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Financial Hacks for Millennials: Starting a Business

Millennials have the entrepreneurial spirit. Research shows that nearly one-third identify as entrepreneurs and they start businesses at a higher rate than previous generations.1

But millennial-run businesses tend to flame-out more often.2 One reason may be that millennials are launching businesses earlier in life, 27 years old on average versus 35 years old for baby boomers.3 Just beginning to build an asset base, many lack the deep financial reserves to support business development long-term.

Cash flow issues are, in fact, the leading cause of all small business failures.4 “The biggest challenge young entrepreneurs face is the combination of zero guaranteed income and increased expenses,” says Joseph Fitzgerald, a financial advisor with Northeast Planning Corporation in Cranford, New Jersey. “The emotional excitement of following your dream is great, but you also need to look at your financial situation from a practical standpoint.”

Here are some cash-flow dos and donts that can help “millenipreneurs” position themselves for success:

Do the math. Many entrepreneurial millennials have crushing student debt. Graduates in their twenties are responsible for more than $350 per month in student loan payments on average — a severe cash flow burden.5

Hack: Factor in every kind of debt repayment into your financial planning. “Be very realistic about the cash flow needed to cover your monthly expenses,” advises Fitzgerald. “Expect to make lifestyle sacrifices. The extravagant bachelor and bachelorette parties, and destination weddings, may be beyond your means for the first few years.” (Related: some tips on managing student debt.)

Don’t be too lean. Millennials tend to be okay with “just keeping up” with monthly expenses.1 But having only a thin cushion of cash-on-hand means that one jolt — a drop in sales, loss of a key employee — can tip the business into a downward spiral.

Hack: Set aside a safety net of cash reserves, ideally the equivalent of your salary to weather negative cash flow, to meet your monthly obligations. “Putting money into a 401(k) or IRA, the savings platforms your parents used, may not provide enough liquidity. You need access to funds to cover expenses and the income gap until your business is in the black, even if you have to sacrifice some potential gains,” says Fitzgerald.

Do keep score. You may think you know how the money is flowing in and out of your company but managing “by feel” is risky business.

Hack: Set up a system to track all income and expenses. With hard data on key metrics, like profit margin and inventory turnover, you’ll know the real score and make better decisions.

Don’t undervalue yourself. Millennials are hard workers, and “millenipreneurs” in particular throw themselves into 80-hour weeks. Becoming a zombie is bad business.

Hack: First, get serious about you-time. Schedule in exercise, family time, and goofing-off time. Second, consider getting a strong income protection plan in case you get sidelined by illness or injury. And don’t neglect retirement planning as well. “Unlike in the corporate world, no one is going to require you to have proper protection,” says Fitzgerald. “You need to require it of yourself and make safeguards like health and disability insurance a fixed business expense.”

Do ask for help (part one). Most millennials consider entrepreneurship to be a mindset rather than a skillset, one reason why they are less likely than other generations to tap into small business resources.6 7

Hack: Passion drives performance, so establish good fundamentals. Check out the Small Business Development Centers in your state for free consulting across a range of issues.

Do ask for help (part two). While 70 percent of millennial entrepreneurs have financial plans, those plans are likely to be thin in critical areas, like having clearly-stated objectives.8

Hack: A financial professional can be a sounding board for your business and suggest additional ways to meet your goals and challenges. You can even find financial professionals with specialized expertise in helping young entrepreneurs. “Setting up a business involves complex money decisions,” says Fitzgerald. “After a long conversation about your goals, an advisor can help you tailor a plan to live your dream, and control your desitiny.


Brought to you by The Guardian Network © 2018. The Guardian Life Insurance Company of America®, New York, NY

2018-70495 Exp. 11/2020


[1] From Smartphones to Smart Planning: Millennials want and need digital and human experiences to achieve financial confidence. 2018. Guardian Life Insurance Company.

[2] Millennials are less entrepreneurial and fail more often. June 13, 2018. Financial Times.

[3] ‘Millennipreneurs’ Are Starting More Businesses, Targeting Higher Profits. Feb 20, 2016. Fortune.

[4] What is cash flow management? Aug 26, 2018. The Balance Small Business.

[5] The Impact of Student Loan Debt on Millennial Happiness. Oct 20, 2017. Forbes.

[6] 15 Millennial Entrepreneur Facts. Sept 5, 2016. Motivated Gen Y.

[7] Millennials and small business go well together, study says. May 31, 2017. USA Today.


The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, NY and its subsidiaries.

Joseph Fitzgerald is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Northeast Planning Corporation is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof.

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