Young entrepreneurs possess inherent advantages in rolling out their products and services – think back to the 20-something genius of two future billionaires: Mark Zuckerberg, Facebook’s founder, and Sara Blakely, the visionary of Spanx undergarments. But youth has its downsides, too. Here’s a look at 10 pros and 10 cons for aspiring entrepreneurs who have yet to sprout gray hair.
10 Advantages of Young Entrepreneurs
- Their risk is lower. A young entrepreneur is unlikely to suffer either an unrecoverable financial disaster or permanent reputational consequence from a failed venture. He or she is probably toiling in obscurity without putting up significant collateral for a loan. Young entrepreneurs aren’t worried about building a college fund for their kids or a retirement plan for themselves.
- Family and friends are supportive. Parents, siblings, extended family, and school pals might invest in the dream of someone they view affectionately. They might cover the entrepreneur’s health and car insurance costs; they might pony up a structure such as a garage or guest room for the start-up. And they may be willing to house and feed the idealist while kicking in some cash for incidentals such as transportation, cell phone and internet fees. In addition, they offer emotional support as cheerleaders and sounding boards.
- They’ve got time. Young entrepreneurs can devote close to 100 percent of their waking hours (if unemployed) or nearly all of their non-day-job, non-sleep hours (if employed) to a passion project in hopes it will lead to a full-time career and lifelong satisfaction.
- They can hire young employees. They can tap like-minded contemporaries to work within a creative culture. Long hours go with the territory of a start-up, but the allure for everyone is building something unique and having an ownership stake – along with the bragging rights that you were there from the get-go.
- Costs are lower. Young entrepreneurs will sacrifice physical comforts (working in less-than-ideal temperatures in a cheap location, for instance) and make little money during the start-up phase. Ramen soup can be a supper staple. Work uniforms can be jeans and T-shirts. They’ll use social media for advertising and customer relations.
- Business innocence can be a plus. Sometimes when people lack the background to know something is pretty much impossible, they make the attempt and score a miraculous success. When Samuel Adams Boston Brewery was in survival mode, founder Jim Koch famously opted to concentrate solely on sales; he would worry later about producing proper financial paperwork. Naïve, perhaps, but the strategy worked for him and has worked for others.
- Learning is simplified. Cheers to the internet! YouTube videos and TED Talks materialize within seconds. Have questions? Expert answers arrive quickly after queries via social media, live chats, text messages, email, and that old standby, the telephone – because contact information is easily found. For an old-school tactic, almost any book (the Dummies series and Idiot’s Guides are terrific) can be delivered within a couple of days.
- There’s tolerance for failure. In the millennium, respected thought leaders insist it’s OK – even desirable – to fail fast and fail often, and then rebound with a better idea. No one says, “You should’ve known better.” Young entrepreneurs’ stumbles are likely to be excused. And besides, the entrepreneur learns from his or her mistakes.
- Enthusiasm abounds. Think about sports fans’ zeal for body paint, weird costumes and dyeing their hair in team colors. Think about the willingness to humble oneself singing karaoke. Go-for-it-all attitudes play well in pitches for start-up capital and the need to work 18-hour days and persevere through setbacks.
- Staying up-to-date is easier. As with No. 7 above, vital information is ready to be mined by a few keystrokes and mouse-clicks – or even voice commands – “Hey, Siri!” News, techie, business and blog websites abound.
10 Disadvantagesof Young Entrepreneurs
- They lack experience running a business. Laws about wages and overtime, employee health, company policies, tax considerations, and other financial and human-resources legalities can bite now or later, with serious consequences.
- Financial backing can be an uphill battle. Investors are hesitant to shower big bucks on someone with no track record and no assets or collateral.
- They have few or no business connections. When every sales call is a cold call, it’s tough to get past the gatekeepers at first and close a sale later. The negativity does a beat-down on the entrepreneur’s morale. And even when the deal is done, there’s the problem of getting paid: The little guy can be last to receive payment in tough economic periods because the customer knows a struggling start-up company may have the least resources for collecting.
- Customers may be slow to trust young entrepreneurs. Potential clients, like potential investors, will fret over throwing money at the new kid.
- They’re not focusing on school. OK, so Bill Gates didn’t finish college and he’s not hurting. But he’s an exception and knows it – he has sent his kids to top schools, Stanford University among them. The average software, robotics or math nerd probably disdains silly stuff like writing a persuasive essay (with correct spelling and punctuation), delivering a speech, learning business etiquette or understanding behavioral psychology. But those topics help build a well-rounded person who can tactfully fend off objections after a sales pitch, comfortably rub elbows with venture capitalists, compose an effective email, and manage a talented but challenging employee.
- Big contracts will be elusive. This dovetails with No. 4 above. Until the entrepreneur builds a reputation and history for delivering on promises, clients are likely to stay in the sample phase of the buying relationship, dipping in a toe but not taking a major plunge.
- They may have problems managing personnel. Inexperienced leaders may be unable to create their desired workplace culture. Or they may have trouble dealing with difficult workers – for example, employee defensiveness after constructive criticism, personality conflicts among staff, and deploying talent in the ways it will pay off best for the company’s long-range benefit.
- Even trivial tasks might be difficult. In a company’s early days, entrepreneurs may have to split their focus to serve as plumber, barista, electrician, counselor, recruiter and janitor, which at times will sideline their preferred work of concentrating on the Big Idea. They must do payroll and pay bills on time. Documenting a process so it can be replicated by clients might be difficult when the founder is a technical genius but not much of a communicator. It’s crucial to be able to shift gears between skill sets and between mundane tasks and high-level concepts. With maturity comes the crucial ability to know your weaknesses and compensate for them, delegating as needed.
- Self-discipline may be in short supply. While there’s the eagerness to try many new things and a reluctance to tell people no, these tendencies can translate to a scattershot approach instead of the single-mindedness that’s crucial for putting a project in the win column.
10. Work-life balance is sacrificed. All work and no play is, well, no fun. Slackers aren’t cut out for taking an initial raw concept to marketplace perfection. Nope, it takes dogged effort. This means forgoing a three-day video-game tournament if a big order is due on Tuesday as well as telling friends no to beer pong when a sales pitch is scheduled for 8 a.m. the next day.