Sometimes I think I missed something...

I’ve been in business for 20 years. I have 7 years of post secondary education which I came out with a Master’s Degree in Business. I have started 3 separate businesses over the last 7 years and was successful in selling all of them. 

Last week, I spent a day with a bunch of smart, younger “entrepreneurs” and I heard a bunch of language that I didn’t fully understand. Words, terminology, funding, government departments and ways of speaking that sounded so complicated. I came home feeling really stupid. It seems like the world has passed me by. Have I missed the train to future entrepreneurship? Am I one of those people that didn't keep up with technology and the new generation is out producing me?

Here’s what I figured out:

Government loves technology. They support technology because of the ability to output products internationally. It has the ability to create jobs, tax revenues and can stimulate the economy quickly because of its scalability and scope.  In my province, the government has tagged $80 million per year to support these high growth potential business start-ups.

There are a lot of really cool ideas out there. But they are JUST ideas. The problem with ideas is that it costs money to translate the idea into a finished saleable product. Any idea, technological or not, needs to be translated into a business that can make money. That's the difficult part. 

The sexy start-up entrepreneurs that I met with talk about hundreds of thousands of dollars of needed seed money like my mother talks about ten dollar bills. “We only need $800,000 to go to market”.  The product is speculative. The business is speculative. The sales are speculative. Is the idea interesting? Of course it is. The only difference between sexy start-ups and traditional start-ups is the ability for the sexy company to go the billion dollar category. 

At the end of the day, a business is not a business unless it can create sustainable sales to support current expenses. 

I’ve learned to look for an entrepreneur’s personal vision for the company. Is it to sell it to a bigger entity? Is it to make the world a better place? Is it a personal journey?  Find the real reason for existing, and you'll find the motivation of the entrepreneur. 

Find the motivation of the entrepreneur and you'll find the real risk behind any start-up.

I worry about tech start-ups. They get more money. They get more attention. They get more interest. But at the end of the day they still need to generate sales, just like any other company.

A tech start-up is no different than any other business. Just because it may be sexy doesn't mean we get any further ahead by investing in it. 

Be careful before you speculate in a tech start-up. The payoff can be bigger, but the risk is generally greater as well. It's risky and speculative just like any other traditional business start-up. Don't let the sexy part lure you in like a burlesque dancer.