and Start Your Own Company
Entrepreneurship is the process of finding opportunities to provide products or services that people will want, and then starting businesses to provide them. These startup businesses vary tremendously in their purpose and ambition. Entrepreneurship ranges from kids in elementary school starting lemonade stands in their front yards, up to technology companies that hope to transform whole industries and change the way billions of people live. Some startups are about creating new products or services that never existed before. Others are about providing existing products or services in a smarter, easier, faster, or less expensive way. In the novel, Danielle recognizes the power of entrepreneurship, and creates several companies including Danielle Music, Danielle TV, and Danielle Stem Cell to make her ideas a reality. You can do the same!
If you have an idea for a product or service that doesn’t exist yet, but should, starting a company is one of the best ways to make it happen. If your idea is successful, you can receive not only financial benefits, but more importantly, you can have a large positive impact on the world. Let’s look at the concrete steps you can take to make that happen:
- Identify a need or problem. The first step to building a successful company is finding a need in your community or the world at large that you can fill, or a problem you can solve. These opportunities could be very local, like kids in your town wanting someone to tutor them in math, or global, like people needing inventions for detecting cancer more accurately or less expensively. Try thinking of this in terms of what someone might wish for. Here are some wish-statements, along with the companies they might inspire.
- “It’s a hot day. I wish I could have some cold lemonade right now.” [Neighborhood lemonade stand]
- “My lawn needs mowing, but I don’t have time to mow it myself.” [Yard-work business]
- “Lots of people want to buy and sell items like they do at garage sales, but there isn’t a good way for them to connect online.” [eBay]1
- “I wish there were an app that could summarize news stories so I could save time.” [Summly app]2
- “It’s hard to get a taxicab at the places and times I want one.” [Uber]3
- “It would be great to have a more realistic and immersive virtual reality system.” [Oculus]4
Here are some other resources on finding the need that your company will fill:
- 5 tips from the Young Entrepreneur Council5 on identifying a market for your company.
- 14 ideas from Patrick Bet-David6 on how teenage entrepreneurs can make money.
- TED Talk by Simon Sinek7on why having a sense of vision and purpose is so important to being a successful leader. If you have a crystal-clear understanding of why your company needs to exist, that will make people want to help you and follow you.
Once you have found a need you’re excited about filling, you should practice explaining it in just a sentence or two, so you can communicate clearly what you’re hoping to do.
- Come up with a solution. The next step is thinking of a specific answer to the question you’ve found. This might be opening an online store, manufacturing and selling an invention you create, or programming an app. Note that there may be multiple potential solutions to your problem. For example, you could solve the problem of thirsty people in your neighborhood by opening a lemonade stand, or starting a lemonade shop in a storefront, or founding a lemonade-by-courier business where people order lemonade by an app and you hire people to deliver it to their houses on their bicycles. The solution you choose should be based on what you think your customers will want, and how much you think they will pay for it.
- Figure out what you need to deliver that solution. When you decide how you want to solve this problem, you’ll next have to think about how to put that solution into practice. In terms of time, money, and skills, what do you need to do so you can actually begin serving your customers? Here are some specific questions you might want to ask yourself, and do research on if you don’t know the answer already:
- If your idea is an invention, have you built a prototype yet? If not, how much time and money will it take to build one? If you already have a prototype, how much would it cost to have a factory mass-produce it for you?
- Do you need to buy any equipment or supplies before the business opens? If so, how much will this cost?
- If you are creating something with computer programming, how long will it take you to do the coding? Do you need to learn a new programming language to implement your idea in the best way? What computer equipment do you need?
- Will you be your company’s only employee, or will you need partners or employees with different skills to work with you?
- Do you need any special licenses, inspections, training, or approval in order to legally operate the business in your community? You can look up the laws and regulations in your area online, and if you’re in doubt, you can contact the local government and ask. If the legal questions are extensive, you may need to consult with an attorney.
- Decide how you will make money. In order for a company to stay in business, it needs to make money. Even if you intend to donate all your profits to charity, or provide your products to customers without making a profit, you’ll still need to bring in enough money to pay your own costs in running the business. For many kinds of companies, this is a pretty simple question to answer: you’ll sell products at set prices, or charge set fees for your services. In some cases, though, the question requires outside-the-box thinking. If your business makes it easier for buyers and sellers to find each other, you might charge a commission on all transactions. If your business involves time slots or tickets, you might maximize sales by offering special discounts for people who take the less-desirable ones. Many businesses now operate through ad revenue. If your company produces how-to videos and shares them through YouTube, you would get a share of the money that Google (YouTube’s parent company) makes from selling ads on your videos.
- Make your business plan. This is a short document stating all the key elements of your idea for the business, along with research you have done on the market. What other companies are already doing something similar? What makes you different? How much money could the business realistically expect to make in its first and subsequent years? Creating a business plan serves three purposes. First, it helps you get clear in your own mind on how the business will work, how you plan to overcome potential obstacles, and how you intend to develop the company over time. Second, it helps people you trust understand your idea so they can give you constructive feedback. And finally, it can convince potential employees and investors that your company will be worth their time and money. Here are some tips from the Young Entrepreneurs Forum8 on how to write a business plan that will stand out from the competition.
- Find collaborators. Your company might just be you working all by yourself; many businesses are. But every company needs a network of people in the community who believe in it and help it succeed. Your job is to find those people and get them excited about your idea. There are several different kinds of collaborators:
- Starting a company can be a very ambitious project, and it can be a big help to have partners willing to share the load. They start the company with you, and share both in its expenses and its profits. It’s often best to pick partners who have different skills from your own. If it’s a food-related business, it’s better to have one person with a talent for food preparation and another with a talent for sales than to have two great chefs but no one to find customers for them.
- As your business grows, you won’t be able to handle all the work yourself. You can hire others to work with you, either on a full-time or part-time basis, depending on your needs. Hiring employees requires good judgment. You want to find people who are trustworthy, work hard, and have a positive attitude. If you already have other employees, you want to be sure new ones will fit in well with the team.
- Contractors. There are some tasks you won’t be able to do yourself, but it doesn’t always make sense to hire an employee for specialized tasks. For example, if your company only has three employees, you shouldn’t hire a full-time lawyer because you won’t have enough work for them to do yet. Instead, you’ll hire an outside lawyer to serve as a contractor whenever you need her. Other kinds of contractors businesses often have to find include: accountants, web designers, IT managers, artists, and equipment repairpersons. Before hiring contractors, read reviews of their businesses, and ask people you trust for recommendations.
- In some kinds of businesses, you’ll need to buy a steady supply of goods—either products to resell, or materials you use to make your own products. If you’re opening an online toy store, you want to find which toy companies’ products you want to sell. If you’re selling baked goods, you’ll have to decide on which grocers or food supply companies can give you the best ingredients at the best prices. If it’s a factory making parts for you, it’s important to confirm that they have high enough quality standards, and can deliver the parts on time.
- Many small-business owners already have decades of experience working in their industries. They’ve had many failures and successes, and learned something from all of them. As a young person, you have advantages like creative ideas and a fresh perspective, but it is important to also be humble and recognize that you can always learn from other people. Mentors are experienced entrepreneurs who can share what they have learned with you, so you can avoid the mistakes they made, and follow the accomplishments they’ve done well. Ask your parents or teachers for advice on people who could serve as mentors, and if you’re under 18, always make sure your family understands who is mentoring you and that they approve your contact with them.
- 9 tips for finding a potential mentor,9 contacting them, and turning them into an actual mentor.
- Ideas from Patrick Ben-David10on how young people can find great mentors.
- Mentorship expert Ellen Ensher11on connecting with mentors and forming strong relationships with them.
- Mentors give you general advice about entrepre-neurship, leadership, and life. By contrast, advisors provide more specific advice about your business and the market you are entering. They can advise you about unexpected problems that similar companies have encountered and tell you how they solved them. They may also have enough experience in your industry to be able to refer to you vendors, contractors, and employees you can trust. Some advisors provide guidance for free to startups, especially by young entrepreneurs, but as your company grows you should expect to pay a fee for their expertise.
- Advice from OpenView Venture Partners12on finding great advisors for your startup company.
- 7 tips from First Round Capital13on getting the most out of the advisors you bring on to help your business.
- Some businesses need significant funding right at the beginning to get started. In other cases, you’ll need a big chunk of money to grow your company and expand into new markets. If either applies to you, you’ll need investors willing to write you checks in exchange for partial ownership of your company. Investors who come in before your company is actually doing business are often called seed investors, while those who give you money to expand are called angel investors. Once a startup has already become successful, subsequent investment is known as venture capital. Attracting good investors requires a solid business plan, and an outstanding “elevator pitch”—a polished verbal summary of what your company is about and why it’s worth their investment, short enough to fit into a 30-second elevator ride.
- In almost every market, there are some people who are seen as authorities about which companies people should do business with. For restaurants, these are dining critics and food bloggers. For gadgets, these are tech magazine editors and YouTube reviewers with lots of subscribers. Your job is to find those influencers and convince them why your product or service is better than the competition. If your company can get respected influencers to recommend you to their followers, you’ll have a much greater chance of success.
- Start your company! Once you’ve made the proper preparations, open your virtual or literal doors and start doing business. Remember: not everything has to be perfect right away. It’s more important to just start than to wait for absolutely perfect conditions. This can be one of the most exciting, frightening, and rewarding experiences of your life—try to enjoy and appreciate the highs, and learn from the lows. A successful entrepreneur and friend of mine, Harry George, compares this to walking on a mountain ridge. You see the grand mountain peaks ahead of you as well as the potential falls all around you. Take the time to listen to some of the world’s top experts and biggest entrepreneurs (and a teen entrepreneur!) on how to start your business, and what will make it succeed:
- 10 steps to start a business, from Rhonda Abrams14for USA Today.
- TED Talk by entrepreneur Bill Gross15on the key factors that allow some startups to succeed while others fail.
- Fascinating thoughts from billionaire Elon Musk16on how to start a business, drawing from his entrepreneurship experience in online payments, electric vehicles, solar electricity, and rocketry.
- Candid advice for entrepreneurs from Richard Branson,17 founder of the Virgin business empire, covering industries like music, airlines, telecommunications, and private spaceflight.
- TEDx Talk by entrepreneur Jan Bednar18on what college students in particular need to know before starting a business.
- Tips from teen entrepreneur Alyssa Ruby19on starting your own online business.
- An outstanding book on how to approach the starting of a business in the broadest and most optimistic way is Bold, How to Go Big, Create Wealth and Impact the World20 by Peter Diamandis (my cofounder of Singularity University) and Steven Kotler.
There are a few additional issues to think about as you plan for starting your company:
- Setting up an online presence. For almost all businesses, you’ll want to have a website. First, you should decide on the right domain name, then register it at a site such as com.21This is usually quite inexpensive. Then, you can use a platform like Squarespace22or Wix23to create a website on your own—with no need for special programming skills. Or, if you’d prefer, you can pay a web designer to create a custom website for you. Many businesses find it’s helpful to have a presence on social media platforms like Facebook, Twitter, and Instagram, but it really depends on what the business is. If your company revolves around something like local business networking, it makes sense to be active on many social media sites. But if you just have your own dog-walking business for people in your neighborhood, you might only need a Twitter feed.
- Protecting your intellectual property. Depending on your business, you may be creating intellectual property, and it is very important to make sure that it is protected. Often, this means creating your company as a corporation, which gives it special status under the law. Corporations can own property, file lawsuits, and do other things that normally only people can. The process for establishing a corporation varies a bit from place to place, but here’s a good starting point for forms24from each of the 50 United States. If you are inventing something new, you should consider filing for patent protection,25 which will give you exclusive rights to your creation for a set number of years (about twenty years from when you file your patent). You can also apply for trademarks26 to protect your logo, product names, and creative designs. You can protect creative works such as books, documents, and designs with copyrights. You should get advice from a lawyer on these applications. Some lawyers may provide legal advice for free or at discounts for young entrepreneurs, so contact a few business law offices to see if they can help you.
- Bootstrapping versus investment. In the business world, “bootstrapping” refers to starting a business with little or no money, and then investing the profits back into the company so it can gradually expand. Especially for the small businesses that young people start, this is often the best approach. You can grow at your own pace, and don’t have to worry about keeping a group of investors happy who are looking to make money from your company. Many entrepreneurs like the feeling of freedom that comes from bootstrapping. On the other hand, getting investors can help you grow faster and be more competitive in crowded markets. For ideas with very high startup costs, investment is necessary. Also, investors in a company have an incentive to help it succeed, and can often provide very helpful advice and connections to young entrepreneurs. Consider carefully which approach fits your idea and personality best.
- Entrepreneurship competitions. There are lots of organizations out there working hard to encourage young people to start their own companies. Competitions give you a chance to practice pitching your idea to investors and answering their questions. This experience is very valuable. You can also win money to fund your startup, along with other support, like mentorship, consulting services, and help prototyping your products. The money you might win in the competition is the least of the benefits. The distinction of winning can propel your business to attract the resources it needs to take off. A friend of mine won MIT’s $50K competition (now $100K). He won $50,000, which attracted venture investors, and a few years later, he sold his business for $300 million. Take a look at these entrepreneurship competitions to see if you find a good fit:
- Hatchpad27 gives info on several top entrepreneurship competitions aimed at high schoolers.
- Pitch28is aimed at students currently in college. It focuses on a 90-second pitch to judges.
- MIT $100K29is open to the public for the initial stage of the competition. To progress, you’ll find a collaborator who is a current MIT student.
- New Venture Competition30 requires collaboration with one Harvard Business School student, but offers great resources for prizewinners.
- Incubators are programs designed to help entrepreneurs turn great ideas into great companies. An incubator can give you seed money, mentorship, office space, and many other kinds of support. The incubator can also pair you up with other entrepreneurs with skill sets that complement your own. When your company is ready to grow, they can find you great employees. Here are some incubators for you to consider:
- Info on 10 top incubators,31and what features make them stand out. For example, some incubators focus on Internet technology, while others are better for biotechnology or robotics.
- Technovation Challenge32 is a Google-sponsored tech entrepreneurship program for girls ages 10-18.
- Catapult33 is a summer incubator program for high schoolers that provides a focused and intensive experience to learn the entire startup process.
Never let yourself think that young people can’t be successful at entrepreneurship. Here are some inspiring examples of kids and teens who’ve built great businesses:
- 10 young entrepreneurs34who’ve already achieved notable success.
- 20 self-made teenage millionaires,35 and how they made their money.
- 8-year-old Evan36generated $1.3 million in annual ad revenue (in 2014) from his YouTube channel37 reviewing toys.
- 10-year-old Mikaila38started the Bee Sweet (now called Me & the Bees)39 lemonade company with her great-grandmother’s lemonade recipe. It started with a neighborhood lemonade stand when she was four, but she expanded the business into a company that sells to Whole Foods and other large grocery stores.
- 11-year-old Asia40(AKA “Super Business Girl”) created a business selling homemade candles to buy clothes and food for needy children in 2014.
- 15-year-old Thomas41created a 3-D printing company called Carrot Corp42 in 2014.
- 16-year old Ben Pasternak43developed Flogg, an app for buying and selling things within your social network in 2016.
- 17-year-old Nick D’Aloisio44 reated the news-summarizing app Summly and sold it to Yahoo! for $30 million in 2013.
For more information, please see the following entries in the companion book A Chronicle of Ideas: A Guide for Superheroines (and Superheroes): Securities and Exchange Commission, Chief Operating Officer, Incentive Stock Options, Black Scholes Valuation, Long-Term Capital Gains, Series A Investment, Simple Preferred Stock, Ratchet Downside Protection, Nonstatutory Stock Options, Bond Offer, Silicon Valleys, Capital Gains Taxes.