18 Apr 2011
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
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.
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