It Pays To Be Young

Recently I was asked to give a talk to students at the Mars Hill University Center for Entrepreneurship. Go Lions! I was able to share some of my lessons (and mistakes) from 17 years of being a small business and wanted to share my key takeaways here, as well as offer encouragement for anyone who is considering starting a business at an early age. 

But first let’s start with some Entrepreneur and Small Business Stats to get a better idea of what we’re really working with.

Entrepreneurship by the Numbers

Not into management?! Not a problem! 82% of all companies are owner run and operated - without any employees. 

And if you aren’t making money, you’re not alone. 65% are profitable. Meaning 35% are not. If you are wondering how a third of all businesses are spending more than they are making, consider the startups who only do that  the first few years, established businesses who have a down year, or (a little bit closer to home for me)  creatives, and it will all make sense <- Just kidding. Kind of. I’m proud of Brew Davis for taking his music seriously, treating it like a business and being in the black. But man… music is a tough biz!

Small businesses have more diverse leadership than corporate America. Nearly 40% are owned by women and 22.6% of employer firms are minority owned.

But don’t I need a ton of money or an angel investor to start a business? Not necessarily. 78% are self-financed and 33% start with less than $5,000 in funding.

Where will I put my office? 50% of entrepreneurs start a business out of their home. 

What are my odds going into it?? Approximately 80% make it through year 1, about half make it to year 5, and 25% make it to year 15. 

How much money will I make? The average income for self-employed small business owners is $51,816. But again some businesses are side-hustles so that probably weighs this stat on the lower end. 

“Entrepreneurship” is a big, fancy word and my fear is that many individuals- and business students will think that they have to start a big, fancy business to qualify as an entrepreneur. Not true. Here’s a little etymology lesson… the word “Entrepreneur” sounds fancy because it comes from the French word “entreprendre” which means “to undertake or begin.” Today Merriam-Webster defines entrepreneur as “one who manages, organizes, or takes on the risks of a business or enterprise.” 

To start something and take on risk is not difficult. I always say that starting a long trail is easy. Showing up at a trailhead with a pack of gear on your back doesn’t take much effort, just a bit of moxie. 

Similarly, if you live in North Carolina and have a couple hundred bucks you can start a business this afternoon if you want to. Just surf on over to the Secretary of State website to file your Articles of Incorporation and Annual Report. Then jump to the IRS, snag a Federal Tax ID number or EIN, and fill out a newly required FINCEN form. Check to see if there are any county or city business registries or filings, and BOOM. You have a business. 

But I follow all this up with a word of caution: hiking a long trail is incredibly difficult. And the day in, day out effort of successfully running a business is equally challenging. Which is why you probably shouldn’t start a business this afternoon, but instead take time to develop a business plan that includes market research, a budget, and a deep dive into the insurance, certificates, and permits required to actually operate your business.

Whether it’s building up the gall to file paperwork or taking the time to tediously flesh out your business plan, the whole thing can feel very intimidating and overwhelming. Wouldn’t it be  easier to just go work for corporate American?! Maybe, I honestly can’t tell you. There are days I dream of a consistent salary, health insurance, and a matching retirement contribution. But then there are the days when I leave the office at 3pm to pick up my kids or go for a run and I am reminded that the biggest benefit of entrepreneurship is the agency and flexibility that it provides. And in my experience, there are some pretty big advantages to starting a small business when you are young. 

Five Reasons to Start a Business Before Age 25:

1. Risk Tolerance – At age 21, I thought nothing of setting off on the Appalachian Trail as an inexperienced backpacker with just a few grand in my bank account. I hardly had any off-trail expenses and I didn’t have very high financial ambitions. I figured I would just give it my best go and if it didn’t work, I would get off the trail and take a job at Starbucks. 

Likewise I thought very little of starting a business at 24. I was still single, my bills were minimal, and I was working part-time to support myself while getting Blue Ridge Hiking Company up and running. The expectations were low. I figured I would give it my best shot and if it failed, I would close up shop and get that Starbucks job. 

For most of us, our “early 20s” brains are wired to tackle risk more aggressively than they might be later in life, not to mention responsibilities tend to be lighter and expenses lower. Which makes it a great time to start a business – or to work at Starbucks. :)

2. A Longer Runway – Starting young also gives you a longer runway to build your brand and business. Once you hit your 40s or 50s, it feels like there is more pressure as an entrepreneur to be bigger, more successful, and more profitable from the word go. Part of that is because you are putting whatever equity (in years of work experience you’ve collected) into launching the business, so one would hope you’ve  learned some important lessons along the way. And partly it’s because, to maximize the value of your business and the time you put into it, you have to go bigger. 

If you think of it like a mortgage, a 30 year mortgage has lower payments over a longer time period, whereas a 15 year is going to require higher payments to reach the same end result. Starting a business at 25 versus 40 gives you the ability to put less in over a long time and still yield great outcomes. 

3. Building a Reputation – There is a reason that well-established businesses like to tout how many years they have been in existence  or the date they were founded. We associate longevity with success and dependability. Starting a business young gives you the ability to develop a brand over time, even if you aren’t putting a whole lot of energy into it. And this is where it does pay to maybe take a day and a few hundred bucks into starting a business before you are ready to go big or even full time with it. Yes, you’ll have to file taxes and paperwork annually, but if you’re not making much money you won’t have to pay much money. It gives you the ability to write off early business expenses and associated R&D (Research and Development). And when you are ready to go full throttle, you can walk in the door telling potential customers and clients that you have already been in business X number of years. 

4. Roles and Responsibilities - Starting a business young, allows you to change positions and roles within the entity as needed at different seasons of life. When I started Blue Ridge Hiking Company, I was THE guide, THE office manager, THE accountant, THE receptionist, THE everything. When I had my babies I stepped back from the guiding and office work. As the business grew, I outsourced accounting (hooray!!). And when speaking and writing started to take up most of my time, I stepped into more of an absentee owner role. As I stepped back, I was very fortunate to always have wonderful and capable managers who were able to run the day to day operations of the business. The last one was so darn good she ended up buying and taking over the company!! And now, I am the BRHC’s number #1 cheerleader and fan. It’s like being a grandparent and it’s my favorite role of all. 

5. Flexibility and Reward – I alluded to this earlier, but for me the biggest benefit of starting and owning a small business is that it provides flexibility. BUT at other times, it demands SO MUCH MORE work than a typical salaried job. By starting young, you can begin to understand and anticipate the work cycles and demands of your industry and plan for them. You can also put in more sweat equity when you have all the energy of youth and also probably less people depending you – be it employees, parents, children, etc… Busting my butt and getting to know my business before starting my family, allowed me to budget time and finances and allowed me to parent the way I wanted to parent. 

Yes, I had to professionally and financially plan for the birth of both my children, in that adding maternity coverage and meeting the deductible of my health insurance meant an additional $15,000 per baby. AND I didn’t have anyone giving me paid time off or parental leave after delivery. In fact I started back working part-time after a week or two with both of my children. But for the most part I did it when I wanted to, where I wanted to, with a baby strapped to me, or nursing, or sleeping next to me. It was all exhausting but I wouldn’t trade getting to be a very hands on working mom who was able to provide for her family with a business that I loved for anything.

Also, here's a BIG benefit. I sold my business before I turned 40. And that transaction has allowed me to further my education by paying for a Mid-Career Masters of Public Affairs and it provides monthly payments that doesn't pay all the bills but it definitely provides stability and cushion when our other endeavors are disrupted (ie.. Hurricane Helene). I've gotta say... having passive income from a business sale in your 40s is pretty sweet. 

Adventure-prenuer

Someone who can manage, organize, or take on the risks of an enterprise is not much different than an explorer or adventurer. And, that has always been the lens through which I have viewed small business. It is an adventure. It will kick your butt and you’ll learn a lot of hard lessons, but you will also cover some amazing new landscapes, meet incredible people, and hopefully have a lot of fun along the way. 

Even though I sold Blue Ridge Hiking Company in 2023, I am still running and operating Jennifer Pharr Davis, LLC which is a personal brand business that oversees speaking, writing, and consulting. And I am trying to figure out ways to weave my passion for public affairs and conservation into it. So… the adventure continues. And even though there are days where I still dream of consistent paystubs and PTO, I’m feel very, very grateful for the path I’m on and how far it’s taken me. 

And I’m not the only one. 84% of entrepreneurs say they would do it again, too. So why not go ahead and get started?!

About the Author: Jennifer is an Adventurer, Author, Speaker, Entrepreneur and mom of two who has a Masters in Public Affairs and a husband that plays bluegrass. Her blog focuses on life as she experiences it with a focus on Outdoor Adventure, Business, Public Affairs, Family, and Faith. To book Jennifer as a speaker for your next event, click here or call (615) 708-4301. And click here to sign up for her once a month newsletter and blog recap.