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Jan 23, 2020

Young, Broke, and Starting a Business—Here’s How

The dream of owning your own business enchants people of all ages. Many people in their 20s bootstrap their small companies and showcase their talents. Each business drives along its own road and has its own challenges, but some basic tips can help you get your business started no matter what your goal may be.

There are some marked disadvantages for young entrepreneurs. On average, small business owners over the age of 40 have more personal funds to take advantage of and a wider network to lean on, not to mention more work experience. However, there are plenty of examples of young entrepreneurs who overcame these business difficulties, ranging from Mark Zuckerberg to Kylie Jenner to John D. Rockefeller. You can do it!

Articulate Your Goals

Young, Broke, and Starting a Business—Here's How

Before you make a sale or take a meeting with a client, it can be useful to sit down and think about what you’re trying to accomplish with your small business. Do you want to be your own boss and leave your day job behind? Do you want to turn your passion into a business? Maybe you think you have an original idea that could make you a millionaire. Maybe you have a goal outside of your bank account, like a sustainability innovation.

Create a short mission statement for yourself and your business. This statement can be valuable as your company grows, but it is also a great guide as you are starting down the road. Of course, you may have started selling products or services before you even considered that you’d started your own business—you can write up a mission statement at any time.    

Come Up with a Business Plan

Even if you’ve already made your first sale, spend a few hours on a business plan. This specific document outlines cash inflows and outflows over time. You can use this data to project future revenue. Additionally, it will help you determine how to grow your business over the next few years. It will also help reveal any obvious ways you are losing money. Most banks and angel investors will want to see a detailed business plan before making funding decisions, but this document will be beneficial for you as well.

Freelance or Gig

Young, Broke, and Starting a Business—Here's How

A popular way to ease into your business is to start freelancing or doing gig work. If your work involves creating and selling a product, starting a simple online store on Etsy or elsewhere is a similarly lower-impact way to dip your toes into a small business. You can start doing this while you are working a full-time job on the side. You might find yourself doing some freelance work for a paycheck while you simultaneously try to get your “real” business off the ground—think about a programmer writing code for other companies’ websites while he or she designs an original website.

Find Your Network

Your network can be one of the most important tools in your business chest. As a young person, you should focus on building your network as soon as you get the idea to start a business. This network can be former classmates, family, friends, teachers, professors, bosses, and other people involved in business. You never know who is going to give you a big break, or how. You also want to build a network of people involved in your industry—you can find these people online or at conferences. To start, print out business cards, fix up a website, and start a LinkedIn account.  

Take Advantage of the 3 ‘Fs’

Young, Broke, and Starting a Business—Here's How

It is very difficult to find startup funding for a new business. Most banks want your business to have existed for at least 2 years before you are eligible for a large term loan, and even marketplace lenders offering smaller loans usually want you to have been in business for at least 3 to 6 months. In your early days, a small business adage says that you should seek funding from the 3 “F’s”: friends, family, and fools. Joking aside, this is why your network comes in handy—the “fools” are the ones who believe in your business dream, even if it’s a longshot.  

Think about Funding Realities

Beyond term loans from a bank, there are a fair number of funding possibilities for young small businesses. Some options include business credit cards, accounts receivable financing, ACH cash flow loans, and equipment financing. You can also look for angel investors. With most of these options, you will want to have detailed documentation of your business’s financial history as well as a business plan.

Be Really Careful about Debt

It should be mentioned that as a young person, you should be very careful about accruing large amounts of debt. You don’t want to declare bankruptcy when you’re 25—that can make it hard to find funding for any future companies. Pay attention to interest rates and fees, and utilize credit responsibility.

Become Your Own Marketing Department

Young, Broke, and Starting a Business—Here's How

Most likely, you will have to be your own marketer in the beginning. You can definitely hire freelancers to help, but you’ll have to direct them in creating logos, websites, email blasts, and signs. Marketing is crucial to finding customers, so this needs to be a focus even at the very beginning of your company.

Technology Can Make Your Life Easier

Today, many, many online services can help you as a small business owner, and many of them are free. This includes meeting scheduling services like Doodle, note-taking apps like Evernote, and group collaboration platforms like Google Drive. There are probably multiple areas that you can outsource to a tech service. You can save yourself hours of time with a few Google searches.

Do the Thing!

Young, Broke, and Starting a Business—Here's How

Most importantly, go out and start your business—it isn’t going to happen by itself. In the end, the only way you can know if your business idea will succeed is by doing it. Start small, think big, and be patient.

 

Young, Broke, and Starting a Business—Here's How

About the author

Barry Eitel
Barry Eitel
Barry Eitel has written about business and technology for eight years, including working as a staff writer for Intuit's Small Business Center and as the Business Editor for the Piedmont Post, a weekly newspaper covering the city of Piedmont, California.

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