Entrepreneurs have more opportunity today than at any other time due to the reach of the Internet that allows you to inexpensively test and develop large markets for many types of businesses.
A recent survey by Deloitte found that about 70% of young men and women born after 1982 want to start their own business. This high level of interest in owning a business is being driven by the general economic instability in the workplace many young people are experiencing. But it also stems from watching many of their parents’ jobs eliminated despite seeing they were dedicated to their companies and worked hard to try and climb the corporate ladder. As a result of this changing workplace, most young people now view entrepreneurship as a better alternative.
But despite a higher percentage of the current generation of young people wanting to become entrepreneurs more than their parents, this ambition is not being translated into a higher rate of startups. In fact, the percentage of startups among this group of young people has been decreasing during the last several years. YPNG feels that this has a lot to due with their increasing student loan burden, which has gone up rapidly over this same time frame and which is detailed in our “Learn More” article on the YPNG home page. Higher levels of student loans mean the current generation of young people is less likely than their parents to be able to save the money that would enable them to start a business because of the necessity for them to immediately service their student loans when they graduate. Keep in mind that the bulk of the 550,000 new businesses that are being formed each year are initially self-funded by the owners and by taking our bank loans that require the borrower to have some reasonable equity in the business. Only about 1,500 startups received venture capital funding in 2013. There are estimates that what are called Angel investors, high net worth individuals, backed about 50,000 more. That means that 90% of the new businesses were self-funded. But starting small does not mean you cannot build a big business.
Entrepreneur Sam Walton, who founded Wal-Mart, opened his first store with a little money he saved while he was in the army during the Korean War and with a bank loan. He only sold stock to the public when he had confidence in his business plan and recognized he was at the point where he needed outside capital to meet his expansion goals. Because he had proven his business concept before he accepted outside equity financing, he was able to get favorable terms and preserved a higher ownership percentage for his family than if he had sold stock earlier. So if starting a business is a personal goal of yours, one of the first things you have to do is look for ways to reduce the debt associated with obtaining your education. Then you will be in a better position to have the capital to get into the arena and test your ideas like Sam Walton.
Recognize that you have an advantage over Sam Walton in terms of the initial cost of starting many types of small businesses because of the Internet. Social media lets you refine your product or service, build a brand and begin to grow your business at a lower cost than was ever possible before. Plus the Internet allows you to think and act globally even if you start locally. Once you have tested your business plan just like Sam Walton, you will greatly increase the chance of getting second stage funding on reasonable terms that will allow you to grow your business faster. Our Mentor Articles will give you examples of how successful entrepreneurs have started small but grew their companies into businesses with significant revenues.
Those of you who choose a skilled trade also have an excellent chance to start your own business once you have gained experience in your trade and if you are also a good business manager. How to successfully make this transition to running your own business is one of the things people in the skilled trades who have started their own companies share in their Mentor Articles.
YPNG plans to also initiate discussion boards and video conferences where you can ask questions and share information about ways to solve a variety of business problems with Mentors who are successful entrepreneurs. When you sign up as a Member, you will be notified of these programs if you list entrepreneurship as one of your personal interests.