Tips for young entrepreneurs

Starting a business is hard work. Learn from one young person who's done it and succeeded.

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Starting a business can be scary—it's a bold move that requires confidence, knowledge, time, and money. Young people who are still climbing out of debt and making their way in the world may not have all those in spades—just yet.

But look out, world; the millennial generation will probably hit their entrepreneurial stride soon. Generally, the peak age for starting a business is around 40 years old.1 The oldest millennials are now hitting their mid-30s, so there is plenty of time for young people to strike out on their own and start businesses.

Dreaming of being your own boss? Here are a few tips from one millennial who's doing it.

Meet Tonya Rapley

Tonya Rapley started her business MyFabFinance.com in 2013, after struggling with her own finances. She found there weren't enough financial information resources for people of color. She boosted her credit score by 130 points by using a credit rebuilder card to establish a positive payment history. Then she became a Certified Financial Educator while in graduate school. She continued her education in creating financial and behavioral changes, and started to help other people conquer their budget problems.

"It started out of necessity—to improve my relationship with money. And then I realized there weren't that many resources for people who look like me," Rapley says.

So she set out to change that—and along the way she learned a few things about running a business.

Tip #1: Start small if you can't start big.

Businesses need money to start, and young people who are just starting out may not be exactly flush with cash. So how can you start a business with no money? Try starting small with bare-bones offerings.

"I started a website for people who wanted to ask me questions, and then I began to do more speaking engagements and making myself available to do them," Rapley says. "I took on unpaid and paid speaking engagements and then slowly added services as I became good at them. For instance, I started creating courses and doing one-on-one coaching."

Starting small may give you a window into what will be required to build your business further. The Small Business Administration (SBA) recommends writing a business plan—which should lay out your plans for the next three to five years. It's crucial to explore your plans for growing revenue—particularly if you plan to seek funding from investors or take out a loan.

Tip #2: Don't quit your day job.

Rapley didn't go all in with her business at first. It took some time before she was able to quit her day job and run her business full time.

"I was able to go full tilt with my business after two years when it finally became profitable," she says. "I loved it so much. It was a way for me to make my purpose and my passion my full-time job."

Taking a series of small risks as you get your business off the ground may help you decide whether entrepreneurship is really for you.

Tip #3: Know your market.

Market analysis is a crucial step in developing a plan for your business. The SBA recommends that would-be business owners investigate the industry, identify a target market, and realistically appraise how much market share is up for grabs. Narrow down your pricing structure as well—will people buy what you're selling, and for how much?

"Test the market before you go all in," Rapley says. "Is there a demand for your service or product? Are people willing to pay you? You may have this great idea, but if no one will pay you then it won't go very far."

Tip #4: Leverage your strengths.

Even though her background wasn't in finance, Rapley was able to leverage her skills and strengths into something that she was passionate about. Like speaking to groups, for instance.

"I talked too much in class and got in trouble—so, my parents said, ‘We need to figure out a way to give you an outlet to talk,'" Rapley laughs. They entered her in public-speaking classes and competitions.

"I'm comfortable speaking to groups. And as a graduate with a degree in public policy and administration, I worked throughout communities educating people on a range of issues—so I became better at speaking to people on those topics, and it prepared me for my blog," she says.

Tip #5: Learn to run a business.

Even if you have years of experience working for someone, being the boss will probably require a new skill set.

"It depends on the type of business you want to start—like whether you're interested in a blog-based business. Really become a student of what you're trying to do," says Rapley.

"Running a business in any industry is very different from working for a business. There is always more you can learn," she says.

You may benefit from finding a mentor, according to the SBA. Investigate trade associations in your industry or look into government-sponsored mentors. You may be able to get counseling and advice from people who are experienced at starting and running a business.

Tip #6: Your business should reflect your passion.

Running a business may be harder than working for someone. In order to put in the hours that may be required to succeed, you need some affinity for the work.

"Always be tweaking your model so that it suits you. The purpose of running your business is to create wealth and to do something you enjoy," says Rapley.

Tip #7: Invest in your future.

Working for an employer may come with a big perk that business owners may miss: the employer-sponsored retirement plan. In order to get a business off the ground, long-term retirement saving may suffer a little bit at first.

"I put a hold on my retirement contribution for a year," Rapley says. "The money I would invest in my retirement account has gone to investing in my business and systems. I view establishing a solid business and portfolio of businesses—I am also producing a national tour and am cofounder of a tech start-up—as an investment in my future."

But she should be able to get back to saving specifically for retirement toward the end of this year. Because of the value of compounding, saving for retirement early and consistently is an important endeavor.

Tip #8: Don't be too scared to start.

While the security and perks of an employer are hard to give up, many people want to be their own boss.

"For a young person thinking of starting a business—don't let not knowing keep you from doing what you want to do," says Rapley. "Don't say, ‘I don't know about that industry, or I don't know where to start.' We're more capable than we give ourselves credit for. Get started. What is the worst that could happen? You have to go back to working for an employer—it's scary, but it's not the scariest thing. The scariest thing is not fulfilling what you are capable of doing."

If you have a dream, it may be worth following it. You never know where it might lead.

Take the next step

If you want to start your own business, this article has tips to help you navigate the first year and become successful.

Read more >

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1. "State of Entrepreneurship: 2015 Address," Kauffman, The Foundation of Entrepreneurship, http://www.kauffman.org/~/media/kauffman_org/resources/2015/soe/2015_state_of_entrepreneurship_address.pdf.
The views and opinions presented above reflect the opinions of Tonya Rapley as of August 12, 2016. These opinions do not necessarily represent the views of Fidelity or any other person in the Fidelity organization and are subject to change at any time. Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice. Tonya Rapley is not affiliated with Fidelity Investments.
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