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For Young Entrepreneurs, Age Poses Challenges, Presents Opportunities

Andy Knight The Herald Bulletin, Anderson, Ind.

WWR Article Summary (tl;dr) As Andy Knight reports, "A significant challenge for many young entrepreneurs — especially those starting out — is persuading potential investors to take a chance on their venture. According to the U.S. Small Business Administration, around 90% of startups fail annually, a grim statistic that remains mostly constant each year. That, coupled with the metrics many lenders use to make decisions on loans, can work against younger aspiring business owners."

Anderson

At a recent retreat, some of Steve Thompson's colleagues on the board of directors for the Metropolitan Indianapolis Board of Realtors were stunned to discover that he is younger than many of them first thought.

"Half of the board had no idea that I was the youngest guy in the room," said Thompson, the owner of F.C. Tucker/Thompson Realtors in downtown Anderson. "Unfortunately, my hairline makes me look older than I actually am. It was a shock to them when they realized I was only 35."

Although the incident gave Thompson a chuckle, it was also a reminder to him that in the world of real estate, as in many other industries, youth — whether it's perceived or real — can affect the success of a business for better or for worse.

"Whether people can help it or not, things just change a little bit when they realize, oh, he hasn't actually experienced as much as we think he has," Thompson said. "There's some validity to that. Even at 35, I can tell you that having a conversation with a 20-year-old makes it very clear to me that life experience has value."

A lack of business background may be one reason why younger entrepreneurs think their age may prevent them from "being taken seriously," according to a study commissioned by Herbalife Nutrition, a global marketing firm specializing in dietary supplements. The survey, conducted among more than 25,000 respondents in 35 countries, found that 62% of young entrepreneurs believe that their age hindered them when they were trying to start their own businesses.

That number doesn't surprise Dan Hiles, who owns the Usual Suspects and Kettle Top Brewhouse in downtown Anderson. In 2015, at age 29, after spending eight years working at Nestle, Hiles and his wife, Cali, decided to start their own business. He approached two different banks for loans to help cover the startup costs.

"Both made comments to me that were basically translated to, 'You need to leave Nestle, your career job that you've been at for eight years and go pick up a job at Applebee's serving in a restaurant,'" Hiles recalled. "That's what the feedback was to me because they were like, 'You don't have any experience.'"

Business fundamentals, including developing an operations plan, managing expenses and keeping track of revenue, didn't come naturally to Jeffrey Chatman, who co-owns the Dapper Cat Café with his wife, Jerrica, in downtown Anderson. The couple opened their ice cream shop in 2019 and weathered the storm of the pandemic last year. Jeffrey Chatman said he's learned some hard lessons along the way.

"My goal was just to get in and work as hard as I could, and I quickly learned that you cannot outwork financial illiteracy," he said. "It took some time to try and learn — and there's still some business language that I do not speak, especially when it comes to finances — so I felt as if there wasn't an equal playing field, but it wasn't something that I was afraid to try and tackle. I wanted to learn."

A significant challenge for many young entrepreneurs — especially those starting out — is persuading potential investors to take a chance on their venture. According to the U.S. Small Business Administration, around 90% of startups fail annually, a grim statistic that remains mostly constant each year. That, coupled with the metrics many lenders use to make decisions on loans, can work against younger aspiring business owners.

"Age would not directly impact a lender's decision about financing a small business, but we would look at credit score which is impacted by the amount of time you have had credit," said Adam Hoeksema, executive director of Bankable, the Flagship Enterprise Center's nonprofit lending arm. "Age could indirectly lower your credit score and make it harder to get approved for a loan."

The study also contained some good news for millennials, with nearly six in 10 saying they're better at adapting to newer technology than other generations, and 43% saying they believe they have fresh, untapped ideas.

Perhaps most importantly, 28% of those who expressed a desire to open their own business said they're "less afraid to fail" than other generations. "Being able to adapt and market ourselves has been one of those big things that being youthful, we're maybe a little more able to do," Jeffrey Chatman said. "Also, one of the things with younger business owners is resiliency. If you're resilient, you're able to bounce back from certain things like pandemics, civil unrest, things like that."

Hoeksema added that, besides comfort with technology, energy in getting a business off the ground and an ability to connect with youthful customers, younger entrepreneurs have other things going for them.

"When you are young you may be able to take more risk when starting a business," he said. "If you don't have a family yet, your cost of living will be lower, which will allow you to re-invest into your business growth instead of needing to take out a large salary to cover living expenses.

"Also, if you start a business and fail, you will have learned something and still have plenty of time in life to start another business or take what you have learned and utilize it in your career."

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