The Wall Street Journal recently reported that the percentage of young people under 30 who own their own businesses is the lowest it has been in 24 years. Financial challenges and a “low appetite for risk” were cited as the primary reasons. To a certain extent, that makes sense. Most college graduates today have debt. Banks continue to be less likely to make loans than they were before the recession. These are legitimate challenges. The fact that more young people are making conservative career choices is understandable–but no less cause for concern.
There is no two ways about it: To become an entrepreneur, you must be willing to take a chance on yourself. Risk is inherent. But I don’t think taking a leap of faith has to cost you. There are ways to pursue becoming an entrepreneur that are less financially risky than others. I know I am constantly asking myself how I can reduce the risk I take on. I’m betting every entrepreneur out there is too.
Feeling fearful is normal. To become an entrepreneur, you must find a way to act anyway. Yes, the stakes are high. But they’ve always been high. The harsh reality is that young entrepreneurs today have to be even more creative and strategic. If you want to become an entrepreneur, but think you can’t–think again. Use these tips to get over your fear and minimize risk.
1. Teach yourself. There is an absolutely staggering amount of information out there these days about starting a business. From articles, books, blog posts, podcasts, and LinkedIn discussion groups, it seems as if everyone has something to say. That’s a beautiful thing. Starting a business isn’t shrouded in mystery. Learn as much as you can. There’s no need to dive in first without knowing what pitfalls may befall you and how to avoid them.
2. Test your idea. It’s easier and more affordable to do than ever before. Float your concept to consumers before you begin investing in it. Does your new product business or service truly fulfill a need? How can you be sure? Consider advertising on Google. Crowdfunding is another avenue available to you. Learn to how to pitch your ideas to venture capitalists and angel investors. If they don’t like your idea, ask why. You can never test an idea enough. When you hit on a perfect market fit, you’ll know.
3. Consider licensing your idea. When you license an idea, you outsource the heavy lifting of bringing a product to life to the company that licenses it from you–and the risk that comes along with that. You will need to pay to have a prototype made and to file a provisional patent application. Compared to the costs of starting your own business, licensing is dirt cheap.
4. Apply for grants. There are many grants out there that are available to young entrepreneurs and low-income entrepreneurs. Research and familiarize yourself with them. The Individual Development Account matched savings grant program is one such opportunity.
5. Tap into the many organizations that exist to help young entrepreneurs. After all, they’re here for you. The Young Entrepreneur Council and Young Presidents’ Organization are two great ones.
Originally published on Inc.com January 8th 2015.
