An Article recently published by the International Business Times explored the potential for problems associated with aggregate student loan debt.  Since the total student loan debt outstanding exceeds $1 Trillion dollars, the scope of the problem seems immense.  When complicated by the 30% of student loans that are 30 or more days overdue, there appears to be a crisis brewing.

The concern expressed by many is that the burden of student loan debt will suppress people’s future disposable income.  To many, this presents a dire scenario where future consumption spending cannot keep growing due to the crushing burden of student loans.  It is complicated by the high rate of unemployment among recent college graduates, and has led many to believe that government action is required to “fix” the problem.

The Solution that Isn’t a Solution

When college students gather in protest rallies, they frequently hold up signs demanding that their student loan debt be forgiven.  Since the overwhelming majority of student loans are underwritten by the US government, all that this would accomplish (besides delivering a free ride to people who acted irresponsibly) is to turn $1 Trillion of private debt into $1 Trillion of public debt.  This sounds great for people that are either looking for a handout or looking to buy votes by giving away a handout with government money, but it does nothing to solve the underlying problem.

By accelerating the government debt problem, it accelerates the extent to which drastic action must be taken.  Many (mistakenly) think that the pile of student loan debt can be dissipated with additional taxes on the wealthy.  Unfortunately, this strategy has two main deficiencies.  The first is that there aren’t enough wealthy people to pay the taxes.  The second is that most wealthy people hire lawyers and accountants to reduce their tax burden with (legal) income sheltering strategies.  The ultimate result is that the government is unable to tax away its debt and will need to inflate the currency.  Since inflation disproportionately impacts the poor and middle class, it will ultimately end up coming back to bite the people who were holding the signs demanding that the government wipe away their student loans.

The Real Problem

A paper recently published by Georgetown University breaks down the average earnings and unemployment rates for college graduates based on the level of education and course of study.  It comes as no surprise that subjects such as education, business, and engineering all have relatively low rates of unemployment associated with them and respectable earnings.  However, studies in subjects such as social sciences and the liberal arts have very high rates of unemployment and relatively low earnings.

Thus, the real problem is not that people carry so much student loan debt, but that people have chosen to take out large amounts of debt to finance an education that does not have a significant market value.  Another way of stating the situation is that people who study subjects like engineering and business do not have a student loan problem.  The reason is because their education prepares them for a career that allows them to generate an income so that their debts can be paid off.

The Real Solution

Understanding the real problem is the first step toward a real solution.  The only way for this lingering problem to be solved is for the people who are under all of this debt to become gainfully employed so that they can pay their debt back.  However, attaining gainful employment requires that better decisions be made in regard to the course of study that one pursues in their path of higher education.  This is the only method of dealing with this problem that will not result in a simple transfer of the burden to somebody else.

The truth is that all choices involve cost.  The decision to attend college is frequently very wise.  However, it is highly important to choose a course of study that is consistent with your long-term career interests.  Studying the arts is fine if you are content with living the life of an artist.  However, if you desire to climb the income ladder, then you must acquire skills that will allow you to generate value for an employer that are sufficient to justify a favorable level of compensation.

Student loan debt is not fundamentally different from any other kind of debt.  It is not good or bad in and of itself … student loans taken out to acquire skills that allow you to earn a good income to support your family are a very wise decisions.  Loans taken out to finance four years of partying a degree that offers no employment prospects are much more suspicious.  All debt is fundamentally neutral in nature.  It only becomes good or bad when paired with an investment that is good or bad.

Thus, the answer is for more people to make better decisions regarding what they study.  In the larger context, the investments of time, money, and education we make are what will define whether any resources we borrow to make those investments were wisely deployed.  Instead of demanding that other people bail us out after making bad decisions, we should take the opportunity to make better decisions in the future.  Each day is a new chance for us to learn.  We should seize those learning opportunities to make each successive day more prosperous than the last.

 

A pair of changes for 2011 could mean big headaches for taxpayers who report business or partnership income on their individual tax returns.

Both changes involve so-called 1099 forms, which are reports submitted to the Internal Revenue Service so it can cross-check information from different taxpayers.

The first change is momentous: It requires third parties—credit- or debit-card firms, PayPal and the like—to tell the IRS about their payments to businesses. For 2011 and after, these firms must issue 1099-K forms to the IRS and the taxpayer giving the amount of such payments.

Why does that matter? This information can help the IRS flush out unreported income by small businesses. Cheating and mistakes cost Uncle Sam $122 billion a year, the IRS estimates, making it the largest single element of the $385 billion in annual unpaid taxes, known as the tax gap.

The new third-party payment information cuts two ways. It can help the IRS identify firms, such as online merchants, who aren’t reporting income at all. But it also can shine a light on businesses that are underreporting their income, such as a restaurant that does a big cash business but declares income only equal to its credit- and debit-card payments.

There is some good news on the 1099-K front: After an outcry by the National Federation of Independent Businesses, or NFIB, and other groups, the IRS recently decided to drop plans to have businesses break out 1099-K receipts on their tax forms. Doing so would have imposed a huge burden, says Chris Walters, an official with NFIB, because it involved an onerous reconciliation process.

“Grocery stores would have had to show that $15 of a shopper’s $40 debit charge was for food and the rest was a cash withdrawal, or else the IRS might think they’re underreporting income,” he explains.

But business owners shouldn’t be lulled into a false sense of security. While they won’t have to report the information on their returns, third parties must still provide 1099-Ks, and the IRS can still use those data in audits.

“Firms that might be ‘outed’ by this form should remember it’s very much alive,” says Don Williamson, a tax preparer who heads the Kogod Tax Center at American University.

***

The other potential trap: two new lines on several forms, including Schedule C (for sole proprietorships), Schedule E (landlords), 1120S (Subchapter S corporations) and 1065 (partnerships).

They say: “Did you make any payments in 2011 that would require you to file Form(s) 1099?” and “If ‘Yes,’ did you or will you file all the required Forms 1099?”

These simple-seeming questions could cause large penalties for some taxpayers.

Here is why: Firms usually are required to issue 1099 forms to providers of more than $600 worth of services during the year, unless the vendors are incorporated. That could include, for example, an accountant, a plumber, a website designer or a consultant.

In 2010 Congress stiffened the penalties on taxpayers who neglect to provide 1099 forms. The higher penalties took effect in 2011, and now the penalty for nonfiling is $100 per violation—$200, in most cases, because two forms are due, one to the IRS and one to the provider. The penalty for “intentional failure to file” is $250.

Mr. Williamson recalls one case in which penalties for multiple vendors and multiple years amounted to $35,000, even though nothing else on the return was disallowed.

By asking the two questions prominently on the return, the IRS isn’t only reminding taxpayers of their obligations but also setting a snare for scofflaws. If a taxpayer answers “no” and an audit shows he should have sent the forms, the answers could be evidence in favor of higher penalties. So “he’s hoist on his own petard,” Mr. Williamson says.

In extreme cases, he adds, it would be easier for the IRS to allege civil fraud, because the taxpayer’s answer is evidence that he or she was willfully noncompliant.

Write to Laura Saunders at laura.saunders@wsj.com

A version of this article appeared Mar. 17, 2012, on page B9 in some U.S. editions of The Wall Street Journal, with the headline: Traps for Small Businesses.

Article source: Wall Street Journal

 

Before Facebook filed papers for an initial public offering, it was already trading in secondary markets — where insiders at hot tech start-ups can sell their shares to investors hungry to get in — such as SharesPost and SecondMarket. In fact, prior to its filing, that secondary market was valuing the social network at around $75 billion.

Most of the startups out there will never see that kind of valuation on these secondary markets. And only a slightly higher percentage of the total will even trade there. But like anything that seems too good to be true — that is, getting your hands on shares of Facebook before it goes public — these secondary markets have their flaws. After all, anyone buying shares through them won’t see the kind of detailed financial reporting that the Securities and Exchange Commission demands of public companies.

What’s more, the ability for the SEC to police companies that aren’t public is also limited. That failing came to light recently, as the SEC disclosed that some of the brokers that buy and sell shares on these secondary markets allegedly hid extra commissions they charged investors who wanted a piece of Facebook Inc., Twitter Inc. and other social-media companies.

In this case, the SEC charged Frank Mazzola of Felix Investments and Facie Libre Management Associates of earning secret commissions on the sale of Facebook shares and stakes in the funds, in addition to the 5 percent commissions disclosed to investors, according to a report in The Wall Street Journal.

Mazzola and two other Felix employees must pay a total of $330,000 for allegedly breaching the rules on how investments can be sold in their promotion of the Facebook funds. Finra alleges that Felix pitched its secondary-market funds to at least 1,000 people through a mass email.

As far as startups go, the SEC crackdown on these abuses doesn’t mean much. That’s because there are probably fewer than five startups that already have enough buzz to create a feeding frenzy for investors before their IPO.

For most startups, these secondary markets have no value as a source of capital.

A better solution would be to rebuild public confidence in the IPO market by enforcing standards for companies that list on the exchange. When money losing companies go public at exorbitant valuations and then crash six months later, the experience sours investors.

But if the SEC required companies to be profitable before going public and to sell shares at a reasonable valuation, then the prices might rise in the after-market and create opportunities for individuals to profit from investing in them.

And this could create a virtuous cycle that would revive the market for venture financing of startups that has been broken since 2000.

How do you think the SEC’s crackdown on secondary markets will affect startups? Let us know in the comments section.

Article source: Entrepreneur.com

 

In 2005, when 15-year-old Peter Crabtree of Poulsbo, Wash., turned his high school culinary-arts training into an upscale chocolate-making business, CBC Chocolates, he saw some early success but not much.

So he started considering what else he could do to make his business more appealing. He wondered what other products he could source as a young, bootstrapping small-business owner. What he found and the new business idea he put together would make him a local celebrity.

Raised on a farm, Crabtree had easy access to natural beef. Living in the Northwest, he was also near other great local food growers and boutique wineries. After some research into what was available, he decided to pivot his business and add some more items besides chocolate.

A year ago, the business morphed into ChocMo, an upscale chocolate bistro featuring beer, wine, paninis, cheese, that naturally raised beef from his family’s farm and a line of decadent chocolate desserts.

Soon, ChocMo had become the new, hip hangout in town. Where else could you get gourmet chocolates and a great local glass of wine in the same sitting? Nowhere. And we all know how well wine and chocolate go together.

Now, Crabtree recently told his local business journal, “I feel we’ve just hit critical mass.”

Often, the first idea you get for a business is really just the germ of an idea. It needs more work. It needs to be developed and different angles need to be tried before you hit on the one customers love.

The difference between being a successful entrepreneur and just another flameout is often the willingness to keep evolving your idea. Respond to customer feedback frequently — even after you hit the sweet spot where your passion and the marketplace meet.

Have you tweaked or even switched your business idea? Leave a comment and share how you changed it.

Article source: Entrepreneur.com

 

Cash is king, especially during difficult economic times. More and more business owners are thinking out of the box when it comes to trying to keep morale up in the workplace.

Promotions are an obvious way to try to boost morale, especially among key employees who generally are happy to have increased duties and status.

But how can you afford to do so when there is no extra money to provide raises? What if your revenues are way down, yet you cannot afford to lose your key people to the competition?

One of the ways some business owners are tackling this dilemma is to promote key employees, but not give them raises connected to their promotions.

There is certainly nothing illegal or inappropriate about this practice. It seems to be growing during these uncertain economic times.

Only 48% of small-business owners said they increased employee compensation during the previous 12 months, in a recent online poll of 450 members of the National Small Business Association. That’s the highest it’s been since August 2008, when the figure was 51%.

If this is the first time you have implemented this practice of so-called “title-only” promotions, there are a few issues to consider.

First, it makes sense review the demographics of the prior employees in recent years who were promoted with raises, then compare them to the employees you’re considering promoting without a raise.

Suppose, for instance, that two years ago a white male employee was elevated from being an hourly worker to a salaried manager and received a raise. Now, this year an African-American female employee is going to be similarly promoted with no raise. You better be prepared to explain the business rationale for this decision.

If the business environment has gotten worse, that perhaps can explain the different treatment. But if your business is simply stagnant with no growth, a creative plaintiff’s lawyer might make a case for discrimination. That case could be made based on the fact that since nothing has changed, the African-American female employee should be treated the same as white male employees was a few years back.

Of course, there may be legitimate non-discriminatory business reasons for the different treatment. But the point is that you should be prepared to articulate those reasons to avoid being unnecessarily exposed to these arguments.

What’s more, it is important for you to communicate why no raises are forthcoming even though your employees are promoted—whether that’s because your industry overall is down, or whether because there are specific issues in your company that have caused a slowdown, such as losing a key contract or customer, or because a big client hasn’t paid its bills.

This will not only make the employees feel as if they are truly a part of your team but, importantly, if and when the employees are asked about the salary freeze they will be in a position to tell anyone asking—including a plaintiff’s lawyer– the legitimate reasons why.

That’s certainly better than the employee being in the dark and perhaps suspicious of the reasons, and then voicing those suspicions to inquiring minds.

You should also put a time frame on the freeze, creating a clear timeline for when you will reevaluate your position. Whether in three months, six months or even a year. Your employee should know where he or she stands relative to potentially being rewarded for increased responsibilities.

The last thing you want is to have an employee who was promoted to start feeling as if though they have been taken advantage of, because morale then goes down

Finally, remember that you also need to be wary of overtime considerations under the Fair Labor Standards Act when promoting employees and not providing raises.

Often times, when a business owner promotes an hourly employee into a “management” position and converts the employee’s pay structure hourly to salary, he or she presumes that the employee is not entitled to overtime compensation. This is not necessarily so.

Write to smalltalk@wsj.com

Article source: Wall Street Journal

 

Smartphones are giving new meaning to the term comparison shopping.

Whether they’re seeking lower prices or better terms on an item they see on a store shelf, consumers are quickly learning that their smartphone can be used for more industrious tasks than playing Words With Friends or snapping and posting photos on Facebook.

Last year, more than half of U.S. smartphone users performed retail research while inside a brick-and-mortar store, with nearly one in eight using their phone to compare prices in real time, according to comScore’s “2012 Mobile Future in Focus” report. Tack on the fact that 42 percent of mobile cell users in the U.S. own a smartphone, as do 44 percent of European mobile-phone users, and that little stat may amount to a big-business loss for your bricks-and-mortar store.

As smartphone adoption becomes more widespread, consumers are presented with mobile buying power once restricted to the home or work computer. Freed from the shackles of a desktop, shoppers can now stroll right into your operation, pull out their smartphone and start some serious comparative shopping. They can scan your merchandise, read reviews, ask friends for recommendations and share with you what they’ve found. And if they’re not satisfied with your response, they locate a business that has better prices or service.

What this means for small-business owners is you and your staff have to get in front of smartphone-wielding consumers, ask a shopper if they’re comparison shopping and offer a solution if it makes sense to do so. Conversely, rewarding shoppers who learn about your products or services through a mobile device may earn you a customer and their recommendation for life.

Among other findings in the comScore report:

• During December of last year, 64.2 million U.S. smartphone users accessed social networking sites or blogs on their mobile devices at least once, with more than half reading posts from brands, organizations and event organizers.
• Also in December of 2011, 20 percent of smartphone owners in the U.S. scanned a QR code.
• Men and women display differing patterns of shopping-related behavior when it comes to smartphones. Women tend to use their smartphones to make shopping a more social experience as they take product pictures (24 percent), send them to family and friends (20 percent) and call or text people about a specific product (22 percent). Men are more likely to use their smartphone to scan a product barcode (20 percent), comparison shop (14 percent) and research product features (11 percent).

How has smartphone adoption among your customers helped or hurt your business? Leave a comment and let us know.

Article source: Entrepreneur.com

 

Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers Alexander Osterwalder and Yves Pigneur (Wiley; $34.95)
This manic collection of typography, photographs, sketches and graphs is actually a crowdsourced collection of expert advice designed to help you disrupt your industry. You’ll learn how to think about your business in new ways, ask the right questions to find new opportunities and develop a plan for your company’s evolution.
Dig Your Well Before You’re Thirsty: The Only Networking Book You’ll Ever Need
Harvey Mackay (Currency Books; $16.95)
Mackay teaches how to network strategically without being disingenuous. He delivers a solid mix of advice and action to help build an effective network that returns on your time investment. The tone gets a little “rah-rah” at times, but this is a master networking class that goes far beyond business cards and LinkedIn invitations. And the list of 16 contacts everyone should know is just plain smart.

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It
Michael Gerber (HarperCollins; $18.99)
If you’ve already read it, read it again. This seminal book on entrepreneurship teaches business owners how to get out of the day-to-day rut and resume the role of visionary. Its straightforward, no-nonsense style helps you spot ways to make your business more effective and efficient, freeing you to look for the Next Big Thing–and still have a life of your own. Gerber reminds you how to be in charge, which is a lesson even leaders need now and then.
The Wall Street MBA: Your Personal Crash Course in Corporate Finance
Reuben Advani (McGraw-Hill; $18.95)
No MBA? No problem. The Wall Street MBA takes the role of mentor, coaching on the basics of corporate accounting and financial statements. While it could have easily veered into the mind-numbingly dry, the book has an engaging tone and is full of anecdotes that make it an accessible read on finance basics for growing companies, including accounting standards, operational and capital cost analysis and valuation strengths and weaknesses.
The World Is Flat 3.0: A Brief History of the Twenty-First Century
Thomas Friedman (Macmillan; $16)
The Pulitzer Prize winner and former New York Times foreign affairs columnist has updated his bestselling The World Is Flat, sketching out the fast-paced changes of the 21st century in a global economy. From values and technology to economics and shifting socioeconomic profiles, Friedman chronicles the changing world and the factors contributing to these shifts. Even local businesses need to understand the opportunities and threats of a global economy, and this book is an excellent primer.
The Godfather
Mario Puzo (Signet; $9.99)
Leaving aside the murder and mayhem, this blockbuster 1969 novel holds its share of leadership profiles. Issues like managing multiple businesses, dealing with problem employees and fighting off cutthroat competitors (often, quite literally) will feel familiar to every business leader–even if Victor and Michael aren’t exactly perfect role models.

This article was originally published in the March 2012 print edition of Entrepreneur with the headline: Words of Wisdom: Recommended Reading.

Article source: Entrepreneur.com

 

Many start-up founders and owners of existing small businesses wonder what their companies could possibly gain from yet another new form of social media. Finding adequate time to properly manage business profiles that already exist on Facebook, Twitter and LinkedIn is enough of a challenge.

But the newcomer Pinterest could offer advantages for some small businesses, particularly those specializing in e-commerce.

The social network lets entrepreneurs create online scrapbooks featuring photos of their newest or most popular products. Importantly, it also provides them a platform to write compelling descriptions of those products, and to embed links that direct consumers to their websites or to order forms.

A product could potentially go viral because of the way the social network allows its users to “follow” other users, including businesses. If someone follows say, Etsy.com, the online crafts marketplace, his or her own Pinterest profile will then display all of the images on Etsy’s Pinterest profile.

Keep in mind: Etsy’s brand is particularly suitable for Pinterest, because both sites are popular with women and creative types. Since joining the social network in October 2010, Esty’s main profile already has accumulated more than 51,000 followers.

To start, try to spend a few days or weeks using Pinterest as consumer to get a sense of how it works before diving into it for your business. Also, study what other businesses already on Pinterest have done.

Some tips:

Create categories.

Take a cue from Warby Parker Inc. of New York, with its Pinterest profile showcasing the brand’s eyewear, combined with other images that are intended to say something about its culture and mission. Notice how its profile is separated into categories, or “pin boards,” with themes such as “Fresh New Frames” and “Sunglasses are a Must.”

Use images with personality.

“The images that get shared the most are funny, inspiring or emotional,” says Jason Keath, a social-media analyst in New York. You don’t need to invest in professional photography. However, the images you post to Pinterest should be visually striking. “People share images that make them look good,” Mr. Keath says.

Be selective.

Highlight only a few of your most popular or newest items so your profile doesn’t look like an advertisement.

If you own a service-based business, use images that show what your brand is about. Balance Yoga Studio LLC of Woodinville, Wash., for instance, shows photos of magazines and books on healthy living, plus graphics with inspirational quotes like “Keep Calm and Carry Om.”

“It’s just creating more of a yoga community online for us,” says owner Michelle Michael, whose 20-employee company launched in October and created its Pinterest profile last month.

Write breezy descriptions.

The images you pin to your profile from a Web page will automatically include an embedded link to that page—but not a caption. Use this space to give users updates on what’s new with your business, as well as to describe product.

“Happy Valentine’s Day! We added Coral to our colors! This is the Light Duty Fish Tail Bracelet,” wrote, Survival Straps, a Jacksonville, Fla., maker of utility-cord bracelets that recently started using Pinterest, in a pin earlier this month.

Use the widgets.

Add a “Pin It” or “Follow” button to your company website by going to Pinterest’s “Goodies” page and following the instructions provided. You can also download the Pinterest logo to your site from the same page.

Add many links.

By clicking “Settings” and filling in the prompts, you can include links to your company website, as well as your Twitter, Facebook and LinkedIn profiles from your Pinterest profile. Then, add links to back to your Pinterest profile from each of those pages.

By creating these trails for consumers, you’ll help lead them to your site. “It’s like a breadcrumb strategy,” says Larry Chiagouris, a professor of marketing at Pace University’s Lubin School of Business.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Article source: Wall Street Journal

 

Lewis S. Jacobus took over his parents’ ailing home-decor business two years ago intent on turning it around by rebranding it as a retailer of game-room products, such as pool tables and dart boards. But he had virtually no money to spend on advertising the shop’s new image.

So Mr. Jacobus began searching Facebook for nearby retailers to see if any would be willing to promote his store for free in exchange for him doing the same. The strategy quickly paid off.

Mr. Jacobus connected with the owner of a Christmas-tree business about 25 miles away. He says they agreed to place sample products and advertising materials in each other’s shops, including coupons specifically drawn up for the partnership. Over the next few weeks, he says both businesses generated sales as a direct result.

“Working together is a way to get your name out there,” says Mr. Jacobus, 27 years old, who became an entrepreneur to save his parents’ 30-year-old New Hampton, N.Y., business, now called Hudson Valley Game Rooms, after his father developed cancer.

One way to grow your small business on a limited marketing budget is to team up with other small businesses that target the same types of customers—but aren’t your direct competitors—and promote each other’s products or services.

The tactic typically requires a lot of networking and relationship-building, which can take time and may not always pan out. But entrepreneurs who have engaged in the practice say it can work and that it beats spending hundreds or thousands of dollars on traditional marketing efforts, like TV, newspaper or radio ads.

“This is the old barter system,” says Bruce I. Newman, a marketing professor at DePaul University in Chicago. “What’s the cost? A phone call.”

Mr. Newman recommends pursuing partnerships with companies that sell complementary goods or services and keeping tabs on your progress to see how effective it is. “Build a database once you start doing this so it can be tracked, measured and monitored over time,” he says.

Sheryl Connelly of Louisville, Ky., has literally gone door to door asking the owners of nearby businesses if they would be interested in doing cross-marketing with her start-up, Marketing Media Management, a provider of social-media services. She also has approached prospective partners through LinkedIn.com and at networking events.

But she says she doesn’t actually mention anything about a possible partnership upfront. Rather, she tries to get to know the entrepreneurs she targets to be sure they’re a good match.

“You’re gathering information,” says Ms. Connelly, who started her business after getting laid off from a sales job in 2009. “You need to be comfortable. It’s about your credibility.”

To date, the 40-year-old entrepreneur says she’s developed six partnerships that entail swapping customer referrals. For example, one partner is the owner of a computer-repair business and their agreement is such that if any of her clients mention having computer trouble, she recommends they call that partner.

Likewise, if any of the partner’s customers indicate that they use social media for marketing, the partner will recommend Ms. Connelly’s firm for support in that area.

“I went from one lead a week to about 10,” says Ms. Connelly. “And they’re solid leads. You’re riding on their credibility, which speaks volumes.”

Of course, not every attempt to strike up a partnership is likely to work out. Mary Tamargo, owner of Nocube, a digital-marketing start-up in Rochester, N.Y., says there were a handful of times when entrepreneurs she hoped to team up with either turned her down or didn’t follow through on their end.

But since becoming her own boss in late 2010, just prior to getting a pink slip from a health-care company, Ms. Tamargo, 36, says she has managed to drum up lasting partnerships with three consultants whose clients are mostly small pharmacies—also her target market.

Partnerships don’t necessarily need to involve exchanging the same kind of support. Entrepreneurs can scratch each other’s backs so to speak by agreeing to assist one another in ways that make the most sense for them.

Sara Marshall of Jersey City, N.J., says she learned of a creative product-display technique from an entrepreneur she met last spring at a farmer’s market. In return, she introduced her peer to a retail store that now carries that woman’s cookies and breads.

Ms. Marshall has been selling her own brand of salsa under the name Saucy Sara’s Salsa since getting laid off from a communications job in 2009. She says the partnership she has works in large part because she and her peer are in the same market and have similar goals.

“Everyone’s having a hard time because of the economy,” says Ms. Marshall, 46. “Everyone wants to succeed.”

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Article source: Wall Street Journal

 

U.S. public schools may serve up a lot of lessons to the 49 million students who roam their halls, but most don’t offer entrepreneurially minded kids much help in pursuing their passions.

On a recent trip to Atlanta, I met Matt Smith, a freshman at Georgia Tech who already has two startups to his credit, GoRankem.com and, now in beta, Insightpool.com. Smith was 13 when he realized he wanted to learn something different from what was being fed to him as “important” at school. He knew that if he ever stood a chance of learning about entrepreneurship, he was going to have to cook up an extracurricular program for himself.

A self-professed nerd, Smith was interested in technology at a very young age. Barely into his teens, he was already devouring tech-related blogs and news feeds and attending Atlanta tech conferences. The key, he says, was getting out there and meeting people. Many encouraged him, and he never got the impression that others believed he was too young to be taken seriously.

I asked him about his experiences and how parents and potential mentors can help bridge the knowledge gap for kids who have an entrepreneurial bent. “High schools are focused on the next step, which is usually college,” Smith says. “But they’re not preparing you for the real world. They’re making you live inside this bubble of secondary education. It doesn’t have to be that way.”

Want to help kids get traction on the entrepreneurial path? Smith recommends encouraging them to:

• Read. Most kids know where their passions lie. There’s a wealth of printed and digital information available for every industry sector and every level of understanding.
• Develop relationships. Help entrepreneurial kids get out into their communities and build relationships with people who can assist them in clarifying, then attaining, their goals.
• Search for and create opportunities. Motivate kids to explore options such as finding teachers who can act as advisors. Also, many universities offer internships and summer programs for high school students.
• Build something. Encourage kids to get their hands dirty by writing a computer program or starting a small business. Help them understand there are no guarantees that their plans will work.

Indeed, one of the most influential ways parents and mentors can help kids is by steering them toward new thinking about The Big F: failure. “Anyone who wants to be an entrepreneur has to learn to accept failure. That’s not something we’re taught in school,” Smith says.

Adults can break the taboo of The Big F by rewarding kids for taking risks and trying new things, then reinforcing the lessons learned from those efforts.

Smith’s final words of advice for adults? “Don’t undervalue what people can do just because of their age. And that goes for people who are older or younger than what you perceive as the norm. We should be more interested in great minds and solutions than the age of the people who are bringing those to the table.”

This article was originally published in the February 2012 print edition of Entrepreneur with the headline: Generation Next.

Article source: Entrepreneur.com