10 Pointers Every Young Entrepreneur Needs to Know

A young entrepreneur might run across a lot of articles offering advice for the new business owner. But how many articles are actually geared toward the young entrepreneur?

As a former young entrepreneur myself (now I’m 30), I’ve decided to share my insights from my past experiences — all the types of things that I wish someone had passed on to me when I was first starting out.

1. Do what you love.

When I graduated from college I worked at a job that I didn’t like because it paid me well. I hated to go into work each day. I admit that entrepreneurs typically make the worst employees because they want to be out there growing their own enterprise. Figure out what you love and then become the best that there is at it.

Your passion for your product or service will keep you motivated and get you through the tough times. Yes, there will be challenging moments. But when you work on something that you actually care about (as opposed to just trying to make a quick buck), you’ll probably be happy, have direction and fight as hard as you can to make this crazy idea of yours become a reality. 

2. Stay focused.

It’s awfully tempting to jump from project to project, especially when it seems as if a million opportunities are flying by. But don’t become distracted from the big picture. Instead of working on multiple projects, stay on track and complete the task at hand. If you’re working on multiple projects, you can spread yourself too thin, which will have an effect on your performance, productivity and resources. Perfect that one thing instead of working on five so-so projects.

3. Exploit online resources.

The Internet is a gold mine of resources. For example, visit the site of the U.S. Small Business Administration for advice about writing business plans, legal considerations, loans and even local resources to help you get that startup off the ground. Other awesome online resources are the websites of SCORE, America’s Small Business Development CenterBplansVentureBeat and, of course, Entrepreneur.com.

4. Find a mentor.

Whether you turn to a local entrepreneur, a business leader or a weathered vet that you meet through LinkedIn, having a mentor is one of the best resources you can have. Not only might a mentor have experience (such as dealing with venture capitalists), he or she also could possess an extensive network and help you connect with the right people to make your startup a success.

Don’t be afraid to cold call or email a big name in the industry. Many of these big names like to help younger entrepreneurs as a way of giving back. I met my mentor when I was 12. He was the owner of a large carpet store. I was his paper boy. I delivered his paper in the perfect location every day for three months till one day I saw him. I asked him straight up, Will you be my mentor? He said yes. He’s still a mentor to me today along with many other people.

5. Take care of yourself. 

I was a young go-getter once. (At age 12 I started my first candy stand and had three at one point.) I know exactly how it is: You think that you’re invincible. Here’s the breaking news: You’re not.

As an entrepreneur, you might find it easy to push aside healthy lifestyle essentials, such as getting exercise, eating a balanced diet and securing enough sleep. But what good will you be if you’re tired or your immune system if weak? Plus, exercise is a great way to relieve some stress.

Don’t forget to make time for yourself. You need to take a break from work or you might burn yourself out. I personally love to listen to books and have since I was a kid. I’m not very good at reading as I have attention deficit hyperactivity disorder so I listen to books. Find what works for you!

6. Define your market.

Failing to define the market is a common mistake of a lot of young entrepreneurs. Always remember to consider if your business plan makes sense for your market. If you’re dreaming up a late-pizza delivery service, do you start it in a business district or a college town? There are a number of ways for you to try to define your market, such as by demographics or psychological factors.  

I always hear people in the fashion industry tell me that their world is a $1.2 trillion market. Technically they may be correct. But if your product is hipster pants, the market isn’t $1.2 trillion. How many hipsters are there in the world? How many of them would purchase your product on a yearly basis? 

7. Be able to explain your business at a whim.

You never know when you’ll have to explain your business. You could run into an investor in an elevator or end up making a sales pitch to a customer while out to eat. Always be ready to clearly and quickly state your mission, service and product or goals.

This is something I learned from Derek Anderson, the founder of Startup Grind, which hosts events for entrepreneurs. He took me to lunch about three years ago and asked me what I did and the business I was promoting. I really didn’t know how to answer. Since then I have refined my pitch so that when someone asks me what I do, I can tell them in five words or less. Practice your 5-second, 15-second and 1-minute pitch over and over. This will help you be able to explain your business to anyone out there in any situation.

Related: Staging the Anti-Conference That Will Pull in Young Entrepreneurs

8. Remember, you run a startup. 

Just because you secured some funding that doesn’t give you the right to act like you’re a rock star. A luxury home, an office with an actual shark tank or a really fast car are all just a big waste of money, especially in the beginning. Remember, you run a little-known startup (and you’re not Richard Branson overseeing a large successful company). Be careful about managing your cash flow and make sure that you keep track of expenses. That’s not being cheap. It’s being wise. You don’t want to burn through all your cash too early.

9. There are still rules.  

A major perk that comes with being an entrepreneur is that you’re the boss. You can make your own hours and develop your vision of a company. In short, you’re doing whatever you want. And it’s awesome. But there are some rules that all entrpereneurs have to follow like registering your business and paying taxes. These are just some of the not-so-much fun things you have to handle. If not, you’re going to be in just a little bit of trouble.

10. Know when to fold ’em.

Sure, I’ve had success running and selling several different companies, but do you know how many I’ve started and stopped because they weren’t taking off?  Tons. Some say 9 out of every 10 business fail within the first couple years. 

Don’t let your pride get in the way of closing your company. I learned this the hard way in college when I launched what became my first failure, Utefan. I knew that what I was doing wasn’t going to work or make money. I kept putting money into it and spending time on it. Eventually I had to give up my pride and stop. Know when to let go.

If you’re not familiar with the classic Kenny Rogers song “The Gambler,”then stop what you’re doing and check it out. It offers some of the best advice ever. Why? Just like any great gambler, you have to know when to fold ’em. Instead of continuing to work on a fledgling business, it’s best to walk away and reflect on what went wrong. It’s not going to be easy. But it’s inevitable. And you’ll take that lesson with on your next venture. 

Advertisements

3 Startups Offer New ‘Microloan’ Options for Entrepreneurs With Big Ambitions

In the United States, a whopping 543,000 new businesses are launched each month. Sadly, half of all start-ups aren’t able to keep their doors open for more than five years. The failure of many small businesses is due, in large part, to lack of funding.

In the last several years, however, there has been a surge of microfinance institutions popping up across the United States, offering a solution to this problem by issuing microloans.

A microloan is defined as a very small, short-term loan with a low interest rate, usually extended to a start-up company or self-employed person. Typically, these loans do not exceed $35,000.

Microloans started as a solution for impoverished borrowers in underdeveloped countries. These borrowers typically lacked collateral, steady employment and a verifiable credit history, making them a difficult candidate for traditional financing options. Microloans have been successful in helping to support entrepreneurship and encourage economic growth in these developing nations. 

In more recent years, microlenders have been establishing themselves all across the United States. According to the 2009 Microfinance Information Exchange study, almost 1,100 microfinance institutions were identified and shown to collectively serve more than 74 million borrowers with $38 billion in loans. Some microlenders are finding creative ways to improve and streamline this already simple process by offering unique microlending services. 

1. TrustLeaf.com: Daniel Lieser, co-founder and development manager for TrustLeaf.com, extends microloans through crowdsourcing. What makes TrustLeaf.com unique is that business owners only borrow from friends and family. Their campaigns are not publicly available. This protects the borrower’s privacy.

Borrowers simply set up a campaign on Trustleaf’s site, providing all the necessary information about their business. They then select loan terms. Potential borrowers are able to pick from a few lending options with different interest rates, minimum amount due,and various repayment terms. The borrower and the lender come to an agreement about which loan terms make the most sense for both parties.

Once the borrower has set up their campaign, they can invite friends and family to view the campaign. “Friends and family don’t like to haggle because it makes them uncomfortable,” said Lieser. “Having this system in place prevents those awkward conversations of attempting to collect money when it’s due because it’s all laid out on our platform. Funding comes straight from the lender, a peer-to-peer system.”

2. PayPal Working Capital. PayPal currently has more than 152 million active accounts, processing more than nine million payments on any given day. Last year, they launched PayPal Working Capital, offering microloans to a select number of businesses. Loans offered through this program range from $5,000 to $60,000.

Paypal Working Capital is unique because loan repayments are based on a fixed percentage of total monthly business sales, creating flexibility for a borrower whose sales patterns are difficult to predict. In addition, the deciding factor in extending a line of credit to a business is their sales history within PayPal, so no credit check is performed.

3. Bitcoin Brands. Peter Klampka, CEO of Bitcoin Brands Inc, is a forward thinker. He foresees Bitcoins being utilized as a means for extending microloans. Bitcoins are digital currency you can send through the Internet. They are universal, have the lowest transfer fees, almost zero time restrictions and have the fastest transfer rate compared to traditional currency loans and transactions.

Bitcoins can also be sent from one mobile phone to another. “With a micro-transaction, I can text you that money and you have it in minutes,” said Klampka. “It’s fast, cheap and can be universally accepted from anyone at any time.”

Bitcoins are quickly gaining public acceptance. Overstock, Expedia and thousands of small vendors currently accept Bitcoin payments. Even forward-thinking universities are getting involved. Every student who enrolls at MIT this fall will receive $100 worth of Bitcoins.

It is clear that microloans present a competitive alternative to traditional banking institutions and are transforming lending practices. This new source of credit is creating a lifeline of capital for small businesses and helping them continue to grow, even in the most competitive of markets.