11 Must-Know Considerations for Young Entrepreneurs
I recently came across an X advice thread for aspiring entrepreneurs. The thread, like so many others, was all performance, no substance. The advice was weak, wrong-headed, and ill-advised.
It's frustrating to watch social media status-seekers misdirect young people with content solely in service of growing their audience and hearing themselves bloviate publicly. This specific corner of the 'creator economy' incenses me — people who pass themselves off as business senseis even though they've never founded, scaled, or exited a single business.
The back and forth responses and dialogue to this thread between myself and others became the inspiration for this list of 11 key considerations for young & aspiring entrepreneurs.
#1 TIME-EXPERTISE-LEVERAGE
Know where you stand and proceed accordingly.
- People with time very rarely have leverage or expertise (experience). Time is a huge advantage for the young entrepreneur. Use those early, lessor experienced years to hone your expertise and amass leverage.
- People with expertise (experience) sometimes have leverage, but rarely time. With experience you learn how to navigate the many intricacies and nuances of business that otherwise stymie lessor experienced people. With experience comes expertise; with expertise, leverage.
- People with leverage often have expertise, but never have time. Leverage, by far the most potent of the three, takes time and experience to amass. People with leverage, especially those practiced at wielding it wisely, have distinct advantages over those with time and/or expertise.
#2 ALWAYS COMPETE ON VALUE, NOT PRICE. NEVER DISCOUNT
From mid-2021 until recently we experienced the highest inflation in 40 years. On Black Friday 2024, American consumers spent a record-breaking $10.8 billion — a $1 billion increase from 2023, representing a 10.2% year-over-year growth — the biggest shopping day ever recorded. The US retail consumer is so enthralled by discounts that they buy things they don't necessarily need with money they don't necessarily have. On shopping days like this, however, I'm more thinking about the retailers caught in their zero-sum, race-to-the-bottom pricing competitions. You cut, he cuts, they cut, now everyone’s cut and bleeding out.
Avoid businesses that compete on price; build businesses that compete on value. Value based businesses are more satisfying to build because they rely so heavily on creative problem solving. When you get it right and the consumer benefits, these businesses flourish in ways those forced to compete on price could never dream of.
#3 THE MARKET ISN’T SATURATED, YOUR BUSINESS JUST SUCKS
Given the painstaking work that goes into founding, building, and running any business, when things don't work there's a natural human tendency to want to understand why. Businesses fail for many reasons, but rarely is market saturation one of them.
Market saturation is typically a bad excuse for a bad business or poor business fundamentals. If your business is failing because there are too many businesses similar to yours, market saturation isn’t the problem. You’re just losing the competition game and ALL BUSINESS IS A COMPETITION GAME.
#4 HAPPY CUSTOMERS ARE YOUR MOST POWERFUL MARKETING
Marketing is one of the most important elements of building a successful business, especially highly entrepreneurial endeavors built to scale and generate high margin revenues. Marketing is a broad category that includes different disciplines from the highly creative to downright scientific.
The marketing strategies, tactics, and disciplines businesses use to grow their customer base depends highly on the nuances of that particular business. That said, the most impactful marketing a business can have is the ability to leverage the good word of their happy, loyal, existing, and returning customers.
#5 IF NO ONE THINKS YOU’RE CRAZY, YOU'RE ALREADY TOO LATE
The recipe for 100X outcomes is for everyone to agree with you...LATER. When you first step into something brand new, if there aren't many people telling you you’re crazy, you’re probably already too late. 100X business opportunities are rare, non-consensus bets that don't hang around for long.
When Elon Musk founded Tesla and SpaceX, trying to build an electric car company or private space company was considered absurd. Now both are consensus. The point is, you're crazy...until you're a genius.
#6 YOUR PRICES AREN'T TOO HIGH, YOUR PERCEIVED VALUE IS TOO LOW
See #2 and #3.
#7 THE REAL CURRENCY OF BUSINESS IS RELATIONSHIPS, NOT MONEY
They say money makes the world go around. Maybe it does, but the real currency of business is relationships, not money — those you meet along the way who have the ability to catapult you to new levels of the game. Once you identify who they are, it's important to work hard to create value for them with no expectation of return. Do this long enough with enough high-quality people over enough time and you're likely to get a very satisfying and profitable call one day.
Business may transact in money, but the real currency of business is relationships.
#8 YOUR PRODUCT SHOULD MEET A DEMAND, NOT ATTEMPT TO CREATE ONE
This is a very important one that’s often overlooked or missed. Small businesses are the engine of the U.S. economy. Most of these businesses were either built by prior generations or newly conceived from a product/service-out perspective. You step into the family business because it's what your family does. You love taco's so you open a taco joint. You prefer to work outside so you start a landscaping business. You get the point.
The one's that work do so because there's a genuine demand in that market for those products/services. But, a much higher percentage of these businesses fail — failure rates of SMBs in the U.S. is exceedingly high, somewhere north of 90%.
It's very simple — no demand, no business longevity. There are myriad reasons not to start a new business, but if you do the one you cannot ignore is focusing on what consumers in your market or locale NEED and what they are actually DEMANDING. (See #11 below for discussion on consumer NEED v. DESIRE).
Starting, building, and operating a business is hard enough. You might as well start with your best foot forward and that will always be with a product or service that meets a specific need or an actual demand.
#9 DON'T TAKE FAVORS, GIVE THEM — NEITHER A BORROWER NOR A LENDER BE
Neither a borrower nor a lender be.
-Shakespeare, Hamlet
I'm begging you to trust me that there's little to no benefit in being a lender or borrower. If you must lend, lend favors instead of money. If you must borrow, borrow favors instead of money. However, if you can't get away from lending money, you're better off giving the person the damn money and having zero expectations you’ll ever see it again. Because you won’t.
#10 THE ONLY WAY TO BEAT THE COOKIE MONSTER IS TO OUT-EARN HIS ABILITY TO EAT
Despite being the greatest economy the world has ever known, we do a very poor job educating people about money, business, and risk. Most Americans have an ill-conceived, oppositional view of risk which is most unfortunate. Despite a marked improvement in people's understanding of risk over the last few decades, risk has yet to fully shed its many negative connotations. The idea that risk, especially entrepreneurial risk, is problematic, dangerous, or irresponsible is deeply flawed, misguided, and short-sighted.
There's so much to learn and know about money and risk, but let's focus here on a single, important point of reference: the byproduct of western capital markets and central banking over the last few decades, especially in the age of government bailouts, free pandemic money, and massively exploding national debt, has created an ever-dwindling currency value situation. Over the last 40 years alone, the crushing force of inflation has devoured two-thirds of the dollar's value, leaving Americans to grapple with prices that have skyrocketed by 200%, with no signs of slowing. $1 today buys only a third of what it bought 40 years ago representing a shocking 65-70% drop in purchasing power.
This unfortunately puts people who earn a set annual salary or own small, service-based businesses with no hope for real upside, in a difficult situation — living on the hamster wheel — running fast in place but getting nowhere fast. Government debt and inflation is the economy's cookie monster eating American's life savings before their eyes. And, the only way to beat the Cookie Monster is to out-earn or out-grow his ability to eat.
Now that we've established the facts, let's revisit RISK. Is entrepreneurial risk more or less risky than that 9-5 job or single ice cream store? Just ask the Cookie Monster.
#11 THE MOST SUCCESSFUL BUSINESSES FOCUS ON CONSUMER NEEDS OVER DESIRES
Human desire is messy and constantly changing. Human need, on the other hand, is clear, definable, reliable, and consistent. Selling products or services people need as opposed to those they want also makes for more consistent, recession-proof businesses.
In high-flying economies, consumers spend according to their needs and desires, but when the economy tightens or degrades, as it always does, consumers' needs always take precedence.