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Entrepreneurship And The Youth Of Today

All of you reading this post, just like us here at String, work for a company that was founded by an entrepreneur or a group of entrepreneurs.  For decades, the creation of new businesses and the ‘entrepreneurial spirit’ have been a mainstay of America’s culture, heritage and most importantly, its economic prosperity.  It is for this reason that a recent article by Leigh Buchanan in the April edition of “Inc.” came as such a surprise to us.

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Published under the title “American Entrepreneurship is Actually Vanishing. Here’s Why’ one could easily assume an author employing a semi-sensationalized title to attract readers. However this article is anything but, and instead cites long term studies showing a multi-decade decline in entrepreneurship /new business creation and discusses a slew of very concerning reasons as to why it’s happening. We will not attempt to summarize the full article here, though we do suggest you take the time to read it. What we do want to do is talk about two points Ms. Buchanan raises that we find most troubling, both dealing with today’s youth.

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It comes as no surprise that new businesses have disproportionately been created by the young. Fresh out of college with new ideas, more energy and ‘less-to-loose’ then those of us with more gray hair (or for some of us – less hair), it is the young that have taken the risk to start new business that ultimately generate jobs and spur economic growth.  Though in recent years, this youthful exuberance for new business creation has been waning – in 1996 20-30 year olds accounted for 35% of new business startups, today this group accounts for only 18% of new startups.

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Sadly ironic, one of the primary reasons given for this decline is the excessive amount of student loan debt shoulder by today’s youth. In effect, they have been forced to borrow so much to learn their profession that they can no longer afford to take the risk of starting their own business to practice that profession. Instead having to find a job that provides them with an income that allows them to re-paying their staggering debt.

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This is compounded by the risk-adverse nature of today’s youth – and the second reason given for the decline. Having spent much of their teen years experiencing the impact of the “Great Recession”, today’s 20-30 year olds are less likely to take risks – including the risk of starting their own business.

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We’d like to hear your thoughts on Ms. Buchanan’s article. What is your take on this decline of entrepreneurship / new business creation? Is this a minor speed bump that will soon be overcome by the youth of tomorrow? Or is it a more endemic, long-term problem for our economic prosperity?  Feel free to comment below.

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