Although nearly 60% of millennials think of themselves as entrepreneurs, fewer than 4% are self-employed. The number of young people starting companies has been declining since the mid-1990s. At the same time, more than 44 million Americans are struggling with more than $1.5 trillion in student debt, which has likely led to fear among younger people.
The Employer-Employee Relationship Needs to Change
One issue is that this relationship needs to meet the needs of the modern workforce. In the past job security was most important, but today employees expect companies to invest in them. Having a job isn’t good enough; they want to be valued in their jobs.
Employers hire employees who can do the most productive work in the shortest time, but this isn’t a long-term investment. They may need to give up some short-term profits for long-term stability.
Student Debt Is the Most Significant Financial Burden
The main financial burden in the adult population is student debt. Employers can provide solutions for this burden, which would help incentivize them. Some companies make student loans and college savings available to their employees, by making financial contributions each year and more.
They realize that people don’t make enough to cover their obligations and their current living expenses. These programs can renew confidence and help millennials feel more positive about taking risks.
Capital Funders Can Change Their Policies
If they want to work with a new and diverse group of entrepreneurs, they need to provide new sources of funding. Capital funding is limited and goes to a very small number of people. Most startups are funded by credit cards, bank loans, loans from friends and family, and savings.
Entrepreneurs don’t want more debt, but they would welcome revenue-based financing or other innovative forms. Another model is where an entrepreneur could pay back investors with shares of the company or a percentage of future income.
Awareness Leads to Solutions
Before the problem can be solved, there has to be awareness. People need to understand why there is a problem and they should offer potential resolutions. Innovation is critical in society, and the decline is concerning. Student debt has caused a caution on the part of millennials, and they need to feel more comfortable so that they are willing to take the risks.