Sorry, Millennials -- You Are Not Entrepreneurs
Younger entrepreneurs should look to their older counterparts for guidance to be successful in the business world.
Most millennials that I meet consider themselves entrepreneurs, or at least innovators. The editor of MiLLENNiAL Magazine, Britt Hysen, claims that 60 percent of millennials consider themselves entrepreneurs and 90 percent recognize entrepreneurship as a mentality.
Related: 5 Ways Millennials Built My Empire
However, the truth shows that millennials are full of shit. The number of people under 30 who own a business has fallen by 65 percent since the 1980s and is now at a quarter-century low according to the Wall Street Journal.
In fact, the average age for a successful startup founder is about 40 years old, according to the Kauffman Foundation, a think tank focused on education and entrepreneurship. This group cites your forties as the peak age for business formation, with at least six to 10 years of relevant industry experience.
Older entrepreneurs have an uncanny ability to see the need, or improve upon, a product or service based on practical knowledge. They also have bigger, more savvy business networks to draw from.
There has only been one group with rising entrepreneurial activity in the last two decades, people between 55 and 65. So it's not millennials, but the boomer-preneurs that are growing our country's economy and monetizing innovation.
Even further, a successful, high-growth company is twice as likely to be started by someone over 55 years old than the age group of 20 to 34. And there are a few reasons why this group is flourishing.
Stay in the game, millennials.
The reason why entrepreneurs are generally older is that they are better suited to the risk involved with starting a business. Nine out of 10 startups fail, so those individuals that choose to create companies are generally better prepared and more experienced than a typical millennial. They aren't discouraged by past failures. They learn from them and apply those lessons to future opportunities. Business is far from a fair or easily solved equation.
One survey given to failed startups showed that 42 percent of them believe that the lack of market need for their product was the biggest determinant for its failure.
To be honest, this is something I do not agree with. I believe there are three key reasons why startup companies fail.
Three reasons why companies fail
The first reason for failure, regardless of whether you're in your thirties, forties, fifties or sixties, is because entrepreneurs forget the No. 1 rule of entrepreneurship, which is to stay in business. Every day, each of these entrepreneurs should be obsessed with how to take care of themselves in order to guarantee that they're in business the next day. Long-term goals are important, but irrelevant if your business is unsuccessful out of the gates.
Second, entrepreneurs don't understand the difference between innovation and entrepreneurship. Innovation is the action or process of using imagination and making it real, while entrepreneurship is the action of monetizing innovation. Great entrepreneurs don't have to have a creative thought other than, "How do I monetize my ideas?" Or, "How do I monetize somebody else's ideas?"
Finally, many entrepreneurs fail to diversify within their own business. If I had $20 million in a startup, I would have 10 separate business initiatives funded by $2 million each, knowing that if I could stay in business as a whole, one of these 10 businesses could evolve with a multiple of 50 times or more. So, at the minimum, my $20 million investment could have a return of over $100 million. And even if I were unsuccessful in nine businesses, everyone would consider me and my business highly successful, because I took my $20 million and turned it into $100 million.
Monetization over innovation
So, remember that there are three rules of entrepreneurship that we must have on top of situational knowledge in order to monetize innovation.
Failing to make this distinction is why millennials may consider themselves entrepreneurs, but they're only innovators, while the older generations truly have what it takes to monetize innovation.
The older generations live in accountability, above blame, shame and justification. They are the 10 percent -- the one out of 10 that succeed. Sufficient capital is just one of the necessary assets to stay in business every day. You must also know the difference between innovation and entrepreneurship, and finally, remember to diversify into different initiatives or business units so you can statistically be successful.
Entrepreneur Leadership Network Writer