Like almost every generation, Gen Z tends to think of itself as a breed apart—very different from the elders who came before them. The jury is still out on how different they might be, but this is true in at least one respect: Gen Z has a more entrepreneurial spirit than other generations, even though many of its business challenges are the same.
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A survey by GOBankingRates found that more than half (51%) of 18-24 year olds aim to become an entrepreneur and 14% have already taken the leap – a higher percentage than any other age group.
A 2022 survey from the Apple Store revealed even higher numbers. It found that more than six in 10 Gen Zers say they have either started or intend to start their own business, making Gen Z “the most entrepreneurial generation the world has ever seen.”
The reasons why such a large percentage want to start a business are many and varied, from wanting to retire early to investing their earnings in social welfare.
Perhaps most importantly, Gen Z is the first generation to grow up with social media from an early age. This means they have the tools and network connections to start a business on their tablet. Some have even used social media itself as a launching pad to fame and fortune as influencers.
But for most Gen Z entrepreneurs, turning businesses into success stories isn’t easy. Here are four of the biggest challenges they face.
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1. Lack of resources
A recent survey by iStock of 500 American business owners found that the biggest challenge Gen Z entrepreneurs face is a lack of resources such as money, people and time. Nearly two-thirds (62%) cited this as the biggest challenge.
Lack of resources is nothing new – it has plagued young entrepreneurs for centuries. In the past, the main way to overcome this challenge was to seek funding from banks, investors, family/friends and other lenders. These are still options today. But Gen Z has another option that previous generations lacked: crowdfunding, which allows you to quickly raise large sums of money for your new business.
2. Preparation of a business plan
Young entrepreneurs often come up with innovative ideas for products and services that can become hits with consumers. But many lack the basic skills to develop a business plan. As noted in a blog by legal services and consulting firm Wolters Kluwer, a business plan is a “blueprint” that defines your enterprise’s identity, offerings, brand, and roadmap for success. Without one, it will be difficult to attract investors and customers and navigate your way through the various stages of growth.
The best solution is to network with experienced business experts, consultants and other entrepreneurs and use their expertise to guide you in developing a business plan. Some business incubators will provide these services for free, while in other cases, you may need to invest some of your money to hire experts.
3. Data Security
Cybercrime has become a major issue in the digital commerce era, and previous generations didn’t have to worry about it much. Fighting hackers, data breaches and other threats should be a high priority for Gen Z entrepreneurs. This means not only taking the right security measures, but also adopting the latest technologies as cybercriminals evolve. This is true even for small startups whose businesses are no more than one app.
4. Increasing visibility
In an iStock survey, nearly half of Gen Z entrepreneurs said one of their biggest challenges is “increasing visibility and generating quality leads.” It actually means getting your brand in front of more people and developing a wider network of potential customers.
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Unless you have the backing of a high profile partner or investor, you will start as an unknown entity and then build your brand from there. This is especially problematic for Gen Z entrepreneurs because the field is so crowded with other Gen Z entrepreneurs. Again, the best solution comes down to networking. Look for marketing/branding partners with expertise in your niche and tools to get the word out.
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This article originally appeared on GOBankingRates.com: Small Business: 4 Problems Gen Z Entrepreneurs Face and How to Fix Them