Gen Z: the ‘gig economy’ generation is driving a new era of entrepreneurship

Younger people are taking advantage of the shift towards flexible and remote working to turn their hobbies and passions into a second job.

According to new research commissioned by Connectd, 92% of startups founded by Generation Z entrepreneurs (those aged 16-24 years old) start off as a side hustle.

The survey, conducted by independent pollsters Censuswide, explored the motivations and actions of 50 Gen Z founders and compared them with the same number of entrepreneurs over the age of 25.

The findings imply that the post-COVID cultural shift towards online and flexible working is bolstering UK entrepreneurship, not hampering it.

The new generation of entrepreneurs

The Connectd research illustrates a trend that has been emerging over the past three years. Young workers are increasingly looking for multiple sources of income to speed up their career and earnings progression.

This could be a result of the cost of living crisis. The majority of Gen Zers have come of working age during a global pandemic; undoubtedly the biggest upheaval to office culture in recent history. Almost immediately after they began work, the UK entered a period of slow economic growth and wage stagnation.

That Gen Z is more likely to explore diversifying their income by starting a side hustle could be a result of rising worries over job security and low pay. We recently reported that new graduates in the UK are being awarded a starting salary that’s £5,000 less than they expect, on average.

But Connectd founder and CEO Roei Samuel believes the findings are more reflective of changing workplace culture.

Increasingly, staff are rejecting the traditional ‘9-5’ working pattern in favour of greater work-life balance. Flexible working arrangements – such as remote or hybrid – have also enabled people to pursue passion projects around their main income.

71% of 16-25 year olds in the UK are either planning to, or already do, work as a freelancer. This group cited the ability to choose their own working hours and ‘be their own boss’ as a top priority.

“Gen Z has grown up attuned to the gig economy and flexible working, which means they thrive on having more autonomy in employed roles than ever before,” comments Samuel. “They’re increasingly bringing this agile mindset to their personal entrepreneurial journeys.”

Side hustle era could remove major gender barrier to starting a business

It’s not just younger generations that are benefiting from the new era of side hustle entrepreneurship.

Time is a major, gender-specific barrier when it comes to starting a company. In most countries around the world, women are still expected to be the primary caretakers of children and do more unpaid housework than men, giving them less time to pursue a business idea.

As flexible working frees up more hours for employees to launch a side gig, a recent survey by GoDaddy found that the number of women-led businesses has surged from 36% to 47% within the last 12 months.

The same report shows 78% of female entrepreneurs started their own business as a way to have more flexibility and opportunity in their career.

The fact that more people feel able to start a business is undoubtedly a good thing for the economy. While GDP figures show that the UK has avoided a recession for now, growth remains flat.

Small businesses currently make up 99.9% of the UK business population. Entrepreneurship at any level, even a small side hustle like dropshipping, should be encouraged to help reverse the economic lull.

Gen Z side hustles: a force for good?

When exploring Gen Z motivations for starting their own business ventures, the Connectd research also found a significant desire to make a positive impact on the environment and society.

Over two-thirds (68%) of Gen Z founders stated that they started their company to make a difference in this respect, compared to 54% of over 25s.

Unanimously, 100% of Gen Z founders surveyed said it was important to them that their business had a low impact on the environment. 

Another key trend explored in the research is Gen Z’s motivations to ‘build in public’, publishing key information about their business successes and failures in an open and transparent manner online.

Public transparency and honesty when growing their business was highly important to 86% of Gen Z founders in Connectd’s research, compared to 63% of founders over 25.

“Our research shows how Gen Z entrepreneurs are uncompromising with their ESG credentials, as they look to underpin successful business growth with strong ethics,” says Samuel.

“This should act as a timely reminder for investors and advisors who are looking to support Gen Z entrepreneurs and share in their future successes.”

Want to start your own side hustle? Check out our guide to the top cheap small business ideas for tips on getting started without massive investment.