Workplace Pressures Creating New Generation of Entrepreneurship

Advisers who currently target small businesses – or who work with individual participants at businesses of any size – could see a major shift over the next decade, according to a new study.
The looming retirements of Baby Boomers could launch a new generation of entrepreneurship, according to new research. Many baby boomers nearing retirement age will launch new businesses in far greater numbers than their counterparts from earlier generations, according to the first installment of the Intuit Future of Small Business Report.
Their motivation: diminished job security, disappearing pensions and health benefits, and the need to match savings with longer life expectancies – issues central to the focus of advisers focused on employer-sponsored retirement plans.
Clients, Not Employers
Moreover, the line between small and large businesses will blur as more entrepreneurs form free-agent contracts with large companies as a natural response to the demise of lifetime employment. According to the report, by 2017, free agents will thrive with less job security – “they will have clients, not employers,’ asserts the study. These “spin-offs’ will exert far more control over their time and working conditions.
This new surge in entrepreneurship will be fostered in the workplace of tomorrow. The study notes that, for some, entrepreneurship will complement a corporate career, but not replace it, as employers see the entrepreneurial spirit as key to innovation and will train promising candidates accordingly. The report says that, as a result, professionals will spend their careers “alternating between two related worlds, sometimes running their own businesses in the free market and at other times running a virtual business within a larger organization.’ Completing a new virtuous circle, experience in the former will help bolster the latter.
“Contract workers, accidental and social entrepreneurs will fuel a proliferation of personal businesses,” claims the report, while economic, social and technological change – and an increased interest in flexible work schedules – will produce a more independent workforce seeking a better work-life balance.
Following in Their Footsteps
Not only will these former participants strike out on their own, many of their children will follow suit, becoming the most entrepreneurial generation in American history, according to the report authors. Those in Generation Y are “remarkably well-suited to the emerging entrepreneurial environment,’ according to the report. Indeed, entrepreneurs will no longer come predominantly from the middle of the age spectrum, but instead from the “edges,’ with those nearing retirement and their children who are just entering the job market laying the foundation for “the most entrepreneurial generation ever.’
Additionally, women will increasingly turn to entrepreneurship. The glass ceiling that has limited women’s growth in traditional corporate career paths will send a rich talent pool to the small business sector, according to the study’s authors. “Mompreneurs’ – mothers who start part-time, home-based businesses, often with the help of the Internet, will be part of this trend. In fact, these “personal businesses,’ as the one-person sector is sometimes called, will be launched by people who may not even consider themselves small business owners. Moreover, a “new breed’ of immigrant entrepreneurs will turn to the Internet to launch business, using their language skills, strong educations, multi-country contacts and professional experience to form international partnerships.
Entrepreneurial training will begin much earlier in life, with universities, secondary and vocational schools – and even some elementary schools – offering entrepreneurship as a mainstream subject. At the college level, the emphasis will widen, focusing not just on high-growth businesses backed by venture capital, but on small business ownership of all kinds.
The report is available online HERE

Advisers Can Help Ease Workers’ Financial Burdens

As corporate and social safety nets erode, workers are less confident they will be able to achieve financial security.

However, advisers are in a position to help both employers and workers reach their financial goals, according to a new study from MetLife.

Nearly two-thirds of workers said that the decline in corporate benefits, such as pension plans and health, life and disability insurance, is a threat to their financial security. Further, a majority of all generations – particularly Baby Boomers and Generation X – say their financial future is at greater risk than in the past.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Workers also appear to have noticed the increased attention to, and discussion about, the solvency of social safety nets, including Social Security and Medicare. According to the study, 72% of Americans – and a strong majority of each generation – do not expect to have the support of Social Security, and more than half (53%) no longer expect to have Medicare in their post-retirement years.

Sixty percent of those surveyed said they think they carry more financial burdens than their parents did, and the overwhelming majority feel this burden will continue to grow for future generations. Further, 66% of workers say that items that were previously considered luxuries, such as Internet access at home, a cell phone and cable television, have now become necessities. In order to generate enough income for basic needs, more than half (53%) of workers say they have had to change jobs, or may need to change jobs in the future.

 

The Role of the Adviser

 

MetLife recommends that employers demonstrate to employees that they’re not on their own by building awareness and programs to encourage responsible saving and preparation for the future. Advisers can help their plan sponsor clients during these transitions.

The research suggests that helping employees cope with their increasing awareness of financial burdens can provide value to the employer. Advisers can help plan sponsors evaluate what benefits, employee or employer-paid, might be considered a cost effective way to mitigate the employees’ financial burdens. Benefits that provide bridges to more effective self-sufficiency, including those that encourage and facilitate capability development and career growth, are often welcomed by employees, the firm said. Also, another way employers can lessen the financial burden for their workers is to offer new retirees the ability to purchase benefits through the company.

In order to help employees through this new time, advisers also can provide clear strategies and plans that directly address increased their burdens. Part of those strategies might include planning for better financial and insurance protection options, the firm said. Advisers can also work with workers to clarify what goals are important to them, and what their personal destinations are, MetLife suggests.

The survey of 1,500 people was conducted by Strategy First Partners and Penn, Schoen and Berland Associates in November 2006.

«