Putting the Pieces Together – Teens, Entrepreneurship, Small Businesses, and Unemployment

Everyone is up in arms about the unemployment rate in the US being around 10%.

One of the best ways to create jobs is to encourage small business growth.  According to the Small Business Association (SBA), small businesses:

  • Represent 99.7 percent of all employer firms.
  • Employ just over half of all private sector employees.
  • Pay 44 percent of total U.S. private payroll.
  • Have generated 64 percent of net new jobs over the past 15 years.
  • Create more than half of the nonfarm private gross domestic product (GDP).
  • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
  • Are 52 percent home-based and 2 percent franchises.
  • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

And of course to get more small business growth you need more people starting small businesses.

So why don’t more people start businesses? Here’s a theory – our school system totally and utterly fails us. It’s not that people aren’t capable. It’s not that they aren’t interested. It’s that they never learn how.

Consider a Junior Achievement poll of 1,000 teens age 12-17:

  • 92 percent of those surveyed believe that entrepreneurial skills should be taught in college or earlier.
  • 51 percent of teens would like to start their own businesses someday
  • 88 percent felt it would be “difficult but possible” or “somewhat challenging” to do so

Wtf people. We’re totally failing our kids. They want to learn when they’re young.  They know that they should learn when they’re young.  They know how challenging it will be.  But no one is teaching them. No one is guiding them.  They need to be taught so that they can practice.    They need a mentor to guide them.  They need to be around other students with the same interests.

All of the great resources on the web are great supplemental pieces to the puzzle, but for there to be true change I think that the seed needs to be planted in an educational environment.   That’s how you reach everyone who is interested in starting a business at an age where they have enough time to develop the skills necessary to take a legit stab at making entrepreneurship their career choice.

We’ve built great support systems for future superstar athletes, but we’ve failed at building any system for the future superstar entrepreneurs.

I love this quote from an article about Jason Fried of 37signals:

Fried talks about how “making money is like playing the piano: The earlier you start, the more practice you’re going to have, the better off you’re going to be.” On the day he turned 13, Fried’s father, a Chicago Mercantile Exchange trader, took him to get a work permit. He worked typical jobs—grocery store, gas station, shoe store—but he always had a side business of his own. At 15, Fried got a resale license and began buying stereo equipment at wholesale cost, marking it up and selling it to friends. “I suck at playing the piano,” Fried says, “but I’m good at making money because I’ve had more practice.”

It makes total sense. It sounds obvious, but many times when you start a business you’re focused on everything but making money. You’re worried about funding, the technology, the people, the office space. Other skills are nurtured from a young age. Why should we expect running a profitable business would be any different?

Teaching entrepreneurship will encourage more entrepreneurship. Entrepreneurship will create more successful small businesses, which will provide more jobs (and also do many more great things).

I give credit to Junior Achievement. They have a high school entrepreneurship program that schools can participate in. I give credit to teachers like Professor Wales who has his students start a business as a part of his college entrepreneurship class.

But it’s not enough. I hope that people of influence are taking note. This is important stuff. It could drastically increase the quality of life that we as a people experience in the future. We teach lots of stuff in school. Much of which is trivial and unimportant to the lives of the majority of students learning it. Make just a little bit of time to teach this.

Side note: My partners and I are all passionate about helping to reform and improve education. In 2010 we’re going to start a scholarship fund at our former high school. We haven’t hashed out all of the details yet, but you can bet that it will encourage technology and entrepreneurship at the high school level. Hopefully it’s the start of us playing our little part.

10 comments on Putting the Pieces Together – Teens, Entrepreneurship, Small Businesses, and Unemployment

  1. Dale Ting says:

    Great move on creating the scholarship. Our education system is in the stone ages. It’s still teaching us as if we’re all becoming PhD researchers (when’s the last time you took a derivative?). The fact that we don’t use most of the stuff we learn in school shows how screwed up it is. And I don’t buy “you learn how to learn.” Why not learn how to learn learning about stuff that matters?

    Also, having entrepreneurial skills… i.e. the ability to make money on your own… is a very valuable skill to have even if you’re a corporate person. Wouldn’t it be nice to know how to create a cash flow when you’re laid off? Or when a big company won’t hire you?

    • Adam McFarland says:

      The last time I took a derivative? I’d say it was the day I finished differential equations in 2003….good point Dale 🙂

  2. Nethy says:

    Adam,

    That is an excellent quote from Fried. I usually don’t like his stuff much but that resonates.

    On the other hand, I’m suspicious & cynical of big institutional attempts to teach kids entrepreneurship at college or high school. There is a bit of school entrepreneurship stuff going on but it tends to be pretty bland.

    I think it’s more likely to be useful from an uncle or something. paying for them to go to Uni? How about buying them an on campus sandwhich shop. If they don’t run it in to the ground you can have your money back at the end. If they run it well maybe they’ll pay their own rent for 4 years.

    Maybe in the States that wouldn’t sound so crazy. Here it sounds pretty extreme. People (in the States, anyway) will sink a lifetime of savings into a “good education.” If running her own business isn’t education for an 18 year old, what the hell is?

    • Adam McFarland says:

      Good points Nethy. The tough part is that not everyone has an uncle or parent or friend willing to teach them. Even if it’s watered down and at least bland, teaching it in school would at least expose kids to the possibility of starting their own business at an early age.

      • Nethy says:

        Rereading the comment I did sound negative. I didn’t mean to be. Just pointing out that it’s tricky.

        Words like “teach,” “instruct” and “school” are hard to mix with words like “entrepreneur,” “outside the box” and “initiative.” For example, say you want to teach a lesson in risk/reward. You need students to experience a situation where they are likely to fail painfully, but it is till worth it because of the upside. For the lesson to mimic reality & allow the kids to “experience” risk and reward “trying your best” should not be enough.

        A school or teacher able to teach that lesson well, within the confines of the school paradigm would be very impressive.

        • Adam McFarland says:

          I agree Nethy. I didn’t take your comment as negative.

          Here’s how Prof. Wales does it in his classes: he grades heavily on attendance, participation, and effort, while still “teaching them the tough lessons”.

          For example, they might have a debate where both teams earn some credit if they do a decent job, but the “winner” in his eyes gets more points toward their final grade. There is an effort component to the grade as well as a results component.

          Once they enter into the phase of class where they need to start the business that profits $200, effort still factors into the grade (say – making sure you maintain a blog with your progress, turning in financial statements, doing a solid final presentation of what they learned, etc), but the grade can’t be an A+ without achieving the goal of $200 in profit.

          It’s not perfect, but it’s a start. Maybe I’ll ask him to do a guest post and outline better how and why he does what he does.

  3. TIm says:

    The system is designed to perpetuate mediocrity, this has been a gripe of mine for as long as I’ve had the ability to develop such a thought. If you go through the paces and excel at schooling you are educated to do nothing but teach, if you follow the path of least resistance you are lead to local/state/federal jobs. As entrepreneurs we have a wire crossed that most don’t have, everyone likes the myth of that rich guy(or girl) who has complete freedom and does it with their own business, as we all know those people are extremely rare, if they exist at all. Compound that by the sheer amount of work it takes to make it to that level and what people really want is perceived power and accomplishment, they don’t want to do what it takes to make that a reality.

    I think you have to have a strong desire to be a successful entrepreneur, while you can teach people the concepts and look at the case studies of what others have done and it may ignite a spark I don’t think education, in the conventional sense, is going to yield great results. As with most all schooling, you study for a test, you pass a test and you are there in qualified to do whatever you were studying. As an entrepreneur you are faced with new challenges almost daily, I’ve functioned as an entrepreneur for over 15 years now and it’s rare that a day goes by that I don’t come across something new. In a world that has been defined by yes and no, black and white, running a business is a lot of maybe and grey – that is hard, if not impossible, to teach in the classroom environment.

    The question I have is: Why are so many enamored with the prospect of becoming an entrepreneur? As entrepreneurs we all openly discuss that it’s not what people think it is, often it is more hours, more problems, more work for less pay an benefits; at least it is this way for a period of every entrepreneurs life. I have to admit it doesn’t sound very attractive if you are in the outside looking in, yet why would so many just like us not trade it for anything? I think it boils down to something we touched on before, happiness. Those entrepreneurs who truly love what they do don’t care about how much vacation time they get, they don’t care about how much they make an hour, they are so engrossed with what they are doing they couldn’t imagine doing anything else or at the very least have a vision of where they are going that they believe in so much that they are willing to make enormous sacrifices for that vision to become a reality. I think what the outsiders really seek is the sense of contentment and genuine happiness that is one of the recurring themes I’ve noticed with entrepreneurs that I’ve met. You can feel, almost in a palpable sense, the energy that these people emit and all real entrepreneurs have it – that I do not believe can be taught in a classroom.

    • Adam McFarland says:

      Well said as always Tim. I don’t think teaching it in the traditional sense will work. But exposing kids to the great business leaders and having them start a mini-business has got to be better than putting them through an American History class where they learn about the Revolutionary War for the 10th straight year. The sense I get (both from my personal experience and from the classes I’ve visited) is that most kids don’t even know it’s an option until someone says “hey, here are some people who did it and here’s what they accomplished, you can to if you want”. If I had that in high school it would have made a difference for me. Then again I found my way to entrepreneurship anyway so I might not be the best example 🙂

  4. Excellent post… Entrepreneurship would be an excellent subject to teach in school. My design and technology teacher dd something like that off the record… several of us in that class are now successful entrepreneurs… coincidence?

    • Adam McFarland says:

      Thanks for the comment David. I’m sure it’s not a coincidence. I had several teachers talk about it “off the record” as well throughout high school and college and it made a big difference for me.

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