Young Entrepreneurs

MYOB 2011-04-18
Show #130
Release date: 18 Apr 2011

Notes

In this edition of the Mind Your Own business podcast we feature an interview with the founder of the Young Entrepreneur Council, Scott Gerber:

followed by a studio discussion between Guy Kingston, Christina Jones and John Richards.

In an engaging interview, Scott Gerber breaks from the orthodoxy that a start up needs external finance (99% don’t get any) and that every venture has to be based on high tech innovation.

Instead, we walk through ‘what it’s like on the ground’ for those of us who really do start a business rather than just talk about doing so one day.

What sort of ideas work? How is it going to be financed?

When Youth Is A Competitive Advantage

Most people go through three stages in their attitudes to youth. The first stage is when we are young yourselves, and are therefore all in favour of youth and against everything else. The second stage is when we begin to establish ourselves and we tend see the next generation coming behind us only as a competitive threat: then we begin to resent youth, and dwell on its follies and ignorance. The third and final stage is when we are established and confident in ourselves: then there is room for nostalgia to kick in, and we become more indulgent towards young people and want to help them if we can.

On the whole, the team at MYOB like young people – whether this is because we are in the first stage or the third is not for us to say.

In particular, we are all in favour of young people becoming entrepreneurs. They have a lot to contribute to the economy and a lot to learn about life from starting their own businesses. Entrepreneurship is not for everyone, but, for young people with the necessary character and intelligence, it can teach them far more about life than their “formal education”.

It is true that the failure rate is high, but even a failed business venture can be a useful experience. Getting knocked down and learning to get back up again is an important part of personal development.

It is therefore heartbreaking to see how young people who are interested in business become the targets of so much bad advice and misinformation. Well-meaning family and friends try to discourage them. The professional “business advice” industry saddles them with its own inadequacies. The media misrepresent what business life is really like.

For example, the fashionable media image of the youthful entrepreneur is that of the internet millionaire.

However, young people looking for business ideas would be well advised – unless they have a particular interest already – to avoid IT or knowledge-based sectors in general. They are not playing to their strengths. Knowledge increases – or should increase – with age. Young people going into a knowledge-based business are at a disadvantage.

The corollary of this is that the best strategy for a young entrepreneur is to find a business that exploits the competitive advantages of youth.

The most obvious of these is energy. When you are young, you imagine this energy will last forever and you fail to take full advantage of it, or you waste it – on partying or on working for someone else’s business. Older entrepreneurs often wish they could combine the energy they used to have with the experience they have now. Alas, one of the tragedies of life is that you never really appreciate the benefits of youth until you begin to lose them.

That energy comes in many forms, not the least of which is physical strength. It is by no means unusual for someone who goes on to become a multi-millionaire entrepreneur to base their first business on some form of manual labour. For example, many successful property developers start out with their own building sub-contracting businesses, often when they are relatively young and prepared to work long hours.

It is a definite advantage for a first business to be based on a simple concept. It is a common mistake among inexperienced entrepreneurs to over-complicate things, and try to develop a range of products or services rather than focus on getting one basic offer right.

The actual process of running any business is complex enough as it is without making it even more convoluted by choosing an over-elaborate concept for your first attempt.

Above all, a first business should be based on realistic expectations. Most young people in the West today are raised in a culture of instant gratification, fuelled by false media images, which focus on spending the profits of a successful business but ignore the boring hard work and self-sacrifice that is necessary to build it in the first place. No one should go into business expecting millions to fall into their lap. They may come in time, but only if you stop day-dreaming about how you will spend them and start focussing instead on how to make the next hundred dollars.