There’s certainly no shortage of successful young entrepreneurs in business today. We hear daily of fast growing startups from New York City to Silicon Valley, headed by CEOs such as Mark Zuckerberg, Andrew Mason and Tim O’Shaughnessy. These creative minds have demonstrated the power of youthful tenacity and innovation, combined with a sharp eye for business.
Yet, in 2010, entrepreneurs aged 35 to 54 were responsible for over 50 percent of total new entrepreneurship activity in the U.S, according to the Kauffman Index of Entrepreneurial Activity. Individuals aged 55 to 64 also made their mark, representing 22.9 percent of new entrepreneurs in 2010, compared to 14.5 percent in 1996.
With their irreplaceable advantage of experience, perhaps those who are older and wiser have learned a few valuable lessons during the course of their careers. Having started my first venture at the age of 28, followed by two others in the last 20 years, my experience has taught me the following crucial lessons:
Follow-through is essential
Nearly 1,000 startups raised $7.5 billion from venture capitalists in the second quarter of 2011, up 19 percent from the first quarter this year and 61 percent from the same period in 2009, according to the National Venture Capital Association. But the success rate of first-time ventures is only 20.9%, according to research published by the Journal of Financial Economics in 2010. Knowing what it takes to turn a vision into a successful business reality is crucial, and often times, is acquired through experience. Prove your ability to execute in both the short and long term, conduct comprehensive market-research and don’t give up when economic outlook appears grim.
Build an enthusiastic and passionate team
Experience teaches you the importance of building the right team and inspiring that team to never give up. Often times, ventures are formed with a top-heavy team of executives overly skilled and inappropriately scaled to the size of a business. When times get tough, instead of having the hunger to stick with it, many will jump ship. Build and inspire a core team that fiercely believes in your vision and has the commitment to persevere through market crises and the ups and downs of a startup.
Balance is critical
New ventures often follow an extremely lean operating model – too lean in fact. To a certain extent, you need to pay for play to capture greater market share. Raise sufficient capital and allocate the appropriate resources to expand your business. Seek to achieve the right balance; don’t be afraid to adjust your business plan depending on market conditions.
It pays to think like an investor
Venture capitalists alone evaluate hundreds of presentations a year. While you undoubtedly need a brilliant idea that addresses a market need to spark interest, investors also gauge their faith in the executive team. Experience helps you to build relationships with your target investor group, and identify the right type of capital to raise for your venture. This does not happen overnight, but over time, strong relationships help you expand your resources and understand how to raise capital and who to raise capital from.
Listen and learn
Listening is a virtue for a reason. Entrepreneurs often focus on communicating, convincing and selling. But investors can be more than financial-backers; they can also act as advisors who speak from their personal experience, failures and successes. Find mentors and industry leaders who can walk with you through your entrepreneurial journey.
In 2010, 565,000 new businesses were started per month by new and repeat entrepreneurs, according to the Kauffman Foundation. In this time of economic uncertainty, the need for innovative ideas and new business ventures is greater than ever. Entrepreneurs are a vital part of the economy, so hold fast to your vision, be flexible, and persevere through failure and fluctuating market conditions. It will pay off in the end.
Brin McCagg is the co-Founder, President and COO of OneWire. He has more than 20 years of entrepreneurial executive management experience.