Business Strategy Consulting

Tips from a “Gen Y” Entrepreneur

Wow, what an inspirational day.

Gen Y has received a lot of criticism from those in my generation. “They expect it all, have a poor work ethic, if they can’t see immediate advancement opportunities they move on” – and the list goes on.

But then every once in a while you meet someone, see something or are told of something that changes that stereotype. With 4 kids aged from 29 – 13, it has happened to me a lot, but today was one of those special days. I had the pleasure of being at the Annual Lunch of the Penrith BEC (Business Enterprise Centre) – always a fun day and great to catch up with business colleagues and friends. When they announced the guest speaker was a ‘young entrepreneur’, I must admit there were a few raised eyebrows among the business ‘boomers’.

But what a surprise. Not yet 30, Jack Delosa has over 6 years experience running his own successful businesses (and one not so successful, but that’s another story). His latest venture, “The Entourage” looks at addressing the problem of ageing business ownership in Australia and the apparent lack of interest from ‘his generation’ in family succession. He sees both the threat and the opportunity and through The Entourage he aims to inspire and develop entrepreneurs to start, build and exit high growth ventures so that we can develop the social entrepreneurs of tomorrow, and effect real change for good.

Sound all too altruistic? Well think about this. The vast majority of Australian businesses are owned by Baby Boomers who will be looking to exit over the next 10 years. Opportunity for those want to acquire a business? Threat for those looking to exit?. Jack shared his thoughts on the risks facing business owners and what to do to minimise that risk. Like all good advice, it looks pretty obvious and simple. I’ll share it with you here.

So what were Jack’s Risk Factors facing business owners looking to get out?

  1. Key person risk – the businesses reliance on one individual.
  2. Management risk – the business has an inexperienced management team or board.
  3. Lack of systems – poor automation, no documented policies and procedures.
  4. Costly and/or time consuming revenue generation – lack of leverage and scalability.
  5. Documents & Reporting – key contracts missing, poor reporting.
  6. Financial risk – inconsistent cash flow, low profit margin.

All of the above risks will have a negative impact on your ability to dispose of a business for it’s full potential (average sale price of Australian businesses is 1.5 times earnings). But all of the above can be addressed with proper planning use of mentors, seeking outside advice and developing advisory boards.

On the ‘flip side’, Jack spoke of the Growth Factors that he looks to instil in a business and that will add value to your asset:

  1. Scalability – you business needs to be easily scalable. Think systems and processes.
  2. Good contracts – long term, high value clients = security of revenue.
  3. Management – the business runs under management, not an individual and doesn’t require specialist skills. Think McDonald’s – a ‘restaurant’ run by 16 year olds.
  4. Database – Make sure you have client details and a good relationship with them. A marketing friend of mine once said “he who has the biggest database wins”. Don’t think Microsoft invested into Facebook for it’s social network (valuing it at around $15bn when it was losing over $1m/mth) – Microsoft bought a database for advertising.
  5. Leveraged Approach – key relationships that deliver consistent business.
  6. Financials – the opposite of the Risk Factor.
  7. Brand – its a barrier to competition.

So all of this from a “Gen Y’er”. Not bad eh? It is said inside every old man there is a young one wondering what happened – I don’t think this will be true of Jack Delosa.