Who is a First Generation Entrepreneur? (+ Tips & Challenges)
The good news is successful entrepreneurs are not born but made. You should develop certain traits and undergo various challenges. There are essential characteristics and skills shared by successful entrepreneurs that help them achieve their goals.
Taking the self-employment route towards entrepreneurship comes with obstacles and challenges, irrespective of the entrepreneur type you belong to. However, if you are a first-generation entrepreneur, you face more challenges.
This article will teach you who a first-generation entrepreneur is, how they differ from regular entrepreneurs, common challenges, and tips for overcoming them.
Who is a First Generation Entrepreneur?
First-generation entrepreneurs are categories of entrepreneurs that turn up as new entrepreneurs in their direct family line.
As a first-generation entrepreneur, you have an appetite for trying new things, which is evident in how you come up with ideas on how to own your own business without any history, expertise, or background in the business world in your immediate family.
First-generation entrepreneurs operate without adequate knowledge of entrepreneurship and setting up business ventures. They do all these without the support or guidance of their family members.
As only your drive to be a successful entrepreneur coupled with utilizing your innovative ideas and skills in your own business, you are left to invent and devise creative processes and plans to guarantee success in your startup business.
As first-generation entrepreneurs are fondly called, new entrepreneurs serve as wealth creators for a country.
They have quick decision-making abilities and leadership traits that enable them to be successful in whatever field or industry they find themselves in. They have no one but themselves to give credit for their success.
Examples of famous first-generation entrepreneurs include:
- Andrew Carnegie
- John Paul DeJoria
- Harland Sanders
- Jan Koum
- Joyce Hall
- Ritesh Agarwal
- Manu Kumar Jain
Key Challenges of First Generation Entrepreneurs
With no bridge connecting them to the business world, first-generation entrepreneurs have only hunger and passion for something more meaningful to drive them towards entrepreneurship.
Challenges would most likely be at the center of your decision to be your boss without background knowledge. Along the way, these challenges would serve as important lessons in the journey to be successful and innovative entrepreneurs.
Here are some key challenges you will likely face as a first-generation entrepreneur.
1. Financial and Legal Issues
Every successful business or startup, at one point in time, had to deal with legal and financial issues. They are fundamental issues that come up in the day-to-day running of companies.
First-generation entrepreneurs need to develop strategies for financing their startup ideas, as money is significant in your entrepreneurship journey.
Seeking a separate dedicated expert to deal with all issues about finance and legal matters is the right step to take in your entrepreneurship journey as opposed to seeking an expert to cover both areas.
2. Cash Flow Management
Cash flow management is one of the significant challenges you will face in your entrepreneurship journey. Expenses are often limitless and seem to keep occurring.
Managing your finances and cash flows is very important for the family and the business. First-generation entrepreneurs are often caught between meeting the needs of their families or investing the already limited money in their companies.
Dividing your earnings from your business into separate chunks for family and business is the best approach to take. Having a backup contingency saves the likelihood of unforeseen circumstances. With this strategy, you get to stay ahead of happenings around you.
You need to plan for the likelihood of late and delayed payments from customers. Without a contingency plan, you risk managing your finances very quickly, leaving you vulnerable to unexpected expenses.
With a contingency savings plan in place, you are better prepared for the future and positioning your business to operate effectively in the long run.
3. People Management
Managing people is an art you need to come to terms with as a first-generation entrepreneur quickly. It is outside the scope of what you were used to prioritizing.
Apart from leadership qualities, you must also cultivate people skills in your startup journey, especially in the initial stage. This skill would be handy during negotiations and interactions with new customers or clients.
Cultivating the right relationship with your employees and clients would go a long way in guaranteeing a successful business. They make up more than half of your business structure.
As an intelligent businessman, you need to recognize that people have immense importance to business ventures.
Managing people is a necessary skill that needs to be polished to get the best out of the people you work with within your business.
4. Lack of Support
The significant challenge for every new entrepreneur is the lack of support from both family and friends. They have no idea or prior experience on how to go about running a successful business.
Without the needed support and backing as an entrepreneur, you must seek and build new relationships that contribute positively to your business and life goals to get the best out of your journey.
5. Marketing Strategy
Most businesses fail due to the lack of an effective marketing strategy. With a proper marketing strategy, your business is given the needed push it needs to succeed in the market space.
Every good marketing strategy focuses on helping businesses unveil themselves to prospective customers and putting a good word out for them in people's ears.
6. Working Capital Management
Working capital is an essential part of a business. It plays a huge role in guaranteeing the company's sustenance in the long run.
As first-generation entrepreneurs have limited access to funds, most people are left with no option but to turn their focus to borrowing money for their working capital.
As a new entrepreneur, apart from adding to an item of capital expenditure, borrowing is detrimental to the business as it puts it under immense pressure. Borrowing to start your new business is a considerable risk you should avoid at all costs.
Best Tips for First Generation Entrepreneurs
As a first-generation entrepreneur, you are self-prepared to take on the challenges and mistakes of running your own business. The path is a very tasking one without support and backing from family members.
Left solely with your own ability to guide you in your entrepreneurial journey, you need to have some basic knowledge to serve as a guide in your bid to create and manage your successful venture.
Here are some of the best tips that first-generation entrepreneurs need to be aware of in their journey to establishing a successful business.
1. Take the First Step Always
As is customary with many people in business, their primary focus is usually on their exit strategy. They do not consider the beginning phase of their process as they often look for the fastest and easiest way to succeed.
But in choosing to be a first-generation entrepreneur, you must keep taking continuous action. After setting up your business venture, you need to keep going and take on challenges as they arise head-on without fear.
Wrong decisions are part of the learning process for your new life as a new entrepreneur. You need to keep looking ahead without dwelling on the mistakes made.
2. Manage Your Finances Well
As an entrepreneur, you need to be aware that money will always come short and will never be enough for all your expenses in your business and personal life. Proper management of your finances is of utmost importance.
Your focus as a first-generation entrepreneur should be on your monthly numbers. You need to structure and plan for these numbers so that it is sufficient to carry you through the following month's expenses.
In the case of surplus cash, you need to invest them in other profitable ventures that generate interest for you. Keeping idle cash in your bank account offers no value to you or your business as expenses will always come up one way.
Investments are a sure guarantee and backing for rainy days and periods where you will be in dire need of cash.
3. Avoid Debt at All Costs
Debt is a factor you need to stay away from at all costs, even to finance your capital expenditure. It is one of the limitations to a smooth running of a business for entrepreneurs.
Taking loans to run your business without backing or support should be relegated to the last resort, as your cash flow should be adequate to sustain your business over time.
Even after your business has grown to a particular stage and is ready and in dire need of expansion, you should avoid carrying out your expansion plans by incurring debts. Borrowing leaves your business vulnerable in the future.
4. Carry Out Your Business Expansion at a Slow and Steady Pace
Expanding too quickly is why many businesses have failed over the years. These businesses did not conduct the needed market research and gather expert opinions on how expanding into the market would affect their business.
The criteria for expansion should be an already built solid business. It is easier for a reliable company to navigate the challenges of expanding its current market reach.
Upgrading the status of your business from a small-scale business to a large-scale one is top of the mind of every entrepreneur. Still, the timing of this upgrade is equally as important as the process itself, as wrong timing defeats the purpose entirely.
Expanding should be at a steady pace. The longer you spend in the business, the more comfortable you will become.
5. Avoid Raising Funds from Venture Capitalists
Without the needed funding support and backing as a first-generation entrepreneur, you are constantly on the search for investors to fund your business.
Seeking funding for your business is not a bad idea entirely. Still, you risk losing control of your business to these investors as they come with their expectations of your business. You now invest a lot of your time and energy into keeping your investors happy and satisfied.
Ideally, seeking funding, especially from capitalist ventures, should come after you have built a solid business. It is easier for you to control and manage your investors after establishing a solid business model.