So you want to be an entrepreneur

Why work for someone else when you can work for yourself? Here are some things to think about it you’re thinking about becoming an entrepreneur.

Show Transcript

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PETE: You are listening to How Not to Move Back in with Your Parents. You are on IU MoneySmarts Radio network. I'm Pete the Planner, Alex how's it going?
ALEX:  Good buddy greetings, salutations.
PETE: I'm excited about this one.
ALEX: Are you?
PETE: Really excited.
ALEX: Entrepreneurship.

PETE: Yep.
ALEX: Here, I gotta be transparent.

I struggle to spell this word, thank God for spell check.
PETE: The EU is what throws you off.
ALEX: Every aspect of the word entrepreneurship I'm unfamiliar with from spelling,
PETE: I'm doing it, that's all I've ever done. It's weird entrepreneurship thinks for a lot of people it's about risk.

It's the idea of starting a business and thinking about growing businesses and but the reality is when you're in your 20s, when you're a graduate, there's not a lot to risk. [LAUGH]

ALEX: Yeah.

PETE: There really isn't a lot of risk. Risk means that you're putting something on the line.

Well, if you're just start now that means you don't want to swap risk.

ALEX: Right, and it also depends on, what stuff you're starting, are you bootstrapping, investing, pulling out of your own savings, things like that but you're kind of starting from scratch. And you have a lot of opportunity to grow, and I think also especially for my generation, it's about freedom as well.

People don't wanna work necessarily for a big company for 40 years and put in their time there and just work corporate life. People wanna have freedom, be their own boss is one of the big phrases of today, stuff like that. So it's a big, it's a very sexy field right now that people are getting into.

But at the same time I think people are underestimating the challenges and what it's actually about at the same time.

PETE: What I found is if you are parents or whoever raised you is an entrepreneur, as a business owner, you were much more likely to be an entrepreneur yourself.

My dad owns his own business, was his own boss. He's entire career and upon graduating college or sixth grade I knew there was no way I'm ever gonna work for anybody.

ALEX: Yeah.

PETE: I can't do it, I'm a terrible employee. I've got to do my own thing and that's all I've ever done.

I was talking to a CEO of a major tech company not too long ago. This is a guy who has sold three major tech businesses that he founded each for $100 million, like this guy is a big-time player. By the way, at 58 years old, he's getting his third grad degree in a particular area of study that interests him which I find altogether [CROSSTALK]

ALEX: He's the Tony Stark.

PETE: Yeah, yeah, he is amazing. He is the Iron Man of the real world. This guy said to me, I asked him about risk. I mean cuz he's the ultimate entrepreneur, and I said, what do you tell young people about risk? And to my [UNKNOWN] please there is no risk for young people.

He's like, me I got some risks I got $100 million. If I'm going to risk my money, then that's an issue. But when you're young, when you're putting a lot of capital, you're just putting sweat equity into a company. You're an idiot to think that you're risking anything, and it's not to degrade someone in their 20s, it's to encourage them to say go for it just be smart.

ALEX: Yeah, I mean you don't have necessarily family, kids tying you down. The responsibilities while larger than in college obviously, are still the lowest they will ever be again. So if you have that opportunity then, I guess, why not start when you're young?

PETE: Yeah, and if you haven't already and you have the opportunity to take an entrepreneurship class through Indiana University or ever you, if you happen to be listening to the podcast and you're not an IU student do it.

Learning to start and run a business is invaluable skills. And Alex, a lot of times I think what people do is they struggle. And I'm stealing this line of thought or borrowing shall I say, from a book called The E Myth by Michael Gerber. If entrepreneurship interests you, you have to read the E Myth revisited.

It's called the E Myth revisited by Michael Gerber. In where he challenges people is that, if you have a peculiar passion if you enjoy a certain area of the world from an industry stand point. You are in that moment, a technician at that, right? So when I was a financial planner for I was a technician at financial planning but that doesn't mean I know how to run a business, and that doesn't actually mean I know how to be an entrepreneur and market the business.

So the three aspects of entrepreneurship oddly enough are being a technician in that business, and knowing what you're doing.

ALEX: Right.

PETE: Which you can gather that in your field of study certainly value. The second thing is how to manage a business and this is where people struggle in every industry.

Whether you are a doctor, your a lawyer does not matter who you are if you do not know how to manage a business you're gonna struggle. And the third is the entrepreneurial aspects of it itself. Looking forward, seeing what is next, innovating and that has nothing to do with being a technician.

And it has nothing to do with managing your business and what you find is most people are okay at one, maybe two of them, but rarely do you find a natural person good at all three of those.

ALEX: Yeah, and it takes work.

PETE: Yeah. A lot of time, and I think and interesting point to bring up, to relate this to financial literacy and wellness, especially for college students, is making the decision.

Let's say while you're in school you wanna start a business or work on a project the decision you have to make say, comparing I'm gonna either start this business or I'm gonna just get a job and make money that way and support myself? So there are tough decisions that have to be made there and that you have to consider where you are in your life, and where your priorities are gonna have to be?

PETE:  Either of a friend or not a, he's a friend now, coauthored the book with me a few years ago. Went to IU, put himself through IU, he started a business in high school. He was making $75,000 a year by the time he got to IU off of his business.

And his entrepreneurial, and now he's in med school. But I mean his, he just got this entrepreneurial spirit about them that there's no reason why if you think you have a good idea, there's no reason to think it's actually a bad idea just because you're young and inexperienced.

It could very well be a great idea. There's a story of an IU student that was on Shark Tank, that had a great idea for a coat checks I believe it was. Derrick Parquet, is that his last name? I might just be making it up. Anyway he turned down Mark Cuban's money on Shark Tank because he believed so strongly in his idea and his ability to be an entrepreneur.

It's a great point though Al, you talk about are you just gonna get a regular job or are you gonna start a business there's no reason to not practice having a business.

ALEX: Right, but I think there are decisions to be made if say you are pulling out a lot of student loans you need to put yourself through college.

It's a risk there because you have to, you're gonna start a business and it fails, there's the risk that, well you can be in trouble, for paying for school, your student loans, your living expenses, things like that. So specifically, while in school, it's an important decision to be made.

If you can you balance both? How are you gonna make that work?

PETE: Yeah, I think worried if someone has to draw a line of you very careful is the idea that you would, and not that you were suggesting this, but that you would borrow money for school and use that money to fund a new business, that is incredibly dangerous, and that is risk.

ALEX: Yeah.

PETE: Because you are leveraging money that's not yours on something that could be risky. That's where risky gets involved. But if you're bootstrapping, meaning that you're funding it yourself, maybe even friends and family money. And maybe it's just a low capital business, not a lot of overhead.

Hey what I do for a living, I'm a writer, I have a radio show, do those sorts of things. Not a lot of overhead in what I do.

ALEX: Yeah, and think about with the internet you can do digital products, you can boostrapping for basically nothing now days and build a viable product.

I mean, whether it's writing, doing videos, informational products are huge right now, and it's very cheap to make. So that would be my number one recommendation, if you are gonna start a business and you are financially strapped in college, boot strap it 100%.

PETE: And since this this is a podcast for Indiana University students an whoever else chooses to listen.

It's important for Indiana University students to know that Indiana has one of the fastest growing tech communities in the world. No joke, primarily out of Indianapolis. There's organizations like TechPoint that can support new entrepreneurs organizations like Verge, Developer Town all sorts of things are available to someone that doesn't exactly know what to do, and these are services provided on you based on where you live

ALEX: And take advantage of the resources at IU as well I know there is Launch IU a buddy I know from actually high school started that organization and they bring in different speakers and people you can network with. There's I think like the incubator, there's the hatchery I think they call it at IU where you can get involved there's a great entrepreneurship school if you can take courses.

I'm actually a double major in marketing entrepreneurship and the courses are great, even if you're not gonna be an entrepreneur you need to get that frame of mind can really help you in different sides of business or whatever you wanna do Do.

PETE: For more information we encourage you to go to moneysmarts.iu.edu.

Thank you for listening to how not to move back in with your parents, here on the IU Money Smarts radio network.

ALEX: Broadcasting for you.