IPG Media Lab
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IPG Media Lab

The Future of Entrepreneurship

How financial service and B2B brands can better support the next generation of entrepreneurs

With contribution from Benjamin Hone on the final section

Photo by Ryoji Iwata on Unsplash

For entrepreneurs and small business owners, it was the best of times, it was the worst of times.

On one hand, no-code and low-code B2B services have significantly lowered the barrier to starting a business online and modernizing existing ones, creating a great deluge of new business opportunities for enterprising individuals to take on. On the other hand, strong socio-economic headwinds, combined with shifting consumer behaviors, pose great challenges for entrepreneurs and the small businesses they create.

According to a recent survey on small businesses, around 31% of survey participants cited inflation as the most important problem for their business, which was followed by quality of labor (cited by 22% of respondents) and concern about taxes (16%). In contrast, only about 3% of respondents stated that the most important problem for them was poor sales. Facing a possible recession, decline in VC funding is also a flashing warning sign for tech startups and entrepreneurs lately.

Compared to shifting consumer behaviors, however, all these concerns are near-term troubles. Smart entrepreneurs are already looking for the next big ideas that will pay off in the long run. As the adage goes, “the only way out is through.” In order to find a viable path to success in the increasingly chaotic environment, entrepreneurs and small business owners will need to embrace the disruptions and innovations that digital technology brings, and smart financial service and B2B brands will need to adapt their products and services to better support them.

The Shifting Definition of Entrepreneurship

Entrepreneurship refers to the process of starting and operating a business. As the world moves increasingly online, entrepreneurship is also being digitized at a quickening pace. Fundamentally, what constitutes a “business” has changed greatly over the past two decades. For example, before the advent of ecommerce and on-demand delivery, starting a small business typically meant securing funding for leasing a storefront. In recent years, however, store-less D2C brands and ghost kitchens have enabled entrepreneurs to start their businesses without a physical storefront at launch.

In addition, the booming creator economy is also changing what is conventionally considered as entrepreneurship. Gifted content creators on YouTube or TikTok can build a personality brand and monetize through a myriad of ways that include platform advertising, brand partnerships, subscriptions, and audience donations, and journalists and writers can start their own paid publications by publishing their content on platforms like Substack or Patreon. Similarly, gamers are also building their own audience base via live-streaming platforms like Twitch and esports tournaments. In recent years, the wave of web3 developments is also giving rise to a new class of entrepreneurs: crypto advocates starting their own DeFi ventures. These creators are, by all intents and purposes, starting their own businesses and deserve to be considered entrepreneurs just like those starting a mom-and-pop cornershop.

This trend is further accelerated by the changing expectations around how we work. Younger generations have a radically different attitude towards career management than older generations. They want to work on their own terms, and more often than not, that means being their own boss. Dovetailing with the increased rates of burnout and low job satisfaction during the pandemic, the so-called “Great Reshuffling” indicates a significant portion of the workforce migrating from service jobs at restaurants and hospitality to skill-based professional services that could be conducted remotely, such as tech support, digital marketing, and editorial services. Some have embraced the concept of polywork, which entails working on a variety of jobs in different domains simultaneously rather than advancing in one chosen vocational domain.

Source: Axios

Yet, despite all the digital-native ways one can start a business today, most research on entrepreneurship and small businesses tend to ignore this new class of “creator-entrepreneurs,” resulting in a rather stagnant view of the demographic makeup of entrepreneurs and small business owners. For example, the following Statista chart, based on data from the Kauffman Foundation, paints a rather stagnant picture of entrepreneurship, as most businesses are still started by people between the ages of 35 to 54, while younger entrepreneurs lag behind around the same level as 2005.

Source: Kauffman Foundation via Statista

What this chart failed to account for, due to a narrow, conventional definition of entrepreneurship, is that more and more young people below 34 are starting their businesses online as creators. They are selling their digital arts by commission on Patreon and Tumblr, amassing a sizable following on YouTube or TikTok by catering to niche interests ranging from film criticism to ASMR, and setting up shops on Etsy and Poshmark to sell their crafts or creatively upcycled second-hand items. The NFT boom of last year created a hot new market for digital artists, some as young as high school students. All these young entrepreneurs are missing from the count, and are underserved by financial service brands.

Part of why B2B services typically do not account for this new creator class of entrepreneurs is because most of their business needs are already taken by their content platform of choice. From YouTube to Twitter, platforms that rely on user-generated content have been doubling down on the management and monetization tools to appeal to creators. And because creators don’t typically need a business loan to start their business, there is little incentive for many to engage with a financial service provider on their entrepreneurial journey, at least not until they become successful and need to expand their operations.

The shift in entrepreneurs’ expectations and needs has resulted in the consumerization of B2B services. Entrepreneurs and small business owners tend to wear many hats by necessity, and therefore can be the sole decision maker regarding which enterprise services they would choose for their businesses. Therefore, B2B services will increasingly have to appeal to individual consumers (aka entrepreneurs and small business owners), in addition to catering to their existing customer base of corporate IT buyers and office managers.

Lightweight Enterprise

Beyond reconsiderations of what qualifies as entrepreneurship, the proliferation of software-as-a-service (SaaS) companies that cater to enterprise customers is another major trend shaping the future of entrepreneurship.

The rise of lightweight enterprise services that are more agile, flexible, and therefore suitable for startups and small businesses, are part of a larger trend of digitizing the existing commerce infrastructure. Over the past decade or so, enterprise SaaS solutions, backed by advances in cloud computing and machine learning, have significantly increased their capability and scale.

Popular SaaS solutions like Salesforce (CRM), Zendesk (customer support), and Paychex (payroll & HR) are lowering the entry barriers for entrepreneurship and gaining traction among small businesses. Unlike traditional enterprise software, which requires the buy-in and support from multiple divisions within a company, enterprise SaaS solutions can be sold directly to the line of business owners. Their user interfaces are usually customizable and they require little, if any, training. Moreover, their pricing model is usually more flexible and appealing for individual entrepreneurs and small teams.

Risks are inherent in entrepreneurship. Studies estimate that more than 50% of small businesses fail within the first year, and more than 95% of small startups fail within the first five years. Deploying flexible lightweight enterprise solutions can help alleviate some of the upfront costs associated with starting a new business by outsourcing some of the basic enterprise tasks to user-friendly software solutions. For today’s businesses, having a CRM system is a prerequisite, and that means embracing SaaS solutions for a more streamlined, digital-native workflow.

Of course, not all businesses are started online. Many small businesses in sectors such as healthcare, restaurants, and hospitality are still rooted in providing in-person services that require a physical infrastructure. Yet, even those businesses still need to confront the changing consumer behaviors and expectations.

One prime example in this regard is the increasing prevalence of digital payment. While some small businesses may opt to hold on to their “cash-only” policies for various reasons, increasingly, more businesses are adopting new types of payment processing solutions provided by fintech companies like Square or Stripe. Both companies target small to medium-sized businesses that do not want to pay monthly transaction fees, and do not wish to be burdened with expensive payment processing equipment or complex contracts. Last summer, Stripe introduced a payment link feature that allows creators and merchants to sell online without creating a website first, further lowering the entry barrier to starting an online business.

Once the point of sale becomes digitized, it creates an opening to access other types of digital enterprise solutions. In May, Stripe launched App Marketplace, a developer platform that aims to bring third-party tools directly into its payment products, At launch, it will support integrations from more than 50 enterprise apps, such as Xero, Dropbox, Mailchimp, Ramp, DocuSign, and Intercom, all designed to bring together a unified finance workflow to Stripe. These integrations will further boost the functionality of Stripe’s services, allowing third-party accounting, analytics, CRM, marketing, and e-signature features to be directly integrated into its dashboard. Stripe even created pre-made UI components to ensure these 3rd-party apps would look like they were designed by Stripe itself.

More importantly, given that this developer platform will debut in a post-cookie world, payment and transaction info is increasingly becoming a crucial data point that could help close the loop on ad tracking and attribution. Therefore, it’d make perfect sense for fintech companies to turn their services into a developer platform open to third-party SaaS integrations, and appeal to small business owners with holistic, full-stack solutions. Through this lens, Square’s recent move to rebrand its corporate entity as Block, in a bid to differentiate its seller-side core services from its broader suite of enterprise services, follows a similar imperative to extend its ecosystem beyond payment and offer full-stack solutions, should the entrepreneurs need them.

Nowadays, businesses are often at the mercy of inexplicable viral trends. When a product unexpectedly goes viral, even world-class corporations would have trouble keeping up with the sudden surge in demand (just ask Disney how they missed out on $2.7 million worth of potential revenues from Baby Yoda merchandise sales when the first season of The Mandalorian debuted), let alone small businesses with far less resource. As lightweight enterprise solutions continue to evolve, however, they should be able to develop full-stack solutions that can help businesses quickly scale up when they need to, and with the flexibility to scale back down once the demand is past its viral peak.

As the leader in independent ecommerce solution providers, Shopify is very much aiming to become a one-stop partner for entrepreneurs. Last year, the company expanded its one-click checkout service, Shop Pay, to any merchant selling on Facebook or Google, which further solidified its position as the lynchpin in the “anti-Amazon alliance.” Moreover, its recent move to acquire logistic service Deliverr signals an even bigger ambition to provide full-stack ecommerce solutions for small businesses. If Shopify can stick to its strategies of appealing to both merchants’ and shoppers’ demands for a more user-friendly online shopping experience, it will continue to grow in prominence — not necessarily as an Amazon alternative but as a first choice for small business owners — and play an integral role in the larger commerce infrastructure.

Value Before Profits

Written by Benjamin Hone

In most cases, the primary goal of starting a business is to make profits. Yet, this assumption that underpins conventional entrepreneurship is increasingly being challenged by more socially conscious and value-driven individuals as they usher in a new model for entrepreneurship.

Increasingly, consumers are voting with their wallets and choosing companies that align with their personal values. According to a Forrester report from last year, 73% of US consumers support brands that commit to social justice causes and 79% believe that brands have a responsibility to protect the environment. Entrepreneurs follow capital which follows the zeitgeist, and with all of the existential threats facing humanity in this day and age, the zeitgeist has shifted in a decidedly activist direction.

As stated above, the capital is recognizing this shift and allocating accordingly. According to a report by PricewaterhouseCoopers, VC investment into climate tech startups is growing 5 times faster than other investment categories. These investments will help new solutions flourish at a time where urgency is essential. The planet is heating every day and if we don’t curb and ultimately end our addiction to fossil fuels, we will leave an inhospitable planet for future generations. It should go without saying that an inhospitable planet means no consumers, no sales, and unhappy shareholders.

The good news is that with great challenges come great opportunities, and the biggest issues we face as a generation are currently being tackled by numerous organizations. There are currently over 4,000 Certified B Corporations in more than 70 countries across over 150 industries, up from 1,700 as recently as 2016. The majority of B Corporations are privately-held small and medium-sized businesses. B Corporation offers resources for aspiring entrepreneurs to launch new products and services with shared values at their core. They launched B Lab, a non-profit network with the stated goal of “transforming the global economy to benefit all people, communities, and the planet.” This allows them to cast a wide net and onboard startups into their certification process. This level of nurturing and accountability is essential for new businesses that face high production costs and low consumer adoption hurdles to launch an affordable, competitive product that earns consumers’ trust.

We are seeing another form of value-based economic impact through a new wave of activist investors. These hedge funds buy a large enough portion of a publicly traded company’s stock to be able to earn a board seat and appeal for ESG implementation. This recently took place when hedge fund Engine No 1, which had previously acquired a significant amount of ExxonMobil stock, pushed hard for the company to disclose ESG efforts in an attempt to create more transparency for shareholders. Last year, Engine No 1 replaced three directors from the board based on what they described as a slow response to climate change and filled the seats with hand-picked selections. This kind of accountability is essential, especially at a time when some of the planet’s biggest polluters are using fluffy language to soften their horrific environmental impacts.

What can financial service companies and B2B service providers do to support value-driven entrepreneurs & SMBs? The first step is to get your own house in order. Reviewing investments with a critical lens and holding partners and investments accountable for the impact they claim they are making is essential. Second, following B Corp’s lead, financial service companies can provide access to capital and open up a network of collaborators and mentors that can help reduce hurdles for new businesses that aim to make a social or environmental impact. Promoting these companies and partnerships can go a long way to easing consumer adoption by providing a stamp of approval from a recognizable brand.



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Richard Yao

Richard Yao

Manager of Strategy & Content, IPG Media Lab