Young entrepreneurs make their mark - business enterprises started by people between age 25 and 35

With enthusiasm and little trepidation, 25- to 35-year-olds are starting companies--sometimes with great success.

Staci Munic Mintz and her brother, Kenny Munic, were thinking of opening a restaurant three years ago. She was 26, with a degree in hotel and restaurant management from Michigan State University; he was 23 and had graduated from a culinary school in Paris after getting a degree in management from the University of Texas.

They were dining with them father one night when he asked a question that changed their lives.

"Stac, instead of opening a restaurant, why don't you start baking muffins and deliver them to coffeehouses and espresso bars?" asked Herman Munic, a successful Chicago restaurateur.

"Dad, that's a great idea," Staci replied, "but only if I can do low-fat baking."

In 1994, the brother and sister launched Little Miss Muffin, which specializes in low-fat, low-cholesterol muffins and other baked goods. The company was started with $2,000 in initial capital, for baking pans and supplies. In 1995, Little Miss Muffin had $1.5 million in revenues, and it now sells to more than 400 clients in the Chicago area. The owners are exploring the possibility of going national.

Jennifer Barclay, who previously had sold a few of her handmade T-shirts at local art festivals, was attending a wholesale fashion show in New York City in 1986 when she unexpectedly booked $110,000 in women's clothing orders. Despite the suddenness of the opportunity, Barclay, then 18, wasn't flustered by having to raise the capital for materials, hire workers to manufacture the clothes, and fill the orders.

"I felt no fear," says Barclay, whose company, Blue Fish Clothing Inc., in Frenchtown, N.J., produces handmade apparel from natural fibers. "If you over-analyze everything, you see how difficult it could be. It holds people back from [acting on] the wonderful ideas within them." Blue Fish had $9.6 million in revenues in 1995--up from $7.7 million in 1994--and employs 200 people.

These twenty-something entrepreneurs are no aberration. A recent study of 1,200 business owners nationwide found that the highest percentage of start-ups was in the 25-to-35 age group. The study was conducted by Paul Reynolds, the Paul T. Babson professor of entrepreneurial studies at Babson College, in Wellesley, Mass. Reynolds says that the number of start-ups was "very low for people younger than 25, and [after age 35] drops off until the mid-40s, and after 55 plummets to zero."

Entrepreneurs in the 25-to-35 group are prevalent because "they are old enough to have some experience and resources and young enough to have [the required] energy," says Reynolds.

The study also found that these entrepreneurs generally were high-school graduates but didn't necessarily have college degrees. Most were from middle-income families and had lived for five to 10 years in the area where they started their business. "It takes a while to know where to get customers and suppliers," notes Reynolds.

The Entrepreneurial Option

Experts say that corporate downsizing has also contributed to an increase in the number of people in the 25-to-35 age group who turn to entrepreneurship.

Bruce Phillips, director of the Office of Economic Research at the U.S. Small Business Administration, says that the options for many workers in this age range are limited to working for a small firm or starting their own.

"Large firms in America, with a few exceptions, aren't doing much hiring," says Phillips. "The incentive for Generation Xers [17- to 30-year-olds] to start a small firm is greater than it has ever been."

David Birch, president of Cognetics Inc., an economic-research firm in Cambridge, Mass., attributes the rise in the number of young entrepreneurs to a change in the business culture.

When he was in college in the 1960s, more than 500 companies regularly recruited on campuses around the country, Birch says. Soon-to-be graduates, knowing they might receive several offers and feeling that they were guaranteed jobs, were choosy about which company to join, he says. But "that all dried up [with corporate downsizing] in the 1990s," says Birch.

That helped create a generation of young entrepreneurs who are like "5-year-olds on sld slopes tearing down the hill because they don't know what to fear. These entrepreneurs have no idea what failure is," says Birch. Meanwhile, he says, "the 45-year-old is scared to death, knows what mistakes can be made, and is terrified."

Using Their Knowledge

Although starting a manufacturing business can require millions of dollars worth of equipment, it's possible to launch some other types of businesses for less than $10,000, says the SBA, s Phillips. He notes that many of the start-ups of young entrepreneurs are "knowledge-based businesses" involving services such as editing, telemarketing, public relations, or selling mortgages by phone--enterprises requiting a computer and fax machine but minimal capitalization.

Mark Rice, director of the Center for Technological Entrepreneurship at Rensselaer Polytechnic Institute, in Troy, N.Y., says that he has seen an increase in the number of entrepreneurs under 30 who launch information, technology, and communication companies, ranging from soft, ware developers to firms that create sites on the Internet's World Wide Web. "This generation grew up with information technology," notes Rice.

Annette Quintana, for example, was a 28-year-old working at a small technicalservices company in 1990 when, after a run-in with her employer, she decided she was ready to embark on a new career. Her 29-year-old sister, Victoria, was a sales manager at a major telecommunications company who had seen many of her colleagues laid off, and she didn't want to stay around to get a pink slip herself.

Drawing on Annette's savings of $20,000 and helped by their father, who co-signed for a $35,000 line of credit, the Quintana sisters founded Excel Professional Services, a computer consulting business in Greenwood Village, Colo. In 1990, the company grossed $250,000. By 1995, gross sales had risen to $15 million.

"People overrate the amount of education and/or background that's important for starting a business," says Annette Quintana, who oversees Excel's financial, strategic, and technical side while her sister manages operations and personnel.

"I don't think you ever get the kind of experience required to be an entrepreneur except by doing it...It's more a matter of desire and mentai fortitude," says Quintana, now a seasoned entrepreneur at 34.

No Fear Of Failure

Mintz, of Little Miss Muffin, underscores Birch's view that many young entrepreneurs lack fear. "There was never a fear factor involved," she says of starting the company with her brother. "What's the worst thing that could happen? If we failed, we would go out and get a job."

When Jennifer Barclay came up with her $110,000 worth of orders 10 years ago, she realized that she couldn't make 6,000 pieces of clothing in her father's garage, where she had printed the T-shirts that she sold at art fairs.

So she forged ahead, never letting failure cross her mind. With purchase orders in hand, she managed to find financing and--with the help of friends who were craftspeople--fabric suppliers, pattern makers, and hand-dye artisans.

She enlisted the help of her father, a builder and renovator, who bought an old grist mill in Frenchtown, which he leased to her at a rent she could afford. He also loaned her $4,000 for materials.

Bankers and other business people tried to discourage Barclay--first from launching her company and later from expanding it. Bankers balked at lending her money because she didn't have a track record. "It's always a bunch of men in suits saying, 'You can't do this,' "says Barclay, who adds that her drive was fueled by the negativity.

Young entrepreneurs often choose to make or sell a product that they are passionately committed to and that reveals their core values. Mintz, for instance, says that starting a firm to sell low-fat, low-cholesterol muffins symbolized "everything that I believe in. It's about eating food that makes you feel happy and satisfied but doesn't make you fat. It's about embracing life." Barclay says that Blue Fish is not only about clothing but about "creating a community of people who can make a quality product, enjoy what they do, and achieve personal success."

Young entrepreneurs also may have an advantage in staying in touch with consumer trends. Little Miss Muffin's products, for instance, appeal to the increasing number of consumers who want baked goods that are tasty but not cholesterol-laden or fatty. And Blue Fish Clothing's handmade designs attract customers who reject the mass-produced look and are willing to pay more for something different.

Less Talk, More Action

MBA programs stress the necessity of writing a business plan and conducting market research before starting a business, but many youthful entrepreneurs shorten or even eliminate the planning stage and plunge ahead.

Reynolds says his study showed that entrepreneurs aged 25 to 35 typically "make quick decisions. Within six to nine months [of getting an idea for a company], they have figured out whether the business will work," and if they believe it will, they launch it.

Most young entrepreneurs were influenced by studying a business book, reading small-business magazines, or getting advice from a mentor, Reynolds' study found.

What typically sustains their enterprises, more than a business plan, is the founder's vision. Barclay, for instance, believed so strongly in her one-of-a-kind clothing designs that she never created a business plan. And when Annette Quintana cofounded Excel Professional Services, her impetus was to provide "computer consult. ing services at reasonable rates and to deliver them in a way that built upon relationship and a commitment to quality service." That idea still drives the company six years latch

Though young entrepreneurs often are regarded with skepticism because of their lack of experience, their youth can be an advantage, experts say. They may be more ready to invest sweat equity in a business than would someone in midcareer who has been downsized out of a corporation, says the SBA's Phillips.

Sweat equity yielded dividends for Mintz and Little Miss Muffin. "It was getting in there and doing the work, mixing the batter, scooping the muffins, baking, cleaning up" that ultimately paid off, says Mintz. As product demand increased, the company adapted. "If we get busy, we hire another person," Mintz says. She is still the company's only sales representative--for all 400 accounts--but she may hire another rep.

Helping Hands For Risky Beginnings

Although the success of these companies was built largely on the efforts of the young entrepreneurs themselves, parental support can make the difference between staying in business and failing. Mintz's father provided kitchen space in one of his restaurants for Mintz and her brother to bake muffins, cutting their overhead costs in the first few difficult months.

The Quintanas' father, an entrepreneur himself and a cattle rancher, provided inspiration and guidance in addition to co-signing for the line of credit.

But even with parental help, many startups fail, whether the founder is 20 or 40. SBA studies show that 24 percent of start.ups dissolve within two years and that 52 percent vanish within four years. Phillips notes, however, that "your chances of surviving [long-term] go up by 20 to 30 percent if you expand within the first couple of years."

After its beginning in 1986, Blue Fish Clothing increased its revenue at a rate of 35 percent a year by first selling its wares at trade shows, then opening three retail stores in 1987, '89, and '94. It began selling its clothes through Nordstrom and Neiman Marcus department stores in 1987 and now sells to more than 600 retail stores and boutiques.

The company completed a direct public offering of stock in May, selling 770,000 shares at $5 each. It plans to use the $3.85 million to improve its computer systems and open more retail stores.

The trait that is perhaps most evident among young entrepreneurs is a dedication to personal success. "We were brought up to believe that it's better to make 50 cents for yourself than a buck for someone else," says Mintz.

Many young people share that view. And despite the numbers of failures among start.ups in general and the inexperience of young entrepreneurs, many of them are making money for themselves and, in some cases, for their shareholders.

COPYRIGHT 1996 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group