Less talking; more doing
Many ‘experts’ say, “Entrepreneurs fail because they are undercapitalized.” This fear of being “undercapitalized,” this lack of money as well as the absence of a steady paycheck, is what keeps most people clinging to job security as an employee. But it’s not why entrepreneurs fail.
While being undercapitalized is a challenge, it is not why most entrepreneurs fail. It’s a lack of entrepreneurial education, real-world business experience, and guts.
Which generation is the most entrepreneurial?
Given that, I’m not surprised by David Meltzer’s article in “Entrepreneur” magazine that deals with millennials and entrepreneurship. David is an entrepreneur who started a sports marketing firm with former NFL quarterback, Warren Moon.
As David shares, “Most millennials that I meet consider themselves entrepreneurs, or at least innovators. The editor of MiLLENNiAL Magazine, Britt Hysen, claims that 60 percent of millennials consider themselves entrepreneurs and 90 percent recognize entrepreneurship as a mentality.”
He then goes on to give some pretty surprising statistics around entrepreneurship:
- The average age of an entrepreneur is 40
- They have at least six to ten years of relevant industry experience
- The biggest growth group in entrepreneurship in the last two decades are folks between the ages of 55 and 65
- And “a successful, high-growth company is twice as likely to be started by someone over 55 years old than the age group of 20 to 34”
Not too long ago, I wrote about the optimism you should have if you’re a baby boomer wanting to start a business. So, the above statistics aren’t surprising to me.
Why most entrepreneurs fail
As interesting as they are, what I found really interesting about David’s article was the reasons he gave for why companies fail.
The first reason for failure, regardless of whether you’re in your thirties, forties, fifties or sixties, is because entrepreneurs forget the No. 1 rule of entrepreneurship, which is to stay in business. Every day, each of these entrepreneurs should be obsessed with how to take care of themselves in order to guarantee that they’re in business the next day. Long-term goals are important, but irrelevant if your business is unsuccessful out of the gates.
Second, entrepreneurs don’t understand the difference between innovation and entrepreneurship. Innovation is the action or process of using imagination and making it real, while entrepreneurship is the action of monetizing innovation. Great entrepreneurs don’t have to have a creative thought other than, “How do I monetize my ideas?” Or, “How do I monetize somebody else’s ideas?”
Finally, many entrepreneurs fail to diversify within their own business. If I had $20 million in a startup, I would have 10 separate business initiatives funded by $2 million each, knowing that if I could stay in business as a whole, one of these 10 businesses could evolve with a multiple of 50 times or more. So, at the minimum, my $20 million investment could have a return of over $100 million. And even if I were unsuccessful in nine businesses, everyone would consider me and my business highly successful, because I took my $20 million and turned it into $100 million.
If I could boil down David’s observations, it would be in line with what I emailed out to Rich Dad Community members recently (yes, they get exclusive emails from me). In that email, I talked about my friend Matt, who graduated from a university entrepreneurship program. He felt the education was very helpful, but he realized that until he put it into practice, it didn’t mean much. As I wrote:
In a school setting, it is hard to really understand that entrepreneurs have to be flexible, nimble, and able to adapt to changing circumstances quickly and effectively.
Entrepreneurs have to have spirit. They have to fight for everything and push through adversity.
Matt realized those lessons do not come from school. They come from life. Those lessons make one, “street smart”.
At the end of the day, what my friend Matt learned, and what David writes about, are the hard-fought lessons that come from simply doing entrepreneurship. That is the only way to be good at it.
Building the entrepreneurial muscle
While I applaud the entrepreneurial spirit of millennials, it is not just a mindset that makes you an entrepreneur—nor is it a book-smart education. Instead, it is the hard-fought lessons of going out in the world, trying, and yes, sometimes failing that helps you hone your entrepreneurial skill set. What I would call building the entrepreneurial muscle.
I always find it amusing when I hear people say, “Oh, she was lucky.” Or “They’re an overnight success.” Few know or appreciate the real story behind entrepreneurial successes. The reason they succeeded is they learned the secret. The secret to leadership.
The primary reason why most new entrepreneurs fail is simply because they lack the core training, the core strengths they need to withstand the rigors of being an entrepreneur. Some people call it guts. Others call it perseverance. In the military, it might be put this way: “Stand up, get off your butt, stop feeling sorry for yourself, stop pouting, stop sucking your thumb, and get going again. Your mama is ashamed of you—because your mama is tougher than you are.” I think you get the point here.
Another important reason why most entrepreneurs fail is because our educational system trains people to be employees, not entrepreneurs. The world of an employee is very different from the world of an entrepreneur. One big difference is the concept of paychecks.
If you think about it, you’ll realize that the person who signs your paycheck controls your life. Shouldn’t that person be you? It probably should be, if you are strong enough.
If an employee does not receive his or her “paycheck” they quit and go looking for a new job”. Most entrepreneurs must be tough enough to operate, sometimes for years, without a “paycheck.”
It should go without saying, but in order to build your entrepreneurial muscle, you have to stop working out your employee one. A side hustle is a good way to ease in, but you need to actually cut the cord at some point and go all in.
Who can be an entrepreneur?
So, does all this mean that millennials can’t be entrepreneurs? Of course not! A success story like Mark Zuckerberg is testament enough to that. But it does mean that simply having the mindset or calling yourself and entrepreneur is not enough.
You have to actually do the thing.
The good news is anyone can be an entrepreneur—from millennials to baby boomers—if they’re willing to put in the work. Each have their own strengths to bring to the table, and each have their own things to learn along the way.