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Young Guns, something BIG is happening

Blog

Young Guns, something BIG is happening

By: Steve Sadler, CEO, Allegiancy

January 19, 2015

Where are you?  Why should we care?  And what should you do?

Something big is happening to America, and most people have not noticed yet.  The fabric of our economy is changing, and I don’t think it’s for the better.

According to a recent Wall St. Journal article, young people starting their own businesses is at a 24-year low.   At the same time, the Journal reports that companies — and the young people they hire — are moving into urban areas at a higher rate than ever before.

These trends are related — because young people are shunning the off-the-beaten-path opportunities for the tried-and-true big company jobs, which are typically found in large cities.  That’s not good for our economy because we need a certain amount of new ideas and entrepreneurs entering the market at all times.

At the same time, Gallup’s CEO Jim Clifton reports that the United States now ranks 12th among developed nations in business startups.  He notes that, for the first time in history, American business deaths now outnumber business births.  And Clifton concludes, “To get back on track, we need to start focusing on the almighty entrepreneurs and business builders.”

So where are the Steve Jobs and Bill Gates of today’s generation?   Who is building tomorrow’s Apples, Microsofts, and Googles?   In short, why are there so few entrepreneurial young guns today?

I want to suggest some causes of — and advice for — today’s gun-shy Millennials.

1) The most obvious cause is that young entrepreneurs lack capital.  Without capital and the proper environment, we can’t expect growth in their new businesses.   Any small business owner, regardless of age, can tell you that raising capital is extremely difficult in today’s economy.

Miraculously, Congress acted to address this issue in 2012 by passing the Jumpstart our Business Startups (JOBS) Act, which along with crowdfunding, included a provision to increase the amount a private company could raise through public securities.

However, as of 2015, the U.S. Securities and Exchange Commission (SEC) has not enacted the rules necessary for this plan to go into effect.

2)  If that weren’t enough, most young people are coming out of college with so much debt that they are indentured servants for the next 10 to 20 years — as they attempt to repay unfathomable student loans.

Sadly, the same education that probably failed to prepare them with marketable skills is also the millstone precluding young people from taking the risks necessary to start a new business.  Or even to buy homes and start families for many years.  Young college grads have to take the big company jobs right away just to pay their bills.  Thus, the movement toward the big city/big company, and the accompanying treadmill life.

The best time in life to take risks and seize opportunities is in your 20s, when you are footloose, optimistic, and resilient.  But now, because of student loans, it’s becoming the least likely time.

And of course, we older people know that it doesn’t get better later.  As people approach their 30s, and finally do start families and buy houses (with big mortgages), they’re even less able to tolerate the uncertainty and risk required to start a new, innovative company (or even go to work for one!).

What to do?

If you’re a young would-be entrepreneur, (or their parents or loved ones), what can you do?

Answer:  Rewrite your story.

1.  Think outside the box in a big way when it comes to higher education.  Don’t accept the common wisdom that everyone has to go to a top-dollar college or go to college at all.   (Bill Gates and Michael Dell didn’t.)

Think in terms of skills and knowledge, more than classes and degrees.   Then do a bit of math to calculate your return on the time and money invested in traditional ‘education.”

Billionaire Mark Cuban has gained much attention talking about how the higher education bubble is failing us and will one day burst.

I agree, and would take it a step further:

2.  Don’t wait for the higher-education system to implode and then one day correct itself.   Change your own higher education plan, demand more, and opt out of the rigged game.   Figure out the best ways to get the education, training, and experience you need now to be successful.  Make sure your choices are financially feasible in the short-term and long-term.

3)  Don’t become a debt slave!   Your choices may include attending community college to obtain basic credits, trying out online solutions like College Plus (www.collegeplus.org), and certainly getting as much hands-on work experience as possible.

Massachusetts Institute of Technology (MIT), one of the best universities in the country, offers its entire curriculum online for free.  My own children were able to graduate from college with bachelor’s degrees in fewer than two years for under $15,000.

4)  The main thing is to realize that you have choices — more choices that ever before.  Always ask, “Why?”  You don’t have to follow the herd and drift into the widely accepted (and failing) definition of “normal.”   Get out of the box.  They’ll put you in one when you die — don’t spend your life in one too!

Develop your own plan, and make sure it doesn’t include debt.   Then you will have the freedom to join forces with other young innovators to create the new models that will benefit us all tomorrow.

Steve Sadler’s company, Allegiancy, has built a technology-enabled system to manage commercial properties so effectively that they have outperformed their peers by 45 percent since 2006.  The company has more than $300 million in assets under management and delivers clients attractive returns and profitable, hassle-free investments in commercial real estate. Allegiancy hires out-of-the-box thinkers.

  • taylor turner

    Excellent post. And because of your example and encouragement one of my children is an out-of-the-box thinker who graduated from college two years after completing high school for approximately $15,000. Thank you.

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