The Babson College definition of entrepreneurship is: “A way of thinking and acting that is opportunity obsessed, holistic in approach, and leadership balanced.”
In honor of the Urban Entrepreneurship Summit being held at Rutgers Business School in Newark today, I wanted to present my thoughts on what the younger generation needs to know about entrepreneurship.
The quotation above from Babson, the top entrepreneurship college in the country, gives a springboard to my essential thought: Every individual should learn how to start, finance, and manage a small business. This will give millions of people the skills necessary to make a livelihood, in case they have to leave a job or are unable to find one. It will also enable them to take advantage of a market insight and turn it into a business opportunity. Also, they will become better employees through understanding how business functions.
After 30 years of teaching entrepreneurship as a way to encourage at-risk students to learn how to be economically independent and to stay in school, I am confident that this experiential approach works will help struggling youth to stay in school and learn basic skills.
One of the major causes of poverty is business failure, often due to a lack of expertise. Learning the basics of entrepreneurship and business ownership will, I believe, significantly lower the rates of global poverty. I have met thousands of young people who have the drive to make their families proud, build good communities, go to college and exit poverty via entrepreneurship. Learning how to start a business should be part of every school’s curriculum. Below I have listed the 24 concepts every young person should learn before graduating high school:
1. The Importance of Mental and Physical Health
This means eating right, getting enough sleep, exercise, building strong ties with friends, family, and community, and, as much as possible, to minimize stress! The most important relationship you will have in your life is with yourself, so treat yourself well to make life worth living.
2. The Joy of Business
Business is fun. Entrepreneurs coordinate resources — land, labor, capital, and ideas — and through the craft of entrepreneurship organize them in such a way as to provide a product or service to the public at a profit. If being in business is not enjoyable, this is the wrong profession for you.
3. Opportunity Recognition
There are two ways to find opportunities: the external method, where you see opportunities where others see obstacles and problems, and the internal method. To tap into this, make a list of your hobbies, interests, and skills in one column, and business opportunities they could generate in another. Whenever you encounter a problem, think of how it could be solved.
4. The Economics of One Unit
This is the cornerstone of a business plan. Many young people dream of how they will make millions. Instead, think of how you will develop and sell one product or one hour of service and make a profit; everything will build from that An economics of one unit will have three numbers: the price of one unit, the cost of goods sold (which is subtracted from the price, leaving the “contribution margin” — or gross profit). This number is key, as it will be added to the fixed costs per unit. The resulting number will be your profit (before taxes).
5. The Laws of Supply and Demand
The law of supply and demand is the most important economic concept of all! Discovered by Alfred Marshall, a Cambridge University don, in 1890, the internal method: make a list of your hobbies interest and skills in one column, and in the other list all the business opportunities that come from the list.
The laws of supply and demand interact to determine prices, which communicate information to entrepreneurs and consumers about the best way to allocate resources.
6. Vision, Mission, Strategy, and Tactics
Find a vision of the world you want to create. Develop a clear mission for your business. Get your economics of one unit accurate and simple.Write down your strategic goals making them measurable with numbers and a timeline. Your strategy can be presenting a product at a lower cost than your competitor, having a better focus on the consumer market, or differentiating it in the marketplace. Your tactics will use your resources to achieve your strategic goals.
7. Don’t Compete, Create a Competitive Advantage
How will you compete? What will be your business edge? How can you create a winning business model with an advantage? Like the Grateful Dead, the secret is to find a niche where you can be not necessarily the best but the only. Find out what everyone else is doing and then do something different. Your competitive advantage can be based on a unique skill, intellectual advantage, or by selling at an unusual time or location. The alternative to uniqueness is to be ordinary, and sell the same product at the same price as everyone else, making minimal profits if any at all.
8. Wealth Creation, Risk, and Uncertainty
Most wealth is created through a business opportunity combined with ownership. In an entrepreneurial endeavor, wealth is created by building a business that has a profit and can be sold for a multiple of earnings. Both mental and monetary wealth is the end result of a successful entrepreneurial career. Being an entrepreneur without ownership can be a nightmare-other people make the profit on your insights. The sooner an individual understands the difference between salary and profit, the better. Ownership of future profits can be sold for a multiple of earnings. Salaries and wages are compensation for work in the present, and hence are worth less than profits — which are projected into the future. All investments take place in uncertain world with risk. The investment of resources to create a business needs to be wisely balanced against the risk involved.
9. Marketing. Putting Yourself in the Customer’s Shoes
If you listen to your customers and ask honest questions, they will tell you they need and want. People are fascinating, and you can learn so much about their problems if you put yourself into their shoes by asking the right questions and then engage in “active listening.” Out of this will come business insights that can help you find your market niche. Be sure to name your business simply and accurately. Always be building your brand through excellent products, customer service, and good communications. Marketing is the process of creating a product or service that meets the needs of consumer profitably.
10. Time Management
The most important resource of all is time. Time is precious. Once spent, you can never get it back. Do not waste it. By planning how you will spend your time for the coming day, week, month, and year, you will be much more likely to achieve your goals and live a productive and positive life.