Raising Entrepreneurs

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Only a small percentage of start-up entrepreneurs can expect to create 20 jobs in their first five years of business, according to a report released this month by accounting and advisory group Mazars, in collaboration with the Global Entrepreneurship Monitor.

According to the Global Report on High Growth Entrepreneurship, high-expectation entrepreneurs account for just 7% of global start-up activity. The high-expectation entrepreneur is typically a young male, has a higher education, comes from an upper-income household and has little fear of failure.

However, they make a disproportionately large contribution to economic prosperity and job creation.

The report was based on interviews with 678714 adults spanning 53 countries over a period of six years, making it the largest study of high-growth entrepreneurship yet conducted. It provides important clues as to the make-up of the high-expectation entrepreneur.

An individual’s decision to launch a new venture is affected by both the environment, and his or her personal characteristics and skills.

“It’s a combination of these two elements that determines whether a particular opportunity has potential for growth in the eyes of any potential entrepreneur,” said Hilton Saven, senior partner of Mazars Moores Rowland, the South African arm of the Mazars group.

There is a sharp division between early-stage, high-expectation entrepreneurs and their already established high-growth counterparts. Almost 20% of the early-stage group were between 18 and 24 years old, while only 3% of the established group fell into this age bracket, with more than 50% over 45 years old.

Only 30% of all categories of entrepreneurs were women, whereas less than 25% of the high-expectation and high entrepreneurs were female.

Education and household income, as well as entrepreneurial activities and attitudes, were significantly associated with high-expectation and high-growth entrepreneurship.

High-expectation and high-growth entrepreneurs had a higher level of education than other entrepreneurs and the general population. “This perhaps reflects the higher opportunity costs faced by this group, as highly educated individuals typically have more alternative employment opportunities,” Saven said.

Source: Business Day

Lois Cook set up her website Angels’ Den in order to match angel investors with people with a worthy business idea. In her experience, early-stage businesses should seek ways to avoid external funding.

Cook’s solution: don’t go running straight to external investors; be ingenious and find ways to generate cash from the business’ inception.

“If you look at the young entrepreneur groups at schools today, they teach you that if you want to run a business, then you’re going to need to run a pre-business to raise the capital to start the main business.

My son recently had to sell bottles of water so that he could pay the deposit to partake in an entrepreneurial event at school. And I think that’s a really good lesson,” says Cook.

“But most entrepreneurs don’t think like that – they’ll just say ‘I need £50,000 to get my business up and running’. But then of course to procure an investment of £50,000, you’re going to need a shareholder agreement which means you’re going to have to employ a lawyer which is going to cost you thousands of pounds, and then you’ll probably need to hire an accountant. But they’ll just say ‘I don’t have that money’. They haven’t really grasped that maybe you need to do something else first to earn that money.”

Early business experience during school years teaches the practical skills and thought processes required to bootstrap a business, rather than going cap in hand to investors – today’s schoolgirl entrepreneur is tomorrow’s Richard Branson in the making.

Source: Real Business UK

Eight-year-old Nzinga Ajamu has her very own jewelry-making business.

“I discovered my passion for making jewelry during my jewelry-making class in school,” she told the Daily News in Memphis, referring to a cultural arts curriculum course she took last year. “I enjoyed making jewelry so much that I asked my parents to buy beads for me so I could make more jewelry. Also, I made a necklace, bracelet and ponytail holder to wear to school. … When I would go places people would compliment me on my jewelry and they would say, ‘Where’d you get that jewelry?’ and I’d say, ‘I made it,’ and they could not believe that I made it.”

Nzinga’s creations were so attractive that people asked her to make jewellery for them as well, and before long she has a thriving business.

Nzinga comes up with the designs for the jewelry – sometimes, she said, the ideas come at night while she sleeps. She also sets her own prices and keeps up with all the orders.

“It’s her company and she handles everything herself,” Veda said. “And we do everything we can to keep it that way.”

But school always comes first, Nzinga’s mother, Veda, told the Daily News.

Education, Nzinga’s parents are teaching her, is the foundation to achieving the high goals the girl has set for herself. Nzinga doesn’t see Queen Nzinga’s Creations as just a fly-by-night business. This is just the beginning for what she hopes to achieve as a “grown-up.”

Already, Nzinga is envisioning having her own retail space to run her business, and developing a broader market and a larger production capability.

Meanwhile, she markets her creations through her website, www.nzingascreations.com.

Rich Schefren took a step into my world last week, when he went to talk to a group of five-year-olds about business – and according to Rich, he was “Shaking In My Boots”!

It can be daunting, trying to break down complicated business ideas into terms kids can understand. Especially if you have learned business through years of experience, or at university-level academic institutions, or both. The gap between your understanding and the world of a child seems almost infinite.

The truth of the matter is that it can be done. Parents are doing it every week, using the Cash-Smart Kids program.

I left a comment on Rich’s blog post, letting him know about the program – I wonder if he will come and check it out?

At his blog post, “Shaking In My Boots” you can download the gorgeous ads he had these 5-year-olds make to convince their parents to buy them things. Imagine how much more powerful it would be if they also included a business plan as to how they would earn the money to pay their parents back for the purchase?

There is a common misconception that only certain personalities are suited to business. In fact, people of all types have become successful entrepreneurs – the trick is to know your strengths (and weaknesses), and choose the right kind of business.

As a parent, it’s good to be alert for your young entrepreneurs’ qualities, and steer him or her towards businesses which suit their personalities.

A great way to think about different types of personalities in business is provided by Roger Hamilton in his book Your Life, Your Legacy. Hamilton distinguishes eight different types of entrepreneurs, and provides biographies of over 30 famous entrepreneurs, divided into the eight types for easy comparison.

Creators move a million miles an hour, spinning ideas like a Catherine wheel. They are great at coming up with really cool idea, but tend to be weak on following through to completion. With the right team to handle the boring detail of making their vision a reality, Creators can do just about anything. For example, Richard Branson and his space tourism business.

Stars shine in the light of public attention. They love to talk about great ideas, but can quickly lose their shine if they are required to slog through masses of routine activity. Given a great product, a Star can quickly whip up a frenzy of excitement in the marketplace – think of Oprah, and the value of getting an endorsement from her.

Supporters are the leaders of teams. They care deeply about other people, and will always check in to see how everyone is feeling before committing to a course of action. Without direction, their lives can become an endless round of pleasant chats with nothing to show for it, so they need to team up with a Creator or a Mechanic to give them a direction in which to lead the team. Jack Welch of GE is a classic Supporter profile – his ability to get the best out of people is legendary.

Deal Makers put people together to create new opportunities. They are always connecting, talking, listening, remembering endless details of who is up to what, and their catch-cry is “ah, I know someone who might be able to help you with that …” Deal Makers lose out when they forget to create value out of all their wining and dining, or forget to make sure they get a piece of the action. Donald Trump is a Deal Maker.

Traders have an unerring radar for bargains. They can pick a value buy on the stock market, at a flea market, or in commercial real estate. Stuck in roles where they can’t see both sides of a deal, the buy and the sell, they can go their whole lives without ever realising their true gift, but when they have the full picture, they are masters at realising value. George Soros is a master Trader.

Accumulators make their money from buying well and holding assets for the long term. If Accumulators fail, it is because they wait too long to take action, or keep their knowledge to themselves instead of building a team around them. The most famous Accumulator of recent times is Warren Buffet.

Lords love the detail, unlike the flashy Creators and Stars, and may even be accused of being “stingy”. Lords excel st squeezing every last percentage point of performance out of an asset. They don’t even need to own the assets to collect cash flow from them – they are happy merely to control the revenues. They love control and hate risk, and their tendency to micro-manage makes them poor leaders of organisations. Given the right team to compensate for those weaknesses, Lords can make money consistently in any niche, regardless of the conditions around them, capitalising on difficult times to acquire their competitors and eventually dominate entire markets. Rockefeller, Carnegie, and J. Paul Getty were all Lords.

Mechanics tinker with businesses the way that some folks tinker with car engines. They can always see a way to improve a system! Many Mechanics find it hard to get going, because they can’t decide what business to start. A Mechanic needs a Creator to start something, and a Deal Maker to get the money rolling, before they can truly shine in their role as the person who takes the one small outlet and builds a system which will spread that little business all over the globe. Sam Walton, Ray Kroc (founder of McDonalds), and Henry Ford were all Mechanics.

Study your young entrepreneur carefully, and you will start to get clues about their individual Wealth Profile. Do they have a new passion every week? Are they always preening in front of the mirror? Can they talk to just about anyone? Are they always coming up with suggestions for people to contact? Do they love a bargain? Do they save money naturally? Do they like to take things slowly and minimise risk? Or do they always complain that they way things are done is “stupid”, and want to change the system?

Work with your child’s natural strengths, and you will not only help them create a business today, you will also give them vital clues as to their most enjoyable and easiest lifetime path to wealth.

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