According to a recent report by accounting heroes, Xero, more than 34% of Australian small businesses are currently owner-operated by Millennials. And that’s on the rise.
Probably the most alarming findings from the report, however, is most of these Millen-trepreneurs either aren’t happy with or don’t currently have a financial advisor/accountant. Those that do have one, are reporting that they’re just not servicing them the way they like. And if there’s one thing we’ve learned about Millennials so far, if they don’t like something, they aren’t afraid to move on––in fact, the report found 56% of business owners 35 or under are looking to change their accountants or bookkeepers.
Today, the profile of a small business owner looks very different from what it once did. The new entrepreneur profile is of a savvy, socially conscious, relationship-focused, digital native. Millen-trepreneurs. And this report is a wake-up call that it’s time we all got used to this type of business owner, particularly accountants. Millennials are carving a very firm place in the small business sector and they stack up differently to the old school. And, because of it, their financial needs are differing to the norm.
What does this mean for financial and business advisors and accountants? It means you better shape up, is what I’m hearing from this report.
The Australian Bureau of Statistics is estimating that 62% of new business for advisors in the coming year will be from Millennials. That’s right, Millennials are now your biggest market. If you don’t know what they’re looking for in an advisor, or how they do business, then I’m sorry, but you might be left behind.
What does a Millennial small business owner look like?
Millennials are ambitious, they’re in it for the long haul––always seeking new markets and opportunities for growth, they’re people-centric and they’re digitally savvy…
Millennials do mostly everything online. They’ve probably never seen, let alone written a cheque in their lives, and most likely, rarely step foot in a bank. However, the surprising thing from this report is that only 17% of Millennial business owners are currently using a cloud-based accounting service.
What are a Millen-trepreneur’s pain points?
While Millennial small business owners are great at seeking market growth and relating to their customers (marketing, client service), they have plenty of holes in the back end of their businesses. They’re really not good at keeping expenses down. Other hurdles, according to the report are; cash flow, investments, and chasing invoices––sounds like the perfect accountant-shaped hole.
What are Millen-trepreneur’s seeking?
More time for themselves.
One of the most unique things cited in Xero’s report was that Millennial small business owners are looking for advisors that ‘get them’. That get their wants and needs. Turns out one of those wants is more holidays (21% cited this as a benefit of being a small business owner) and one of their needs is to feel less stressed out (17% have gone into business for this reason). Isn’t this what we all want? Millen-trepreneurs are prioritising these things, however, which means, as an advisor, you really need to understand these values.
So, they want a few holidays and less stress, please don’t mistake these results as those of a “typical lazy Millennial”. They’re far from lazy or lacking in ambition. Millennials are all about work-life balance, which is why small business is so appealing––because they’re in control of their balance. But they’re still looking for the fundamental successes of the business, and they are still requiring advisors to help them get there. Xero’s report claims 34% of Millennial small business owners see success as making more money, with 30% wanting to expand into new markets. See––Growth!
Less backend presence.
Most Millennial small businesses see rapid growth after the start-up phase. And when that hits, because of the type of entrepreneur they are, they want to be at the front of that growth steering the next move––creative, marketing, product design, running the show––not tied up in bookkeeping and other stuff. They’re keen to handball this to experts. They know there’s more money to make if they could only free themselves up to explore it.
According to the report, 65% of Millennial small business owners would happily hand over company tax and financial reports, 59% want to offload record-keeping and invoice distributing and chasing, and 57% are ready to pay someone to do financial analysis as well as sales and profit analysis. These are growing figures too.
And, what do they want in their advisor?
And you know what? They’re willing to pay for it. With a massive 86 % seeking to expand their relationship with their advisor by buying into even more services. Of this 86%, the average spends on external accountants or bookkeepers in the last 12 months is $8, 600. That’s not chump change. But you have to earn that.
Millennial business owners aren’t satisfied with a twice-yearly check in with their financial advisor. They want someone who’s invested in their journey. They want more, give it to them. They’re looking for knowledgeable, capable, experienced financial professionals that are willing to share what they know and give time to helping them achieve their goals. They don’t want that nameless, faceless number cruncher popping their head into their business once or twice a year.
Get to know them, learn about their businesses, their values. Give them good advice and maintain rapport.
I keep spouting about this and will continue to do so because all of my research is swinging this way. Millennials value values. As an advisor, you need to understand your Millennial client. You need to want for them what they want for themselves. And as we can see from above, they value relationships, they value work/life balance, they value growth and social enterprise, they value money. Can you get around that?