Which demographic group has a lock on entrepreneurship? Is it the Gen-Y/Millennials, which has grown up with social media, group dating and an ability to leverage technology and get products launched fast? Or it the Baby Boomers, who are graduating for corporate life and taking the lessons of decades as they invest their equity in themselves? The answer is "Yes."
The New York Times today checked in on Ernie and Maggie Doud, a middle-aged Missouri couple it had profile about two years ago. A decade ago, the Douds started a company to cure dog breath (in dogs, not people) so they could live more happily with their own mutt. They came up with a kind of doggie Altoid called "Greenies" (maybe Major League Baseball could be a customer?) and sold it to Mars Inc. in 2006 for "a small fortune." Since then they've started 12 other companies. Judging from the photo of them in the Times, I'd say they're in their mid-60s. And they look very, very happy.
Then there are the youngsters. I just finished reading a fascinating book called Upstarts: How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit from Their Success, by Donna Fenn (McGraw-Hill, 2009) She profiles scores of Upstarts, some as young as 14 when they launched their businesses. If you are not a child, you should read the book so you can convince yourself that if a child can start a business and succeed, so can you. And if you're a kid, what are you waiting for -- stop playing Warhammer just for fun and figure out a way to make it pay off.
Fenn identifies common threads of success that are emblematic of her young upstarts, but I found them to be much more universal. For example, she notes that Upstarts have "a healthy disrespect for the status quo" that keeps them "constantly questioning how things are done and why." Well, that is true for any entrepreneur. No one ever got rich by doing something the same way everyone else does it. By definition, entrepreneurs cause market disruptions.
She also notes that Upstarts build their brand by gathering communities who will champion their products. Here again, that's what all entrepreneurs do regardless of their generation. The days are long gone where businesses can spend $100 million+ to launch a brand. Social media entrepreneur Seth Godin has been talking for a long time about Tribes (in his book and elsewhere) and how great entrepreneurs make it a point to connect with "sneezers" -- those people who love their product and are dying to tell other people.
Fenn further notes that Upstarts are maturing in an era where traditional corporate environments have morphed tremendously. There are no longer any safe havens, loyalty to employees, or predictable hierarchies. Older entrepreneurs may be burdened by a sense of the unfairness of having to say goodbye to all that. But Gen Y never had it and doesn't miss it. They know from their disillusioned moms and dads that they are free agents now and forever.
Fenn has a couple of other hallmarks of Upstarts' best practices, which are important for any entrepreneurs to heed:
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Collaboration
Having productive partnerships is important, because entrepreneurial companies can't afford to vertically integrate and do everything in-house. By the same token, reaching out to constituencies of potential customers and partners to ask for advice -- before launching -- can be a lifesaver.
- Technology's Role
There is no entrepreneurship without a social networking strategy. Don't bother launching without thinking about how Facebook and similar platforms fit into the picture.
- Be Socially Aware
Upstarts, Fenn says, are more socially and environmentally conscious (whether that can be proved is another matter). Nevertheless, there is nothing wrong with this Mom-and-apple-pie suggestion that entrepreneurs thinks about doing well by doing good.
- Change the Game
You don't have to invent the next rocket to be successful. Look for underserved niches in existing industries that are too small for big players to care about; and professionalize low-tech businesses (moving household goods, junk removal).
Fenn adds a delightful appendix to her book in which she asks some of the sages of entrepreneurship for advice to give GenY. There are some real pearls here, again relevant to entrepreneurs of all ages. Guy Kawasaki, founder of Alltop and author of Reality Check, says "never ask your customers do to something you wouldn't do." And, "do not listen to naysayers and bozos -- no matter how successful or famous they are -- when they tell you that 'this can't be done.' " And Bo Peabody, a venture capitalist, notes, "Being too early and being wrong are indistinguishable...And technology does less in two years and more in 10 years than you think it's going to." The message: timing is everything.
Michael Hanley, author of Effective Tax Planning for the MicroBusiness, is a CPA specializing in small business. We asked him for year-end tax planning tips that can help entrepreneurs and small buiness owners. Michael gave us his top five action items.
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Analyze You Business Structure
Are you operating under the best structure for you business? Various items such as how much tax you will pay each year, your risk of being selected for a random IRS audit, and the level of protection of your personal assets are determined by the type of entity you operate. If you operate as a Sole Proprietor, DBA, Partnership, LLC, or C Corporation, this should be Priority #1 in your life. You could be overpaying your taxes by $10,000 if you are not operating under the best business structure.
f it's December and you have no idea where you stand for the year or how much tax you will owe or get back come April 15th, you should be putting together a quick tax plan for this year and speaking with your accountant about putting a formal tax plan in place for 2010.
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Tax Planning
Cash basis taxpayers should be looking ahead to any expenses and equipment purchases on the horizon. Any large expenses or big ticket items that you are planning to buy in early 2010, you should consider purchasing prior to December 31 if your tax plan shows that you will be at a similar or higher tax rate in 2009 than you will be in 2010.
As long as you can afford to report some extra income in 2009, you should step up your collections efforts during the next few weeks. This is the best time to convince your customers/clients to pay you as they have an added incentive to do so. Any monies that they pay to you prior to Dec. 31 are tax deductible for them in 2009.
- Equipment Purchases
Make sure to make state estimated tax payments prior to December 31. While the payment deadline for fourth quarter estimated tax payments in most states is Jan. 15, 2010, any payments made prior to Dec. 31, 2009 become itemized deductions for you in 2009. If you are subject to the Alternative Minimum Tax (AMT), you may not receive any benefit from accelerating this payment, so be sure to consult with your accountant if you are unsure.
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Speed Up Collections
While the payment deadline for fourth quarter estimated tax payments in most states is Jan. 15, 2010, any payments made prior to Dec. 31, 20009 become itemized deductions for you in 2009. If you are subject to the Alternative Minimum Tax (AMT), you may not receive any benefit from accelerating this payment, so be sure to consult with your accountant if you are unsure.
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Estimated Tax Payments
Make sure to make state estimated tax payments prior to December 31. While the payment deadline for fourth quarter estimated tax payments in most states is Jan. 15, 2010, any payments made prior to Dec. 31, 2009 become itemized deductions for you in 2009. If you are subject to the Alternative Minimum Tax (AMT), you may not receive any benefit from accelerating this payment, so be sure to consult with your accountant if you are unsure.
When it comes to research on entrepreneurship, few organizations do more of it than the Kauffman Foundation. For a just-released study called Making a Successful Entrepreneur, Kauffman surveyed 549 company founders of successful businesses in high-growth industries to determine the factors that influence the success or failure of startups. The key success factors, it turns out, are "prior work experience, learning from previous successes and failures, a strong management team and good fortune." Let's look at the highlights one at a time.
1. "Nearly all of the company founders surveyed - 98 percent - ranked prior work experience as an important success factor, and 58 percent ranked it as extremely important." This seems obvious, but it's surprising (some might say alarming) how many people start businesses without any relevant prior experience. I have known people who were laid off from their jobs and felt forced into entrepreneurship, and then failed because they had no models for success. That doesn't mean people with no applicable experience shouldn't become entrepreneurs. It just means they need to realize the gap they must fill and that they take their deficiency seriously.
2. "Forty percent cited lessons learned from failures as extremely important." There's the Catch-22. You may have to fail in business before you can succeed. If you haven't started a business before, you have to learn how to fail without catastrophic results. That could mean knowing when to shift strategies or when to abandon an investment. A lot of startups these days are solopreneuring ventures with one full-time employee, the owner. But it's very hard to play all the positions on a team. Knowing how to outsource and develop a virtual team is a critical skill if you're going to build anything that scales beyond what you can do yourself. No matter how great your idea, you will be inherently limited if you do everything yourself. From the start, find other people to do things you don't absolutely have to do. Find a virtual assistant, outsource telesales to qualify leads, get your CPA's office to do your bookkeeping. You focus on the things that only you can do -- get new sales.
3. "For 73 percent of the entrepreneurs surveyed, luck was an important factor in success." There's truth to the adage that some people make their own luck. There's lottery ticket luck, then there's entrepreneurial luck. Ask any successful business owner what was the luckiest thing that ever happened to them in business that allowed them to be successful. I guarantee you that the "luck" was manufactured with a lot of intention.
4. "Professional networks were important to the success of their current businesses for 73 percent of the entrepreneurs. In comparison, 62 percent felt the same way about personal networks." Again, no entrepreneur is an island. Knowing people is critical. How many people have you reached out to and tried to help? Learn how to network and extend a hand to others. Earn some karma credits and you'll find the path much easier when you need a hand.
5. "Only 11 percent of the first-time entrepreneurs received venture capital, and 9 percent received private/angel financing. Of the overall sample, 68 percent considered availability of financing/capital as important." Message: if you think you're going to get formal private capital (venture, angel, private equity), chances are you are wrong. You will probably need financing from a good old bank, or with help from the SBA, or from your parents, siblings or others. How do you feel about asking people, especially people you know, for money?
6. "In identifying barriers to entrepreneurial success, the most commonly named factor - by 98 percent of respondents - was lack of willingness or ability to take risks." Knowing a calculated risk from a foolish one is a very important skill. When you prepare to take a business risk, are you the type who gets caught up in the moment with your gut feeling and goes for it, second mortgage and all? Or do you study the situation fully, wallow in the numbers, make sure you have thought of everything that can be antcipated, and then make your move?
7. "Other barriers...were the time and effort required (93 percent), difficulty raising capital (91 percent), business management skills (89 percent), knowledge about how to start a business (84 percent), industry and market knowledge (83 percent), and family/financial pressures to keep a traditional, steady job (73 percent)." Wow, why does anyone start a business? Even really successful people cite massive obstacles and difficulties. All the more reason to believe, should you go entrepreneur, that there is nothing else you would rather do -- make that nothing else you can do.
