A lot of young people are starting companies.But when you’re young and inexperienced, you’re more error prone.
Nick Tart spoke to many young founders while co-authoring a book, 50 Interviews: Young Entrepreneurs, What It Takes To Make More Than Your Parents.
He told us the most frequent business mistakes they made.
We grow up listening to authority figures; it's a habit that isn't easily broken.
Tart spoke about a young Indian entrepreneur he interviewed, King Sidharth. He was successful in business by age 18, but he was taught to listen to elders even if it meant ignoring gut feelings. Initially Tart says it inhibited Sidharth's business execution.
Even Tart recalls the pressure to conform to others' opinions. 'When I was a junior or senior in high school, I had an idea: Mandles,' he says. 'They were candles that would have manly scents, like hot sauce and fire.'
Even though he thought it was brilliant, he says his family and friends called the idea stupid. Tart let his idea go, only to read about someone else pursuing the same thing years later on CNN.
'That guy deserves all the credit, he actually executed. I should have trusted my instincts,' says a regretful Tart.
Tart interviewed Andrew Fashion, a teenager who made $2.5 million selling mechanical rocket launchers, and blew it all before his 22nd birthday.
'Fashion spent it all on whatever his little heart desired -- girlfriends, trips to Vegas, fancy cars and friends,' says Tart. Now that he is older, the entrepreneur has learned to better manage his money.
'Now Fashion has an investment plan set up for the next time he becomes successful,' Tart tells us. He's also writing a memoir titled 'Young and Stupid.'
Tart says another young entrepreneur he interviewed, Ben Weissenstein, made a similar mistake. He was never taught finance in school and struggled to keep track of his revenue and expenses. At age 19, Weissenstein lacked basic accounting skills because he never had an opportunity to learn them.
'Most of the entrepreneurs I interviewed were really excited by the next shiny object,' Tart told us.
Lauren Amarante, the 23-year-old co-founder of World Entrepreneurship Day, suffered from this. She scheduled the first gathering in April 2010 at the United Nations. CEOs from 35 countries attended. After the successful event, she was bombarded with invitations and email requests.
'It was difficult for her,' says Tart. 'She was being asked to attend all of these great events all over the world, but it was pulling her away from her own goals.'
Once Amarante started turning down invitations, she saw her business take off again. 'Usually, external interest is more distracting than helpful,' says Tart.
This is part of a larger issue: many young entrepreneurs lack confidence in their abilities.
Jacob Cass, a 20-something graphic designer, had a lot of clients because he wasn't charging enough for his service. He was a better designer than he gave himself credit for.
Eventually he upped his price, and his business did better as a result. The higher cost weeded out weaker clients that weren't worth his time and Cass was able to devote more time to his best customers.
'A lot of young people are more talented than they give themselves credit for,' says Tart. 'Thanks to the Internet, where information is only one click away, they are actually more educated than any other generation was at their age.'
Most young entrepreneurs are so focused on executing an idea that they forget to give it an identity.
Alex Fraiser, 18, created a blog that is now successful. When he first started, he fell into the poor branding trap.
'Fraiser thought, 'I have traffic, I should put up Google ads and make money right away,'' says Tart.
But the ugly interface turned off new readers. 'Fraiser realised that putting up the ads conflicted with the site's message and overall design, and it turned readers away. He hadn't taken the time to build their trust.'
Joe Penna, a 25-year-old YouTube sensation, also learned this lesson the hard way. Penna wasted three years creating videos that went largely unwatched.
'Penna would put up any video he wanted and hope it did well. There was no structure,' says Tart.
Penna found success once he began creating videos that followed a format. 'Eventually, Penna's videos started with an intro, transitioned to a music segment, and closed with a message from Joe. People knew what to expect.'
Once Penna began making consistent, branded videos, he grew his viewership to more than 1.5 million people per week.
Emil Motycka started mowing lawns as a teenager and grew his business until he was personally maxed out. He was afraid to hire anyone else, so his business stalled.
'He would spend seven hours a day mowing 100 lawns per week,' says Tart. 'It sounds ridiculous not to trust people with such an easy task. It's just mowing a lawn. But Emil understood the importance of customer service, and he didn't want to ruin his reputation.'
'Your company is your baby,' explains Tart. 'It's like giving your baby to a babysitter for the first time. You want to trust someone else with your child, but it's hard not to worry.'
Young or old, many entrepreneurs wonder if they should have started their companies sooner.
Juliette Brindak, founder of MissOandFriends.com, is a good example. She founded her company when she was eleven. Eight years later, Procter and Gamble invested in her startup a $15 million valuation. If she had waited until then to start her company, she'd be much further behind.
'Every year you put off a business is money lost,' Tart says. 'The earlier you make those inevitable, first-time mistakes, the more successful you will be.'
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