Today, I spoke to Scott Gerber, who is a serial entrepreneur, angel investor, media personality, public speaker and the most-syndicated young entrepreneurship columnist in the world. He is the founder and CEO of Gerber Enterprises, and the author of the book, Never Get a “Real” Job. In this interview, Scott explains why people can learn to be entrepreneurs, his personal story, why young people have a great opportunity to skip the corporate world and start a business, and more.
Can everyone become an entrepreneur?
I am a firm believer that anyone can learn to be an entrepreneur. With the national unemployment rate near 10%–and Gen Y unemployment still in the 15% range (and even higher in certain ares of the country), desperation and necessity for an income have transformed record numbers of people into self-sufficiency experts. Aspiring entrepreneurs must keep these 3 things in mind before they get started:
Build with your head, not over it. Entrepreneurs must keep their real financial situation and resources in mind when it comes to starting any business. Know what you do, do what you know. Don’t do what you don’t know and don’t build using things you don’t have, and your business will be better as a result. Remember, entrepreneurship might be hard, but in theory it’s not complicated. Whenever you get confused, just go back to basics and remind yourself that you main goal is to sell X product or service at Y cost for Z profit. Always keep that simple formula at the forefront of your mind and you’ll always put yourself back on track to find solutions to your toughest business problems.
Start a simple service-based business that requires little-to-no capital and takes advantages of your actual talents. Your start-up will not be able to raise investment money, so it is vital that you find a starting point. Simplify your business until it cannot be simplified any further. As an example, if you can’t fund a restaurant start-up, consider building up the brand by starting a delivery only service and cook the items in your apartment. Start on a shoestring budget and build towards the boot.
There are always ways to find good information and solve problems. If you hit a road block the answer might only be a Google search away. There are tons of free resources out there meant to provide aspiring entrepreneurs quality information about starting, building and maintaining a business, including Inc., Entrepreneur and my Young Entrepreneur Council. You can also find mentors by following gurus on Twitter or sending emails out to people you respect and asking them to lunch.
What made you want to be an entrepreneur?
The thought of working for someone else gave me chills. Office politics, dress down days, cubicle life, water cooler rants, a lack of real decision making ability–they all made me want to reach for Vodka and a bottle of Xanax. If I was going to fall flat on my face or go bankrupt, it certainly wasn’t going to be because I let myself end up in a position where I could be underpaid or downsized without any warning. “Real” jobs, and the quest to attain one in the first place, didn’t make sense for me–and they especially don’t make sense now in the new, post-recession economy. I found all the arguments that “real” jobs are stable and secure to be ludicrous. After all, how stable and secure is ANYTHING that you don’t control, own or have a real say in? And with ever-growing rises in outsourcing, globalization, on and offline educational institutions, and recessions, I know I absolutely made the right decision and have absolutely no issue telling others they should do the same in order to take control of their lives and financial futures.
Jobs are not going to materialize out of thin air just because politicians say they can make it happen. The only job that is remotely safe for young people in this new economy is one of their own creation and design that they own and control. However, even though we live in a world of an over abundance of collegiate institutions, enhanced automation, increased globalization, and ever-growing outsourcing options, Gen Y is still being force fed that this age-old “send out resumes to get a job” is still relevant and applicable to today–when the reality is that this notion is anything but the actual reality. Yet there hasn’t been any real action. Just empty promises and words from politicians and pundits. Nor has there been any sort of helping hand to teach Gen Y about the new way forward they must learn in order to stay competitive and effective. This needs to change.
Do you think young people have the advantage when it comes to starting businesses?
Absolutely, unequivocally 100% yes. Young people have an insurmountable amount of energy and drive. We are fearless and don’t take the word “no” very well. While many older people might shy away from anything but the “straight arrow path” or cling to the idea that things need to be done a certain way, we find ways to make things happen–no matter how crazy or non-traditional our tactics end up being–in order to get our desired outcome. We are a generation of natural hustlers that are just find with butting heads with the norm and the Man on a regular basis.
In addition, at a younger age, we often have less personal responsibilities and expenses. Most young people don’t have to worry about a mortgage or a family, and we have the ability to bounce back from a failure much quicker than Gen Xers or boomers. We can also drop our expenses down almost instantaneously. There have been more than a fair share of successful millenials–founders of multiple-million dollar businesses in fact–that were so dedicated to their cause that they slept on air mattresses in friends’ basements and ate Top Ramen for years just to get their businesses in gear.
As you start your business and try to grow it, what should you be aware of?
Nothing will ever go as planned. Ever. Business needs change. Consumer demand will change. The economy will fluctuate. A competitor will come out of the woodwork and knock the wind out of your business. In order to remain successful, you need to stay alert and aware. You can never allow yourself or your company to “get comfortable.” Think of everyday that you aren’t thinking about new ways to grow, new tactics to acquire new clients or new blockades to fortify your business from competitors as simply one day closer to bankruptcy.
Work on your business, not for your business. Being a “start-up” is a phase, not a long term strategy. There are too many entrepreneurs who try to do everything themselves–and never take the time to create an “auto-pilot” plan. I’ve fallen victim to this many times, and I can assure you, all this mentality does is slow growth and burn you out. You must always be thinking of ways to scale and automate as you grow.
Business plans are a total waste of time. Business planning is an absolutely necessity.Business plans are absolutely not. Stop writing about selling and go and sell! Learn what works, scrap what doesn’t and improve your batting average as you go. Field testing and execution is the best way to grow a business. Speak to prospective customers, find mentors who know your market and put yourself out there as often as you can. The best entrepreneurs are doers, not writers. I’d also suggest you check out my One Paragraph Start Up Plan in my new book, Never Get a “Real” Job, which explains how to create a fluid action plan in hours, not weeks.
What are your top three tips for starting out as an entrepreneur?
1. Be certain your idea is a money maker, not a money pit. It is vital that you determine how you plan to make money. Your idea must be able to generate real (not imaginary or hypothetical) revenue that can put money into your bank account and wallet. Saying “you’ll figure out how to generate income later” is irresponsible and foolish. Being in business does not give you the luxury to be a dreamer or idealist. You must be a down-to-earth pessimist that questions every aspect of your idea and finds ways to speed up profitability. Don’t throw a cent into ANY “business idea” until you are absolutely sure that it–and you–can survive and, eventually, thrive. Ask questions now so that you don’t sink and drown later.
2. Be unoriginal to be successful. Keep your offering simple and easy for customers to understand. Don’t feel like you have to disrupt an entire industry or reinvent the wheel to be successful. The vast majority of businesses in the world produce products and services that are cheaper, faster, or better than some other guy. Don’t kill yourself trying to change the world or creating the next Twitter. You won’t, nor will you make any income trying. Provide a simple service to a targeted niche and expand over time. Remember: unoriginal works, unoriginal can be profitable.
3. Be yourself. Own who you are. No matter what the circumstance or who you end up meeting or working with over the course of your career, always be yourself. Stick to your guns. Never change who you are or what you believe in for anyone else but yourself. At the end of the day, other than making money, you’re only other goals should be to be able to go to sleep at night and look in the mirror in the morning and be proud of who you are and what you do. Living out a successful entrepreneurial lifestyle is nothing if you don’t have happiness and piece of mind. If you’re a surfer, don’t try to be a suit-clad tight ass. Likewise, if you’re a suit-clad tight ass, don’t try to come off as a party animal. Trying to sell others something your not never leads anywhere productive.
When should you start hiring a team to grow your business?
You don’t need to hire a marketing team to increase your sales or find new clients. That’s YOUR job. Employees and vendors should only be brought in to improve upon your existing model and scale your proven game plan into a monstrous success. Here are a few tips to get you started on creating a low cost marketing plan that will get you in front of your target market:
Listen to your customers. Find out what they like, what they hate, and most importantly, how they hear about what they like and hate. You never want to tell a customer about something they like using a mechanism, channel or communication medium they hate.
Build a referral marketing plan. What can you offer a current client to take 10 minutes out of their day to become your salesman. Free services? Discounts? Exclusive offers? Figure out how to build a marketing and sales team without a payroll and you’ll never have to put one on it.
Strategic partnerships are vital. There are three important questions you must ask yourself when considering strategic partnerships:
- What complimentary businesses already market to your prospects?
- What non-competitive businesses already service your target market?
- Who can make more money by working with your business?
Work with complimentary companies to create more appealing offers that benefits both of your bottom lines. Create revenue share partnerships to get your product in the hands of new prospects without any upfront cost.
Should an entrepreneur become an expert in their field? How do you go about doing it?
I always say that when a customer decides to buy your product or service, they aren’t doing it simply because of your offering, quality or marketing. Rather, they are buying into YOU. Niche expertise is vital. In today’s hyper-cluttered market, everyone and their mother claims to be THE expert of the moment. You must find a way to break through the glut of experts. Be something to someone, not everything to everyone, or else you’ll be nothing to no one. Never just say you’re an expert. Prove it. Guest blog and comment on relevant media outlets or offer free webinars and advice to customers and prospects. Become a leader in relevant online and offline groups and communities. Get others–such as media outlets and customers–to validate your expertise by providing you with video and print testimonials.
How do you get a venture capitalist to invest in your idea?
No one will invest in your idea. Period. The last thing any sane investor wants to do is give money to an unproven manager for an unproven business. Get it through your head now or be prepared to fail fast and hard. Starting with nothing is not an automatic disadvantage. Often it will make you stronger, more resilient, and more adaptable to change than well-entrenched competitors. Figure out what you can produce with your own two hands, not with someone else’s imaginary wallet. Concentrate on selling, proving the concept actually works and can generate revenue. Simplify your business to it’s most simplistic, manageable form. Find ways to eliminate and grow into overhead and infrastructure.
I started Sizzle It!, my sizzle reel production company that produces promotional videos for PR and marketing professionals, for $500. The company has now grown into a business that produces tens of thousands of dollars per month and has clients such as Proctor and Gamble. No, this didn’t happen overnight, and no start-up will experience explosive growth overnight. But if you think about ways around every purchase, sell every second you can and grow slowly with revenues, you’ll never be reliant on investors. And if you do need investment to grow one day, you’ll be more likely to succeed and be able to raise funds on much better terms because you have a real business and a real track record.
What is your best networking advice for entrepreneurs?
I think of every person or customer I meet as three to five new contacts that I will one day be able to add to my address book. Everyone you meet, whether they know it or not, knows three to five other people that you’d benefit from meeting at some point during your career. I never push a new friend into introducing me to their entire address book overnight, however, over time, as I provide value to their lives and businesses, they often reciprocate that value in the form of introductions or referrals. Provide real assistance, value and insights. Never use people or try to be a “taker” to build your network, but don’t be afraid to ask for introductions when the time is right either. Put yourself out there, do favors–without asking for anything in return–for the right people, and prove your value. Over time, your network will experience exponential growth as a result.
Is it important knowing when to quit your business? How do you know when it’s time?
Nothing is more important in business than knowing if and when it’s time to call it quits. Contrary to popular belief, a smart captain does not go down with the ship. Don’t go on a fool’s errand for the sake of ego. Know when it’s time to walk away. If your idea doesn’t pan out, reflect on what went wrong and the mistakes that were made. Assess what you would have done differently. Determine how you will utilize these hard-learned lessons to better yourself and your future entrepreneurial endeavors. Failure is inevitable, but a true entrepreneur will prevail over adversity. Here are several examples of moments when you should seriously consider throwing in the towel:
- Cash flow clients have all but disappeared.
- Internal politics amongst partners is destroying the company, it’s products and/or its/your reputation.
- The company’s market has vanished because it was unable (or didn’t) keep up with trends or competitive offerings.
- You feel like you are throwing money at the problem simply to keep the doors open.
- When the overcoming the thought of a damaged ego becomes the main success driver.
Scott Gerber is a serial entrepreneur, angel investor, media personality, public speaker and the most-syndicated young entrepreneurship columnist in the world. He is the founder and CEO of Gerber Enterprises, an entrepreneurial incubator and venture management company that invests capital, management expertise, and marketing services into innovative early and mid-stage companies. Founded in 2004, the company has since launched a diverse portfolio of businesses, including Yearbook Innovation, an end-to-end provider of print and digital media school memory products and services; and Sizzle It!, the expert in sizzle reel production for a global clientele of public relations, marketing and advertising firms. Scott is also the Founder of the Young Entrepreneur Council, and the author of the book, Never Get a “Real” Job. Scott has been featured in news outlets such as FOX Business, WSJ, Entrepreneur, Inc., The Huffington Post, and the New York Post.