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5 Mistakes Millennial Entrepreneurs Make With Money

I’ve seen too many start-ups die because the founders blew the money. Here’s how your start-up can avoid becoming the next victim.

Andrew Medal

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Building a new company isn’t easy. Only a fraction of the start-ups founded each year survive for five years, and even fewer are run by young entrepreneurs. Business leaders who have experience running companies tend to be more likely to found a successful start-up than first-timers – which many millennials are.

That being said, there are some advantages to being a millennial entrepreneur. The generation is known for having innovative ideas, drive and spirit, all factors that can contribute to building a successful company. The trick is to avoid being among the 24 percent of failed start-ups that crashed due to running out of money.

Here are some mistakes to avoid, so that you don’t become just another statistic.

1Managing cash flow poorly

The amount of cash moving in and out of a startup needs to be managed extremely well, especially early on. According to the Association of Chartered Certified Accountants, 82 percent of businesses fail due to not paying attention to cash flow. Unfortunately, a lot of millennials aren’t financially savvy, making cash flow management a significant liability for a millennial-run business.

To avoid this mistake, you just need to pay attention to what’s going on with your finances. Look at where all income comes from and how it’s all spent. Set up a system – as simple as an Excel document – to keep track of everything. If you don’t, you leave yourself open to issues such as not knowing profit margins, not having the records necessary to get investors or unnoticed theft.

Related: 10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets

2Fundraising too much, too soon

It can be easy to spend a lot of time planning how to raise money from investors and venture capital firms early on in a start-up. A lot of young entrepreneurs consider the amount of money raised at the beginning a measure of success. Focusing too much on fundraising, however, can be bad for business.

Spending all of your precious time and energy on generating as much funding as possible can take you away from other, more important tasks. For instance, instead of setting up solid business strategies and planning thorough marketing pushes, millennials can get caught up in the fundraising game.

Keep in mind that with the right planning, your business will make money.

If your business makes money, you can run your startup with minimal outside control or ownership. That’s often a lot more valuable than some cash in your pocket at the starting gate.

3Trying to control it all

It’s very common for young start-up leaders to try to control everything because they feel they are the only ones who know their products, services and business plans inside and out. However, along with the risk of burnout, taking over all aspects of your financial planning can hurt your success.

Due to the relative inexperience of many millennial entrepreneurs, it’s usually a good idea to get advice and input on your financial strategies – whether that’s from an accountant, a financial planner or a friendly neighbourhood business person with an eye for finances. If you don’t, you run the risk of making inadvisable financial decisions that could tank your start-up.

Another option is to hire a person or team to help out. As long as you make your vision clear, outside help can save your bank account and your sanity.

Related: 9 Top Tips For Young Entrepreneurs

4Hiring the wrong people

staff members

It’s important to hire a team that will have your back and occasionally save you from yourself, but hiring weak team members can quickly drain your finances and ruin your startup. Be conscious of whom you’re hiring and any assets and liabilities they bring with them.

The costs associated with hiring the wrong people are significant. Not only are you paying their salaries, you also must pay for training, recruitment and other related expenses. Further, weak employees result in lost productivity and sales. If you aren’t getting a return on your investment, then what’s the point?

With this risk, it can be tempting to hire low-cost employees and consultants. Don’t fall into this trap – you’ll often pay for it in the long run, as they can be inexperienced or unreliable, costing you more later on.

5Spending in the wrong places

Millennials are an idealistic generation, there’s no doubt about it. As great as this characteristic can be for coming up with innovative ideas for start-ups, it can also get in the way of practicality. For instance, many young entrepreneurs spend too much money on developing their new product or service, and not enough marketing it.

Related: 8 Reasons Young Entrepreneurs, or the Young at Heart, Lead the Way

If you spend all of your time and finances on trying to perfect a prototype without getting out in the field and selling it, you lose out on several advantages such as customer feedback, users and acquisitions. You will waste time that you could spend interacting with your customer base and learning what they really want.

There’s no reason that millennials can’t found successful start-ups. With the drive and spirit of this generation, innovation is limitless. By avoiding financial pitfalls, young entrepreneurs can put their big ideas into action.

This article was originally posted here on Entrepreneur.com.

Andrew Medal is the founder and CEO of creative agency Agent Beta, which fuses together clever and creative design with advanced technology to help companies and brands thrive. He recently published his first book, Hacking the Valley. Follow his personal blog at AndrewMedal.com where you'll find life advice, inspiration and entertainment.

Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.

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Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.

1532099434_2-cents-worth-infographic

Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on Entrepreneur.com.

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.

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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel

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Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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