4 Reasons it’s getting harder to start a business

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We are proud to share that the Managing Partner of Intergroup Partners AG, Montserrat Corominas, has recently been published in Inc Magazine. Her article “4 Reasons It’s Getting Harder to Start a Business” has already been shared over 330 times.

Despite what we often read in the press about extremely successful young millennials (e.g. founders of WhatsApp or Snapchat), the fact is that the share of young business owners has declined dramatically in recent years. According to the Wall Street Journal, the share of people under 30 who own private business has reached a 24-year-low.

There are several reasons claimed to have caused this trend: an aging population, lower willingness for risk, increasing student debt, etc. However, behind it all are the fundamentals of the challenging environment an entrepreneur faces today. Here’s the perspective of Intergroup Partners managing partner Montserrat Corominas.

1. Technology evolution as a business accelerator
Although technology allow operating costs for business operations to be reduced, since the year 2000, the explosion of high technology has led to an incredible pressure on pricing, market transparency and competition making the game for small business owners a much harder play.

2. Investment culture and risk have changed
There are more sources of investment available, but there are also more alternatives. The challenges of raising capital are higher than ever, even in fast-growing sectors. Investors have a much lower tolerance for risk than entrepreneurs because the market dynamics have become less predictable and investors need to be close to the market pulse.

3. Income opportunity cost
Although many people start a business to make money, they need to accept that when they step into entrepreneurship, they will almost immediately be earning less in the upcoming years. Personally, I see valuable career alternatives in front of my eyes everyday and the opportunity cost for a younger person is even higher.

4. Higher levels of ability and skill are required
It is challenging to be successful as an entrepreneur, and all entrepreneurs have doubts about their abilities, whether they have the right skills or enough support. Entrepreneurs have to be prepared and flexible to see where their challenges are and what skills need to be developed to be able to overcome them.

As a final reflection, all private and corporate investors and established entrepreneurs need to develop a better context and support the new market values. Economic vitality is measured by the energy, passion and innovation of its entrepreneurs. Although the environment may have changed, these fundamentals of entrepreneurship remain strong. Please feel free to discuss this article with me. I’m on Twitter at @intergroup_news