Wednesday, February 28, 2024

5 main things you need to know if you’re starting a business in your 20s

Before you get too deep into your entrepreneurial endeavor, there are a few important things to know about starting a business before you’re 30:

1. There are substitutes for experience.

Whether you’re crowdfunding, looking for private investors or funding your business yourself, as you look for that first round of clients, you’ll find that early supporters will be basing most of their first impressions on the depth of experience you offer.

Unfortunately, this is going to be one of your biggest weaknesses: You simply won’t have nearly as much experience as other people in your field, and investors will question whether you can pull this thing off.

Don’t be discouraged; there are actually substitutes for experience (you read that right!).

For starters, if you don’t have experience of your own, you can get some secondhand, by partnering with someone who has the background you lack, or by working alongside a mentor willing to share his or her expertise.

You can also offer investors hard evidence, social proof or a demonstration of your talent to compensate for your lack of experience.

You have a good business idea but no capital? See how to get funded

As long as you realize what your weaknesses are and find a way to make up for them, the “experience” factor shouldn’t be a problem.

2. Credit matters.

Before you start a business, you should have your personal finances in order. But before you can start building credit in a business, you need to have personal credit, and that’s something not a lot of twenty-somethings-have.

Without personal credit, you’ll have a harder time persuading investors to part with their money; and securing a line of business credit will be nearly impossible.

To make matters even worse, you likely won’t have a steady line of profit (or income) for the first few months of your business (or even years).

Think carefully about how you’re going to pay those bills and make ends meet during that time. If you’re drowning in debt, and have little-to-no savings, you have some work to do before starting a business.

3. Youth favors risk.

In investing, in business and life in general, youth favors risk-taking. If you make a catastrophic error, such as a bad investment, you’ll have more time to make up for that mistake over the course of your life.

You’ll also have fewer assets, and not be as “tied down” as your elders are, meaning you’ll be more adaptable and can flexibly accommodate almost any challenges or surprises that come your way.

As an added bonus, when you’re young, if you take a risk and fail, it will be seen as a natural byproduct of your inexperience and enthusiasm, rather than a reflection of your character and abilities. So, take advantage by taking more risks while you’re young.

4. You have time.

Young professionals tend to have energy in spades, and a passion that simply isn’t matched by their elder counterparts.

This comes with a lot of positives, such as higher productivity and more enjoyment in your actual work, but it also often leads young entrepreneurs to act quickly without thinking, or spend money with reckless abandon in an effort to scale as fast as possible.

My advice? Slow down. Understand that you have your entire life ahead of you, and even though it’s exciting to think about scaling your business to monumental heights, it’s nothing that can’t wait.

If you become too eager and impatient, you’ll end up compromising your chances at long-term success.

5. This probably isn’t the end.

You may also be comforted to realize that your present business most likely won’t be the end of your entrepreneurial journey.

You know the statistic about how most businesses fail, but when you’re young, it’s hard to wrap your mind around that reality.

Regardless of whether your business succeeds or fails, you’ll eventually exit it, or chase other pursuits while it stabilizes.

When you look at your business as something temporary, or as a stepping stone, you’ll bear less stress from the little things and be able to make decisions with greater perspective and future-focused thinking.

With these considerations in mind, you’ll be able to play to your strengths and compensate for your weaknesses.

There’s no “perfect” time to start a business, of course, but knowing the advantages and disadvantages of your specific timing is necessary if you want the greatest chance of success.

Let your momentum take you where it may, and don’t let challenges or failures stand in the way of your achievements.

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