Intuit QuickBooks Entrepreneurship in 2024 Report: Majority of Americans Believe Starting a Business Better Way to Build Wealth Than Buying a House

Rhea-AI Summary

Intuit Inc. (Nasdaq: INTU) released the findings of the Intuit QuickBooks Entrepreneurship in 2024 Report, revealing that 23% of surveyed U.S. adults are considering starting a business in the new year, with Gen Z showing the most interest. The report also highlights the impact of inflation and interest rates on personal wealth, with 66% believing that starting a business is a better path to wealth than buying a house. The survey of small business owners indicates that hiring skilled workers, social media, and ecommerce are seen as the primary drivers of business growth, ahead of securing financing or loans. The report also discusses the reliance of small businesses on credit cards for cash flow management, with concerns about credit card balances and high interest rates. Additionally, insights on defining success in 2024 are provided, with small business owners setting revenue growth as their primary goal, and Millennials having the highest bar for success at an average of $288,000 in annual earnings.

Positive

• 23% of surveyed U.S. adults considering starting a business in 2024
• 66% believe starting a business is a better path to wealth than buying a house
• Hiring skilled workers, social media, and ecommerce seen as primary drivers of business growth
• Insights on defining success in 2024 provided

Negative

• Concerns about the reliance of small businesses on credit cards for cash flow management
• Worries about credit card balances and high interest rates

Insights

Financial Analyst

The recent survey from Intuit QuickBooks highlights significant trends that could influence the entrepreneurial landscape and, by extension, the broader economy. With 23% of U.S. adults considering starting a business in 2024, there is an indication of potential growth in the small business sector. This entrepreneurial spirit, especially among Gen Z, may lead to an increase in demand for business services and a surge in innovation.

From a financial perspective, the reliance on credit cards for business financing is noteworthy. With 83% of small businesses using credit cards for cash flow management and a significant portion carrying high balances, there is an emerging risk of increased debt service costs, particularly if interest rates rise. This trend could impact the financial stability of small businesses and their ability to invest in growth.

The survey also points to the importance of ecommerce and hiring skilled workers as drivers of growth, suggesting that companies in these sectors may see increased demand for their services. However, the potential for smaller tax refunds to hinder business formation and growth could be a concern, as 32% of small businesses created since 2020 were funded in part by tax refunds.

Moreover, generational differences in investment and success metrics indicate a shift in the economic behavior of younger entrepreneurs, which could influence market trends and consumer spending. The high financial threshold for Millennials to feel successful, averaging $288,000, suggests a potential increase in consumer spending power if these income levels are achieved.

Overall, these findings could have implications for a range of stakeholders, including financial institutions, business service providers and policy makers. The potential increase in small business formation may signal opportunities for investment, but also highlights the need for financial education and support to ensure the sustainability of these ventures.

Economist

The survey's revelation that inflation and interest rates are perceived as the greatest threats to personal wealth building suggests a cautious economic outlook among U.S. adults. The impact of inflation on small business growth and the preference for starting a business over buying a house demonstrate a shift in wealth-building strategies, which could have long-term economic implications.

Given that a high percentage of respondents view starting a business as a viable path to wealth, there could be an uptick in entrepreneurial activity, which traditionally fosters job creation and innovation. However, the reliance on credit cards for business financing raises concerns about the financial resilience of these new ventures, particularly in an environment of high interest rates.

The generational investment differences, with younger entrepreneurs more inclined to invest in growth, could indicate a future landscape where businesses are more agile and tech-focused. This aligns with the trend of prioritizing ecommerce and social media investments over securing traditional financing.

These insights are valuable for understanding consumer behavior and potential shifts in the economy. Policymakers and financial institutions might need to adapt their strategies to support the burgeoning number of small businesses and ensure that the credit market remains accessible yet sustainable.

Industry Analyst

The data pointing to a substantial portion of Gen Z and Millennials considering entrepreneurship signals a potential shift in the workforce dynamic. This could lead to a transformation in the labor market, with more individuals moving towards self-employment and away from traditional employment structures.

The emphasis on hiring skilled workers and investing in social media and ecommerce over securing loans suggests a change in how businesses approach growth. This could benefit companies operating in digital marketing, online retail and technology sectors, as demand for their services may increase.

However, the reliance on credit cards for financing, especially with high utilization rates, indicates a vulnerability in small business cash flow management. This trend could lead to an increase in financial service offerings tailored to small businesses, such as credit counseling or alternative lending solutions.

Finally, the report's insights into how small businesses define success and the financial goals required to quit day jobs offer a glimpse into the aspirations driving the new wave of entrepreneurs. This could influence consumer behavior, with potential ripple effects across various industries, from retail to real estate.

Nearly a Quarter Surveyed Considering Starting a Business in 2024

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq: INTU), the global technology platform that makes Intuit QuickBooks, TurboTax, Credit Karma, and Mailchimp, today announced the findings of the Intuit QuickBooks Entrepreneurship in 2024 Report. According to a survey of more than 4,500 U.S. adults, inflation and interest rates are the greatest threats to the ability to build personal wealth in 2024 and 66% believe starting a business is a better path to building personal wealth than buying a house. As a result, 23% are considering starting a business in the new year, with Gen Z showing the most interest in entrepreneurship.

28% of Gen Zers say they’re considering starting a business in 2024. (Graphic: Business Wire)

Greatest Impact on Business Formation and Growth

Despite the increased interest in AI, hiring skilled workers was rated as the number one way to drive growth by respondents who were small business owners, followed by investing in social media and ecommerce. Interestingly, these came ahead of securing financing or loans – often perceived as a key to business growth. Other key findings that could influence business formation and growth include:

• Tax returns turning into businesses: Nearly a third (32%) of small businesses created since 2020 were funded in part by tax refunds. Given this, the size of 2024 tax refunds will likely impact business growth and formation, with 65% of respondents saying a smaller return will make it harder for them to start a business or side hustle.
• Inflation’s ongoing impact: Over the past three years, more than half (57%) of respondents who started a business said boosting their income amid inflation influenced their decision to launch a business venture – equal to the amount who cited the COVID-19 pandemic as a reason. Additionally, respondents noted that inflation is the number one challenge to small business growth in 2024 followed by higher interest rates which make it more expensive to borrow money.
• Generational differences in investment: The data show that younger entrepreneurs are more likely to invest for growth in 2024 than older generations, with 88% of Gen Z small business owners looking to expand ecommerce or physical locations to boost revenue in 2024 compared to 66% of Gen X and Baby Boomers. Additionally, 76% of Gen Z small business owners and 80% of Millennial small business owners want to hire in the new year compared to just 58% of Gen X and Baby Boomers.

Credit Cards Critical to Small Business Cash Flow

The survey reinforced recent findings from the 2023 Intuit QuickBooks Small Business Index Annual Report, which demonstrated the reliance small businesses increasingly have on credit cards to manage cash flow. Of small businesses surveyed, 83% said they have relied on a credit card to manage their business finances this year. Overall credit card usage trends show the importance of credit to small businesses as well as potential issues:

• Emergency funding is the primary use of credit cards: Among all small business owners surveyed who are currently using credit cards, 59% say this is “an emergency or temporary source of funding.”
• Credit card balances a concern in 2024: Overall, almost one in four (24%) small businesses don’t believe they will be able to pay off their credit card balances in 2024 without paying interest.
• High open credit utilization and interest rates: More than half (51%) have used 50% or more of their available credit limit and 76% have used 30% or more of available credit. Over 40% of respondents indicated the APR on their business credit cards was 20% or higher.
• Business vs. personal card usage trends: In general, personal credit cards are more popular than business credit cards, with 70% of respondents revealing they use them. Personal credit cards are most popular among freelancers and solopreneurs, while small businesses with employees are more likely to use business credit cards.

Defining Success in 2024

The report also reveals what success looks like in 2024 amid inflation concerns and what financial thresholds small business owners need to reach to feel successful. The survey showed that 41% of Americans would feel successful earning $75,000 in 2024. Other insights on how small businesses measure success include:

• Success means increasing revenue for small businesses: Among small business owners, 42% said that increasing revenue is their primary goal in the year ahead, indicating the importance that financial growth has for small businesses.
• A high bar to quit day jobs: Of the 1,000 side-hustle business owners surveyed, nearly two-thirds (62%) would quit their day job if they were able to earn $100,000 a year. The primary reason for keeping their day job before they hit that mark is the concern of having a stable income. This was almost twice as important as having access to healthcare benefits from W2 employment.
• Millennials put a higher price on success: By generation, Millennial respondents have the highest bar for success in 2024, saying they will need to earn $288,000, on average, to feel successful. At the other end of the scale, Baby Boomers would be satisfied with less than half that amount, at $126,000 on average.

The full report and additional data insights from Intuit QuickBooks are available here.

About Intuit

Intuit is the global financial technology platform that powers prosperity for the people and communities we serve. With 100 million customers worldwide using TurboTax, Credit Karma, QuickBooks, and Mailchimp, we believe that everyone should have the opportunity to prosper. We never stop working to find new, innovative ways to make that possible. Please visit us at Intuit.com and find us on social for the latest information about Intuit and our products and services.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231219808087/en/

Intuit QuickBooks:

Dan Mahoney

dan_mahoney@intuit.com

Jen Garcia

Jeng@accesstheagency.com

Source: Intuit Inc.

FAQ

What are the key findings of the Intuit QuickBooks Entrepreneurship in 2024 Report released by Intuit Inc. (Nasdaq: INTU)?

The report reveals that 23% of surveyed U.S. adults are considering starting a business in 2024, with Gen Z showing the most interest. It also highlights the impact of inflation and interest rates on personal wealth, with 66% believing that starting a business is a better path to wealth than buying a house.

What are the primary drivers of business growth according to the survey of small business owners in the report by Intuit Inc. (Nasdaq: INTU)?

The survey indicates that hiring skilled workers, social media, and ecommerce are seen as the primary drivers of business growth, ahead of securing financing or loans.

What are the concerns related to the reliance of small businesses on credit cards for cash flow management discussed in the report by Intuit Inc. (Nasdaq: INTU)?

The report highlights concerns about credit card balances and high interest rates, as well as the use of personal credit cards being more popular than business credit cards among small business owners.

What insights on defining success in 2024 are provided in the report by Intuit Inc. (Nasdaq: INTU)?

The report provides insights on defining success in 2024, with small business owners setting revenue growth as their primary goal, and Millennials having the highest bar for success at an average of $288,000 in annual earnings.