Young people face a different set of obstacles along the path of entrepreneurship, from access to finance and inexperience. Here are the main challenges that they face – and the ways to overcome them.
Access to finance.
Although this is generic to all entrepreneurs, access to finance greatly affects the youth. The requirements of attaining loans are very strict in most financial institutions, with a proven track record and experience considered essentials. Youth, even those with unique ideas and solid business plans, rarely have track records and experience, and are usually fresh from university. As a result, they are, in most instances, denied the funds.
The solution for young entrepreneurs is to apply for loans from institutions or funding organisations that fund young people. For example, the National Youth Development Agency in South Africa knows the kind of limitations young people possess; consequently, they give finance based on the viability of the idea and not only on experience.
Lack of a business plan.
A business plan serves as a guideline and is, in many ways, a businessperson’s best friend. A business plan will be the guide to obtaining your goals and allows an investor to assess if you can generate realistic profits.Many young entrepreneurs are not able to draft their own business plans due to lack of training and this has a negative effect on acquiring finances. The ideas may be sound, but if the paper does not reveal that, then few investors will buy into the idea. If the plan does not show a possible return on investment for the investor, the entrepreneur will not attain funds.
To solve this, young entrepreneurs can approach small business incubators, or NGOs that focus on small to medium enterprise development to attain assistance in drafting a business plan that attracts investors.The purpose is to attain guidance to ensure that the business plan is comprehensive and professional.
Although it is sometimes overlooked, education is crucial to any business, be it big or small. One may be born with an entrepreneurial spirit, but education provides a competitive and theoretical edge – ifapplied practically and effectively. Many young people may lack education due to unavailability of funds or inadequate resources in their areas. Business studies prepares the entrepreneur for many aspects of the business, such as finances, market trend interpretation and even knowing when to invest into another business. Lack of education is a challenge still faced by entrepreneurs and it poses as a negative effect on their entrepreneurial endeavours.
Young people may apply for loans for education or apply for scholarships that will assist in furthering their education to a professional level. The entrepreneur may also approach business training centres that will assist them in training education. If you still cannot attain education in the classroom, try as much as possible to attain experience in a certain field you wish to venture. In that way, you can be two steps ahead because of practical experience.
Lack of mentorship.
Young people sometimes struggle to attain mentors that guide them in the right direction due to lack of exposure to surrounding role models. There may be few role models to look up to, but depending on the place of residence, youth may fail to aspire to reach these heights if they are not surrounded by role models all the time.
A possible solution is that the entrepreneur researches and looks for entrepreneurs that have made a success of themselves in business. A great mentor is one who has experienced and overcome, and is willing to mentor. One must identify these and approach them for assistance. One can consider networking or searching on networks such as Facebook, LinkedIn or even starting a network with your own peers that includes your university professors.
Although challenges may vary from place to place, these are the most common among many young entrepreneurs. At the end of the day, it is up to one individual to ensure they overcome these challenges to become the best they can be in their entrepreneurial endeavours.