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.
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
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.
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.
If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30
Five common mistakes entrepreneurs make when starting a business and how to correct them.
Last week, I had lunch with a millennial who wanted some advice about a business he’s starting. After the usual small talk, we got down to discussing his business plan. Within a short time, it was clear that his business idea was great, his plan for executing was fairly solid and he had gathered together a strong team to help him make it happen.
So far, so good. But, to be frank, this guy has no chance of being successful with his current mentality. What it takes to be rich (or successful in any measure) has a lot more to do with your mindset than your ideas and plans.
From the time we started in business at the ripe ages of six and seven, our Grandpa Joe taught my brother Matthew and me many lessons about the details of running a profitable business. Over the years, we learned about how to create a business plan; how to market our products and services; and how to take care of customers, vendors and employees. All this knowledge has been invaluable to us in creating and running successful businesses. But, what our grandfather taught us about attitude and mindset trumps all other lessons.
Without calling out the specific individual I spoke with recently, below are five “hypothetical” attitudes that will get you nowhere in your journey to success – and the attitudes that should replace them.
5 Habits That Lead To Millionaire Business Success
You need the right habits if you’re going to succeed.
What do all millionaire businesspeople have in common? Well, a lot of things.
I found from a recent study that 80 percent of all millionaires still go to work every single day. They’re working people just like me. But, they have to keep themselves in work or it all grinds to a halt. So what are the habits you need to make your business a success?
Nothing is ever going to come easy. You can look at the likes of Steve Jobs and Bill Gates, as well as the other usual suspects, to realize that success didn’t come with their first venture. Many of them failed time and time again. It took patience for them to become successful.
I read an article recently about 36-year-old teacher Andrew Hallam who became a self-made millionaire on a teaching salary. But, in his spare time he invested smart and lived frugally.
It proves you don’t have to inherit lots of money or become an instant success to make a millionaire business.
You have to be dedicated to your craft if you’re going to become successful. Going back to Bill Gates again, he started his business in the back of his garage. Now that’s dedication.
It’s what I tell all my students. If they’re not dedicated to this, then they should leave. You need to be able to push through the barren periods if you’re going to reach the oasis of success.
3. Ambition and big dreams
Have you ever heard the quote, “Shoot for the moon. Even if you miss you’ll land among the stars”?
I take that to heart because even if you aim to become a billionaire and miss you still might be a millionaire many times over. Take the Wright Brothers as an example. Not content with creating a successful glider in 1902 they went on to create the world’s first airplane in 1903, making four brief flights in Kitty Hawk. It demonstrates the importance of dreaming big because you never know what you might achieve.
4. Learn from mistakes
Every good businessperson will mess something up. It’s inevitable. What’s important is how you learn from your mistakes over time. Do you adapt after making your mistakes?
Millionaire businesspeople always set some time aside to reflect. Then they create a plan of action for ensuring that it doesn’t happen again. Most failed businesspeople put it down to “bad luck.”
5. Focus on niches
This important! Try to take over a whole industry at once and you’ll inevitably get swallowed up by the competition. Start small and control your own niche before moving into another niche. When you master your small area, you can push on and expand.
You’ll be amazed at how much easier it is to expand after you master your own niche/audience first.
Do you have what it takes? That’s the question I always ask novice businesspeople. You need a plan and you need the right habits if you’re going to succeed.
This article was originally posted here on Entrepreneur.com.
The 3 Decisions That Will Change Your Financial Life
There’s nothing worse than a rich person who’s chronically angry or unhappy. There’s really no excuse for it, yet I see it every day. It results from an extremely unbalanced life, one with too much expectation and not enough appreciation for what’s there.
Without gratitude and appreciation for what you already have, you’ll never know true fulfilment. But how do you cultivate balance in life? What’s the point of achievement if your life has no balance?
For nearly four decades, I’ve had the privilege of coaching people from every walk of life, including some of the most powerful men and women on the planet. I’ve worked with presidents of the United States as well as owners of small businesses.
Across the board, I’ve found that virtually every moment people make three key decisions that dictate the quality of their lives. If you make these decisions unconsciously, you’ll end up like the majority of people who tend to be out of shape physically, exhausted emotionally and often financially stressed. But if you make these decisions consciously, you can literally change the course of your life today.
Decision 1: Carefully choose what to focus on
At every moment, millions of things compete for your attention. You can focus on things that are happening right here and now or on what you want to create in the future. Or you can focus on the past.
Where focus goes, energy flows. What you focus on and your pattern for doing so shapes your entire life.
Which area do you tend to focus on more: What you have or what’s missing from your life?
I’m sure you think about both sides of this coin. But if you examine your habitual thoughts, what do you tend to spend most of your time dwelling on?
Rather than focusing on what you don’t have and begrudging those who are better off than you financially, perhaps you should acknowledge that you have much to be grateful for and some of it has nothing to do with money. You can be grateful for your health, family, friends, opportunities and mind.
Developing a habit of appreciating what you have can create a new level of emotional wellbeing and wealth. But the real question is, do you take time to feel deeply grateful for your mind, body, heart and soul? That’s where the joy, happiness and fulfilment can be found.
Consider a second pattern of focus that affects the quality of your life: Do you tend to focus more on what you can control or what you can’t?
If you focus on what you can’t control, you’ll have more stress in life. You can influence many aspects of your life but you usually can’t control them.
When you adopt this pattern of focus, your brain has to make another decision:
Decision 2: Figure out, What does this all mean?
Ultimately, how you feel about your life has nothing to do with the events in it or with your financial condition or what has (or hasn’t) happened to you. The quality of your life is controlled by the meaning you give these things.
Most of the time you may be unaware of the effect of your unconscious mind in assigning meaning to life’s events.
When something happens that disrupts your life (a car accident, a health issue, a job loss), do you tend to think that this is the end or the beginning?
If someone confronts you, is that person insulting you, coaching you or truly caring for you?
Does a devastating problem mean that God is punishing you or challenging you? Or is it possible that this problem is a gift from God?
Your life takes on whatever meaning you give it. With each meaning comes a unique feeling or emotion and the quality of your life involves where you live emotionally.
I always ask during my seminars, “How many of you know someone who is on antidepressants and still depressed?” Typically 85% to 90% of those assembled raise their hands.
How is this possible? The drugs should make people feel better. It’s true that antidepressants do come with labels warning that suicidal thoughts are a possible side-effect.
But no matter how much a person drugs himself, if he constantly focuses on what he can’t control in life and what’s missing, he won’t find it hard to despair. If he adds to that a meaning like ‘life is not worth living,’ that’s an emotional cocktail that no antidepressant can consistently overcome.
Yet if that same person can arrive at a new meaning, a reason to live or a belief that all this was meant to be, then he will be stronger than anything that ever happened to him.
When people shift their habitual focus and meanings, there’s no limit to what life can become. A change of focus and a shift in meaning can literally alter someone’s biochemistry in minutes.
So take control and always remember: Meaning equals emotion and emotion equals life. Choose consciously and wisely. Find an empowering meaning in any event, and wealth in its deepest sense will be yours today.
Once you create a meaning in your mind, it creates an emotion, and that emotion leads to a state for making your third decision:
Decision 3: What will you do?
The actions you take are powerfully shaped by the emotional state you’re in. If you’re angry, you’re going to behave quite differently than if you’re feeling playful or outrageous.
If you want to shape your actions, the fastest way is to change what you focus on and shift the meaning to be something more empowering.
Two people who are angry will behave differently. Some pull back. Others push through.
Some individuals express anger quietly. Others do so loudly or violently. Yet others suppress it only to look for a passive-aggressive opportunity to regain the upper hand or even exact revenge.
Where do these patterns come from? People tend to model their behaviour on those they respect, enjoy and love.
The people who frustrated or angered you? You often reject their approaches.
Yet far too often you may find yourself falling back into patterns you witnessed over and over again in your youth and were displeased by. It’s very useful for you to become aware of your patterns when you are frustrated, angry or sad, or feel lonely. You can’t change your patterns if you’re not aware of them.
Now that you’re aware of the power of these three decisions, start looking for role models who are experiencing what you want out of life. I promise you that those who have passionate relationships have a totally different focus and arrive at totally different meanings for the challenges in relationships than people who are constantly bickering or fighting.
It’s not rocket science. If you become aware of the differences in how people approach these three decisions, you’ll have a pathway to help you create a permanent positive change in any area of life.
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