Young entrepreneurs should be asking themselves tough questions, such as whether they have a Plan B lest Plan A go awry, and whether they’re prepared to tough out the hungry days that come with a business startup.
Seventy percent of young adult jobseekers say they want the freedom of being their own boss rather than the job security of regular employment, and 53 percent say they’ll probably launch their own business in days to come.
That’s according to research conducted by MAVY Poll on behalf of the American Institute of CPAs, which checked out the employment prospects of millennials who either graduated from college in the last 24 months or will do so in the next 12 months and are presently looking for work—those “young adult job seekers” mentioned above.
“It’s not surprising that the generation currently entering the labor market is looking beyond the traditional approach of rising through the ranks in a well-defined career path,” says Gregory Anton, chairman of the AICPA’s National CPA Financial Literacy Commission. “Developments in technology and the internet have made it easier than ever to start a business. However, they have not necessarily made it easier to succeed.”
And of course millennials aren’t the only ones looking to be their own bosses, with 540,000 people giving entrepreneurship a shot each month. And while a surprising 80 percent actually do survive their first year, after that it’s downhill all the way for many, with only about half surviving five years and only about a third sticking it out for a decade.
New business owners need to remember some key essentials if they’re going to make it into that select group, with AICPA offering tips on survival. They include having a solid financial foundation—something that’s hard to do for people laden with student debt—and being ready for all the costs involved.
That means would-be entrepreneurs should be looking to pay off debt, establish an emergency fund and even start saving for retirement before they’re really prepared to set aside enough money to support themselves—never mind prospective employees—in a manner that will allow them to survive.
They should also be asking themselves tough questions, such as whether they have a Plan B lest Plan A go awry, and whether they’re prepared to tough out the hungry days that come with a business that gets a slow start and doesn’t roar out of the gate to immediate success. Other costs come into play, too, such as whether they’re making enough as an entrepreneur to afford their own health insurance and out-of-pocket expenses.
Finances need to be organized, as does an emergency fund for the business, so that unexpected expenses don’t eat up the last dime before the next client payment comes in.
And remembering that free is good is paramount in keeping costs down for a fledgling business; would-be business owners should take advantage of any free tools and resources on offer, such as calculators to help them figure out loan repayment and budgeting, expertise on where and how to find business financing and all the legal and business factors they need to consider when setting up their venture. Among such resources are the AICPA’s #CPApowered and 360 Degrees of Financial Literacy websites, which offer both tools and resources free of charge.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
