Starting a business can be very appealing to many. In fact, it’s almost as if it has become a “trend” in recent years, especially amongst millennials (ages 20 to 35). According to a recent article in Fortune Magazine, “millennial entrepreneurs have launched about twice as many businesses as baby boomers.” While starting a business can be great for the economy, it’s important to understand the level of difficulty associated with building and sustaining a successful business. It’s critical that you understand how to do it the right way so that you have a greater chance of being successful on your first try.
It’s also important to understand the pros and cons of starting a business before you go into it so you can make an informed decision. In my experience, often times millennials go into business without fully understanding the type of responsibilities that it requires. Millennials tend to see the “glitz and glamour” successful entrepreneurs portray on their Facebook and Instagram pages but they don’t see the hard work and dedication it requires. This purpose of this blog post is to give millennials the cold, hard truth about what it takes to build a successful business. If you’re a millennial, you may want to read this before you take the big leap.
- You will need startup capital – As the old adage goes, “it takes money to make money.” This is very true for starting a business. According to Gallup article, the majority of new entrepreneurs use their personal savings (i.e. bootstrap) to start a business. If you don’t have personal savings you may be able to obtain a small business loan or line of credit to fund the business. Obtaining a small business loan or line of credit requires you to have an established and well managed personal credit history. If you don’t have good personal credit, the only other option is raising capital from friends, family and/or angel investors.
Raising capital from friends, family, and/or angel investors will require you to give up a percentage of ownership in the company. Giving up a percentage of ownership means that you will also have give up some control over your company. Furthermore raising money from friends, family and/or angel investors can be extremely difficult. You may be better off bootstrapping or getting a small business loan or line of credit, if you can qualify.
- You won’t be able to quit your job right away – You will need to manage your time very well because the business may not generate enough sales in the beginning for you to quit your full time job. If you quit your job prematurely, you may have to go back just as fast. It’s wise to continue working full time, focus on building the business part time, and hiring someone part time to assist (if necessary). This will give you a chance to build up the sales for the business. That way, when you do quit, you will be able to pay yourself enough to replace the income you once earned from your job.
- You may not get the results that you want – Let’s face it, starting a business is a risk. It’s one of the biggest risks you can take as a millennial. When you’re in your 20’s and early 30’s, you likely don’t have that much to lose, but if you do fail on your first try, keep in mind that you will have to start over again. The good news is that you will have the knowledge and experience of a business owner so you’ll be able to make better decisions the second time around. The bottom line is that starting a business and becoming successful is not as easy as so many people make it seem. Starting and running a business consists of long 14+ hour work days, slow sales or no sales. It can come with tons of struggle. As long as you understand that it will probably be the hardest thing you will ever do in your adult life, give it a shot!