Ahead of tax season, independent survey illustrates unique challenges facing the economic recovery of millennial business owners, and their trust in social media
Xero, the global small business platform, today announced the results of a Canadian small business survey which evaluated the financial literacy of business owners by generation and explored the factors barring their path to success and eventual economic recovery.
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The survey of 800 Canadian small business owners found that millennial small business owners (ages 18-34) identified being better prepared for financial instability as their primary business goal for 2021. However, the group earned a failing grade on financial literacy.
Unlike Generation X (ages 35-54) and Baby Boomer (ages 55+) respondents, millennials also expressed high degrees of financial trust in social media platforms and a uniquely pessimistic outlook on the future of their business.
Perceived versus actual financial literacy
While the majority of millennials surveyed considered themselves to be financially literate (62%), on average, the group received a ‘D’ (66%) when presented with a series of true or false financial literacy questions. This was the poorest letter grade among respondents across generations. In comparison, Generation X earned a ‘C’ or 76%, while Baby Boomers earned a ‘B-’ or 82%.
Roughly a quarter (24%) of millennials surveyed were unaware they would need to report the total amount of pandemic aid they received on their tax returns. Only 14% of Generation X respondents, and 13% of Baby Boomer respondents answered this incorrectly.
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Faye Pang, Canada Country Manager at Xero said, “The survey data shows a gap between perceived and actual financial literacy among millennial business owners, which means they may be leaving money on the table.”
“Meanwhile, 24% of respondents in the survey said they would rather get a root canal than organize and file their taxes. Xero’s priority is to help relieve this kind of stress for small business owners and surface insights that are designed to help them achieve their financial goals.”
Higher degrees of financial trust in social media platforms
Across generations, millennials (40%) were more likely to trust social media platforms, including Facebook, Instagram and TikTok, as sources of information for their business financials. Trust was significantly lower among Generation X (28%) and Baby Boomer (17%) respondents.
When asked to report on their trust for other sources of information, 84% of millennials responded that they trust themselves, moderately to completely, followed by business advisors (83%) and their friends (79%).
Pessimism for the future
When asked how the release of COVID-19 vaccines had impacted their outlook on the future of their business, millennials felt far less hopeful, with 33% reporting unchanged feelings of pessimism. Xero’s Young Entrepreneur Report revealed just over one-fifth of Canadian small businesses are owned by millennials, making this an especially concerning statistic for the future of small businesses in Canada and the longevity of their operations.
In contrast, when asked about the future outlook of their business, Generation X and Baby Boomer respondents reported unchanged feelings of optimism (at 34% and 46%, respectively). Interestingly, this segment also reported the highest personal assessment of financial literacy at 68% and 77%, respectively.
