Wednesday, September 16, 2009

Tips for Young Entrepreneurs

One of the ma great things about becoming an entrepreneur is that there is no age limits. Any one young or old can be an entrepreneur and if I knew what I know now when I was 15 I would have started then. Young people often have few responsibilities and less to lose, plus with your whole life ahead of you, why not give it a try?

The entrepreneurial landscape today is of course much different from the one 20 years ago. With the benefit of the Internet and an electronic commerce not only have entrepreneurs have almost instant access to a world wide market but startup costs are of corse much lower.

In a recent interview with Business Link, Internet entrepreneur Marc Day, founder and creator of spoke about the joys of being an entrepreneur, his challenges and what he would do differently if he started a business again:
Marc Day founded Limited, an internet-based, games-rental subscription service, two years after graduating. A professional attitude and thorough research has helped him finance and build his business, set to achieve a turnover of £1 million in its fourth year.

What I did
Take time for thorough research
"After I left university I took on admin-type jobs just to get by. During this time I did lots of research into my business idea. I also carried out field research, questioning people coming out of video games shops. I got as many facts and figures together as I could and found out all the costs involved before I approached anybody for money.

"It took about 16 months. I wanted to go into the market as quickly as possible, but I knew I needed to cover every angle before I did. I knew people weren't going to throw money at me and that they'd want to know all the details. Besides, it was important I knew that the business was going to be viable too."

Explore all funding possibilities
"When I was first looking for start-up capital I approached private investors and venture capital companies, but they all wanted to see more experienced management in the company. It was a difficult situation because I didn't have the money to bring that experience on board. The feedback was always that I had a great idea, but they'd like to see me start the company and how it went first. It was very frustrating. "But I plugged away and eventually I got the money through loans - personal and family ones.

Importantly, I also secured a R300,000 bank loan. The bank was apprehensive, but I was able to use my parents' property as security and I made my father chairman of the company, which gave the bank more confidence. My father was experienced in business and I used him as a sounding board anyway.

"Two years later I wanted to raise working capital for expansion, so I used the Department for Business, Enterprise and Regulatory Reform Small Firms Loan Guarantee scheme (now replaced by the Enterprise Finance Guarantee). Age wasn't a factor at all. It was my track record that counted, the partnerships I'd made and my growth strategy. We got R1 000,000 and can go back for another R1 500,000 if we reach certain targets."

Show confidence
"A lot of my contact with people when I started was over the telephone and nobody questioned my age because I came over in a professional manner, knew what I was talking about and wasn't frightened of negotiating with people. I think that makes a big difference."

What I'd do differently
Scrutinise my business plan regularly
"I finalised my business plan when I got my finance and though I kept figures in my mind that I had to achieve I didn't look at the plan again properly until I entered the Shell Livewire competition. It was then, a year after starting up, that I discovered how high my packaging costs were and how that was impacting the business on a daily basis.

"I managed to trim those costs down by about 40 per cent and it really affected profitability. If I'd looked at my business plan after, say, six months, I could have made the business leaner much sooner."

Marc's top tips:
• "Get as many facts and figures together as early as possible to back up your ideas."
• "Find a mentor you can ask for advice and run new ideas past."
• "Keep plugging away - even when you come up against obstacles."

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