So your kid wants to be an entrepreneur? 4 reasons to think twice
I recently saw a friend who is a top editor at a popular lifestyle magazine published by a company on par with Time Inc. and Condé Nast. I started telling him how cool it was that he had reached the pinnacle of success in the journalism world, but he laughed. “Kids don’t want to work at magazines anymore,” he told me. “It’s too corporate and bureaucratic. They want to join startups.”
Of course, this isn’t really news. It’s hard to find an ambitious high schooler or college kid who wouldn’t salivate at the chance to interview at Snapchat, Uber, or Yelp—not unlike the way my peers and I used to feel, back in the day, about companies like Disney, Coca-Cola, and General Electric.
70% of Millennials said that they imagine themselves working independently at some point in their careers.
But it’s more than just the companies that have changed since I was in college. The way young people think about work itself is different. The idea of working your way up in a Fortune 500 firm, once considered the path to success, is now about as exciting as watching black-and-white TV. Today’s youth want to be entrepreneurs, working on their own, and on their own terms. For some, that means joining a startup; others want seed capital for an app idea; and still others want to open some business—any business—at which they get to call the shots.
In fact, in a recent survey by the international consulting company Deloitte, about 70% of Millennials said that they imagine themselves working independently at some point in their careers.
And what’s wrong with that? This country was built on innovators who forged their own paths.
But here’s my concern: Increasingly, I see a huge disconnect between expectations and reality. While the idea of working for yourself is hotter than ever, the story of the entrepreneurial whiz kid who drops out of college and hits it big is largely a myth. For one thing, most of the people who create wildly successful businesses didn’t drop out of college. For another, for every Mark Zuckerberg (who was smart enough to get into Harvard, by the way, so he was always an outlier), there are millions of successful people who thrive by working for and with others.
The hard truth is that most kids fresh out of college don’t yet have what it takes to be successful entrepreneurs. Here are four things to consider if you’re a recent college grad thinking of venturing out on your own.
1. Saying “I want to be an entrepreneur” isn’t enough
It sure sounds good. But it’s a lot like saying you want to be “famous” or “rich” or “a sprinkled red-frosted donut” (an actual reply from a preschooler who was asked what he wanted to be when he grew up). The “entrepreneur” label is meaningless unless you have a specific vision, the skills to execute it, and, above all, the passion to make it happen. (Okay, so maybe the donut thing is a dead end.) Check this out: In a survey, 7 in 10 successful entrepreneurs said that it was the desire to capitalize on an idea that made them start their own businesses.
Take my friend and colleague Ted Gonder, an amazing young guy who co-founded a nonprofit called Moneythink. Ted got the inspiration for Moneythink when he was a student: He noticed that the kids in the poor Chicago community next to his campus didn’t have access to financial literacy resources. So he set out to build a curriculum and a network of mentors to help underserved teens understand money better. Eventually, his work got noticed by none other than President Obama, who appointed him to the same presidential council on financial literacy that I serve on. My point? Channel your entrepreneurial energy toward a specific problem—and then focus on building a strategy to solve it.
2. An “A” in your entrepreneurship class doesn’t mean your business will succeed
These days there are a million courses, boot camps, workshops, and programs that promise to groom you for start-up stardom. But you’d probably be better off sinking the price of that course into your fledgling company. In fact, in a study just published in the Journal of Economic Organization and Behavior, a group of Swedish researchers report that taking an entrepreneurship class made people more likely to start their own venture, but their ventures weren’t more successful because of that education. What’s more, a lot of folks who run these workshops and courses are just trying to earn a quick buck off of the entrepreneurial trend. You wind up helping their business dreams, not yours. So be skeptical of people and programs that guarantee they’ll turn you into a wunderkind. The best way to learn how to work for yourself is to learn how to work—period.
3. Working for The Man (or Woman) can be a good thing
A recent study in the Harvard Business Review noted that the best entrepreneurs aren’t usually twentysomethings in sneakers, but “mid-career specialists with substantial industry experience.” People actually benefit from working for traditional companies or organizations prior to going solo. This may mean that sometimes you have to deal with a nagging boss, or wear an ugly uniform, or go to boring meetings every Monday at 9:00 AM. But such a job can also provide lots of amazing things—like experience working with a team, improved communication skills, self-discipline, and the sense that your work is contributing to a larger goal. So figure out how to be creative within your corporate career. Virgin founder Richard Branson calls this being an “intrapreneur”: It means learning how to use your passion for innovation and independence to make you better at your paid job. Then, once you’re ready to venture out on your own—go for it!
4. Being your own boss can cost you big time
Here’s a dose of financial reality: Starting your own venture is not only risky, but you have to be able to support yourself during those rocky start-up years. With the average student loan debt now at $35,000, many young people can’t afford to pay their bills with regular jobs, let alone by opening their own businesses. A recent poll revealed that for 68% of aspiring entrepreneurs, lack of personal savings played a significant role in their decision not to launch a business. And even if you can afford to make a go of it, you should know that only about half of new businesses survive five years or longer—and you could lose all the money you sunk into the enterprise.
Finally, when weighing your decision, don’t forget to factor in how much you’ll actually earn as your own boss. You might be picturing vast riches, but the average startup founder between 21 and 30 pays himself or herself just $36,873 a year. In short, think again before you quit your job to open a shop that sells your secret-recipe kale smoothie. You might discover that you miss the regular hours—not to mention the regular paychecks.
So what’s my bottom line? Being your own boss can be great, but it’s not nearly as romantic as a lot of young college grads think it is. And most of the time, entrepreneurial success comes from hard work, and yes, even paying your dues at a place that may seem less than exciting.
This post was originally published on Mint.com.