Young entrepreneurs share tenacity, passion and energy

In the fall of 2011, KPMG Enterprise interviewed several FuEL Award winners to discuss the unique challenges and opportunities that they face as young entrepreneurs.

The discussions revealed that these bright and ambitious businesspeople have taken many different trajectories in their paths to entrepreneurial success.

There are those who found their calling straight out of the gate, and those with a history of false starts before hitting their stride. Some started their entrepreneurial careers in their teens; others, after graduating from university. Many built up their operations from a shoestring personal budget; others had to secure financing to support their big ideas.

Those in niches in which “young” thinking can be an asset, such as online marketing or robotics, were able to establish credibility from the outset; others in more traditional sectors had to overcome their youth in convincing others of their capabilities. Yet, there are many commonalities to be found among these successful young entrepreneurs.

All display tenacity, commitment and passion for building their business. And many have had to face similar challenges, such as building a customer base from virtually nothing, sourcing capital to take their businesses to the next level and learning how to network effectively to achieve their success.

The FuEL Award winners have overcome these obstacles with aplomb. In fact, their experiences serve as inspiration to anyone who aspires to launch a successful company—owregardless of age or experience.

Our experience in working with young entrepreneurs tells us that age and inexperience can present significant hurdles in appearing trustworthy to clients, suppliers and other partners. This is certainly true for many FuEL Award winners.

“Sometimes, you find yourself saying or doing something someone more experienced might not say, which can hurt your credibility,” says Kyle Vucko, co-founder and CEO of online custom menswear manufacturer Indochino Apparel Inc. in Vancouver. But, he points out, the fresh perspective of young entrepreneurs often allows them to generate new ideas and approaches others haven’t thought of: “Generally, being young is a net positive.”

Indeed, in some industries, being young can be a competitive advantage—especially those sectors in which more established firms have difficulty connecting with the ever-elusive Gen Y customer. Lauren Friese has built a successful online recruitment business, Toronto-based TalentEgg Inc., largely on her ability to connect easily with a prime market. “Yes, I was younger than anyone,” she says. “But our idea was to connect employers with students and graduates. Not only could I relate to these people, I could help clients by looking at this market with fresh eyes.”

The target market for Toronto-based campus-marketing firm Redwood Strategic Inc. is also young people. Founder and president Dave Wilkin echoes Friese’s point that being close in age to his audience is an advantage. “We’re very much in an ‘old’ industry,” he explains. “Many people running agencies have been there for years and years. Customers appreciate that a young guy can provide strong insights and creativity into that market .”

Whenever Wilkin did encounter doubts about his inexperience, he was able to address them quickly. How? By soliciting raving testimonials from early clients.

“We developed case-study packages with some of the smaller firms that first worked with us,” Wilkin explains. He has used these to win over progressively larger clients. Edward Yao, who co-founded group buying website TeamBuy.ca in Toronto, also has benefited from being in a youth friendly industry. Even still, he has had to earn clients’ respect. Like Wilkin, he believes that the slow but steady approach to building credibility is the best way to nab bigger sales and larger clients. “I didn’t necessarily look like an adult; and I didn’t have case studies under my belt,” he says. But he knew he had a lot to bring to his market, so he got to work developing a site that would resonate with customers. “Once you build up your successful idea, age and inexperience fall off the table,” says Yao.

In the many industries in which youth isn’t necessarily an advantage, it helps to have a fighter’s spirit. When Sammie Kennedy was preparing to launch her Toronto based fitness-class chain, Booty Camp Fitness Inc., in 2007, she met with an older entrepreneur to discuss her concept. Kennedy was shocked to hear that the market would probably consider her too young to succeed: “That just fuelled my fire.”

Most startups have to scramble to get financing. We know from experience that when the CEO is young, the cash hunt is even harder—no matter how youth-friendly the business. So, it was not surprising to discover that many FuEL Award winners were forced to fund their startup ventures with their personal savings or contributions from friends and families after banks and other financiers dismissed them. Most continue to bootstrap today, generating enough revenue from sales to sustain business growth.

For a company that requires significant capital investment at the outset, this is easier said than done. At Clearpath Robotics Inc., a Kitchener, Ont.-based developer of robots for use in research and development, it proved next to impossible to persuade banks to finance the hardware and equipment needed to set up a production facility. “The capital costs to start up were very high,” explains co-founder and CEO Matt Rendall.

So, Rendall and his co-founders started investigating alternatives to traditional bank financing. The answer came courtesy of the Accelerator Centre business incubator in Waterloo, Ont. “That’s where we got the idea to secure customer financing off our auxiliary cash flow,” explains Rendall.

Once Clearpath’s revenue started to grow, the company applied for government funding, including the federal Scientific Research and Experimental Development (SR&ED) tax credit and the National Research Council’s Industrial Research Assistance Program.

“Those [programs] gave us the seed round we needed to expand production capacity and make some new strategic hires in sales and engineering,” Rendall says. He admits it’s not a revolutionary financing approach, but he thinks it’s what every capital-intensive startup should do: “Get some revenue and take advantage of customer and government programs. Then, apply for traditional private equity when you’re ready.”

Firms with smaller up-front capital needs struggle with traditional financing, too. When Rattan Bagga went cap in hand to banks to secure funding for Jiva Organics Manufacturing and Distributing Inc., his Burnaby, B.C.-based health-foods firm, he was quickly denied. “To banks, I was just considered too young. In their eyes, I didn’t have a credit rating,” he says. “Until I built up the business, I had to take help from family.” In those early days, he improved his cash flow by getting creative with vendors; for instance, he negotiated longer payment terms with several suppliers, a tactic, he says, that was “very helpful.”

Often, we find that getting access to a bit of experience can make a world of difference for young businesses. While it takes a lot of youthful energy to build a business out of nothing, most FuEL Award winners have found that the advice of more seasoned businesspeople can be an invaluable asset. “We may be smart and hard-working, but we can’t change the fact we don’t have experience,” admits Ray Cao, founder of Loose Button Inc., which distributes cosmetic samples to paid subscribers. He is among several FuEL Award winners who have set up an advisory board of experienced industry pros, all of whom have been happy to help when approached. Not only does Cao depend on his board for advice on the firm’s direction, he says, “The grey hair helps balance out my young age, from an optics perspective. It gives us the voice of experience we need.”

Mentors can help, too. At Clearpath, for instance, mentors Rendall encountered at the Accelerator Centre guided him and his colleagues through the firm’s early growing pains, and continue to do so today. When seeking advice from busy business veterans, it helps to think outside the box.

When Josh Sookman was starting Toronto-based personal-security app developer Guardly Corp., he took to volunteering at industry conferences: “It provided fantastic opportunities to build relationships and help get conversations started. I’ve bought a lot of coffees in my day.”

It should come as no surprise that social media plays a large role in young entrepreneurs’ efforts to build their business networks. Tools such as LinkedIn and Twitter give youthful business owners forums to start a dialogue with more senior pros.

Social media also can be particularly cost-effective when conducting market research among potential clients, says Alexander Levy, whose company, MyVoice Inc., has developed a mobile app that allows people with speech disorders to communicate audibly. “Firms with big sales and marketing teams tend to emphasize traditional techniques, such as sending people out to do sales calls. But that approach can separate the company management from its customers,” he says. “Through our use of forums, Twitter and blogs, we gain a lot of credibility with our clients. That’s an important differentiator.”

At KPMG Enterprise, we have long known that successful young entrepreneurs tend to demonstrate energy and enthusiasm that makes them stand out from the competition. But that’s not the only thing that makes this year’s FuEL Award winners remarkable. Their experiences show that creativity, good business sense and a willingness to learn from others can help even the greenest young upstart build a credible—and successful—enterprise.

SUNIL MISTRY is a partner with KPMG Enterprises. He is based in Toronto. You can find expanded coverage of his interviews with FuEL Award winners at www.kpmg.ca/forentrepreneurs