The Reality Of A Young Entrepreneur: What You Need To Get Off The Ground
Starting your own venture as a young entrepreneur is no easy feat. It takes a lot of risk, ingenuity, hard work and hustle. However, I want to address one issue I continue to see with a lot of young entrepreneurs. They pour their hearts and souls into a startup, but often forget about the most important thing: CASH. Like it or not, cash flow is everything.
The chances of creating the next Instagram or Snapchat are about the same as chances of winning the lottery. Great entrepreneurs start from the bottom and work their way to the top, like Elon Musk, who started his career by basically generating online yellow pages, which in my opinion, is much less ambitious than his next endeavors including, Tesla, SpaceX, Paypal and Solar City. My point is that young entrepreneurs need to focus more on generating cash before starting more ambitious capital-intensive ventures.
You need cash to survive, and you cannot live off of slaving away at your startup making zero dollars forever. With a startup failure rate of 80 percent in the first year, according the U.S. Bureau of Labor, I want to stress the importance for young entrepreneurs to develop a diverse skill set that ensures a greater chance at success. Here are three tips to survive the realities of starting a business on your own:
1. Develop a skill to make short-term cash on demand. Rent, food, gas and student debt are real, and they don't accept equity in your company to pay for it.
Find a part-time job that pays well and does not require 40 hours a week such as, bar tending, valeting, tutoring, or teaching lessons. For me, I teach kite boarding lessons to pay for the essentials. This allows me to schedule my own hours, exercise in the process and teach an activity, which I am passionate about. For the young entrepreneurs I have met, I know they are savvy enough to find a skill they can teach, and it is as easy as posting a Craigslist ad to get started.
2. Add services that compliment your startup to generate cash quickly. Engineering a new product, mobile app, or software program takes time. This is a time when you cannot afford to be generating zero income as a young entrepreneur.
Analyze the industry of your startup and identify a niche where you could easily generate cash to compliment your startup. For my real estate tech startup, we started flying drones to take aerial photography of real estate listings. This has allowed us to generate cash quickly and complement the services of my startup.
3. Seek funding, but be very careful. The funding you receive for your startup pre-revenue is the most expensive money you will ever receive. I cannot stress enough the importance of showing traction and revenue prior to giving up equity for funding. The more you prove your startup as a viable business, the more leverage and control you have in raising capital.
Trust me, if your idea is that great, investors will find you. Funding should be used to scale a business, not give up your idea and business to some angel investor.
What I want to stress here is that cash is king for any young entrepreneur starting a venture. You are young and inexperienced in relation to the rest of the business world. Investors like a return on their investment, not money thrown at an idea.
Photo courtesy Tumblr