsored by Intuit and authored by the Institute for the Future, the next decade will also see a trend toward the rise of sole proprietorships and an expansion of entrepreneurial education that will help train those starting small businesses.
"Until now, the picture for American small businesses has been a fragmented set of statistics and forecasts," Brad Smith, senior vice president of Intuit's small-business division, said in a statement. "By putting the pieces together, we've shown how different this sector may look in the future."
The study predicts that a new breed of entrepreneurs is emerging -- fueled significantly by baby boomers who are nearing retirement, as well as their children. According to statistics from the Ewing Marion Kauffman Foundation cited in the study, Americans between 55 to 64 are forming small businesses at the highest rate of any age group -- 28 percent higher than the adult average. These high percentages are a result of diminished job security and a lack of pensions and health benefits, the report found.
Brian Dennehy, vice president of marketing for Intuit's small business division, said that because baby boomers represent the largest population cohort, he wasn't surprised that they would play such a major role in small business. However, he was intrigued by "how many of the baby-boomer generation don't want to opt into traditional retirement." Workplace participation rates among retired people have dropped over the past few decades, but those rates will begin to rise again as more boomers decide to stay in the workforce, according to the report.
The children of baby boomers -- Generation Y -- comprise another group that is increasingly choosing a nontraditional career route. Many of these teens and young adults are opting to become entrepreneurs, the study finds, and are doing so as a way to maintain independence in their careers. Several recent nationwide surveys have shown a large interest in entrepreneurship among Generation Y. Those results, coupled with the business opportunities created by digital technology, will contribute to a spike in small business formation by 20-somethings in the next decade.
According to Dennehy, the younger generation's desire to start small businesses is partly what is driving the growth of entrepreneurial education, which was another key finding of the study. "Generation Y is coming into college and university settings and demanding that they get educated about how to succeed in this kind of environment," Dennehy said. Entrepreneurship will also become a widely adopted curriculum at trade and vocational institutions, allowing more of the population to be exposed to business education, the report indicates.
But, the most surprising of the report's findings according to Dennehy, is the predominance of immigrants and "mompreneurs" as part of the next decade's small-business profile. Women looking for better career options or ways to achieve a work-life balance will continue to turn to entrepreneurship as the answer. Many of these women are leaving their corporate roles and looking to redefine themselves, Dennehy said. As a result, the study found that more women will become "mompreneurs," creating a rise in personal businesses that are typically started at home with the help of the Internet.
Dennehy called them a "fascinating group," because they behave differently from the typical competitive nature of the corporate culture. "They are highly collaborative, which is something that I haven't seen before," Dennehy said.
Finally, the study found that immigrants will play a significant role in driving a new wave of globalization in the next decade. Data from the Kauffman Foundation shows that immigrants form small businesses at a higher rate than the native U.S. population. "Immigrants are harnessing the power of the global economy almost immediately upon their arrival," Dennehy said, noting that they are doing so by maintaining contacts with their native countries, which provide them with the opportunities to link markets within their businesses. The report predicts that immigrants will help create broader and deeper economic links across the globe.
What types of companies are poised to capitalize on these trends? Check out this list of the 6 top-performing industries for 2011.