The business world is growing fast. According to the U.S. Small Business Administration (SBA), Americans submitted a record 5.5 million new business applications in 2023. This increase is fueled largely by young business owners, with 46% of those aged 18 to 44 believing it’s somewhat or much easier to own a small business than it was for older generations.

That doesn’t mean starting a business is without challenges. But with the right advice, young business owners can overcome these challenges and find success.

1. Follow your passion

The most successful businesses are often started by people who truly love what they do. Think about what excites you the most — whether it’s kayaking, music, or another hobby, your personal interests can be a great source for business ideas.

When your idea is based on something you enjoy, you’ll stay more focused and motivated. Plus, your knowledge and experience can help you find a unique approach to succeed.

Tip: Starting a business comes with financial and personal risks. About 20% of new businesses close within a year, according to the Bureau of Labor Statistics. This information is for education only — always talk to qualified professionals, such as lawyers, accountants, or financial advisors before making big business decisions.

Step-by-step approach

• Make a passion list: Write down all activities, topics, and causes you truly enjoy.
  
• Check market demand: Use tools like Google Trends to see if there’s interest in your passion.
  
• Talk to potential customers: Interview 10–20 people to test interest in your idea.
  
• Build a simple product or service: Test the market with a small version of your idea.
  
• Get feedback and adjust: Use customer responses to improve your offer before a full launch.
  

Avoid

• Chasing trends you don’t care about
  
• Skipping market research
  
• Underestimating the effort needed
  

2. Know your market

Not knowing your market is one of the top reasons businesses fail. Research shows 34% of businesses fail because their product doesn’t meet market needs.

To succeed, know exactly who your customers are and what they want before launching. This will guide pricing, marketing messages, and help you see if there’s real demand for your idea.

Step-by-step approach

• Define your ideal customer: Include age, habits, and challenges.
  
• Study competitors: Research others in your space to see what works.
  
• Estimate market size: Know how big your opportunity is.
  
• Do surveys or focus groups: Get direct feedback.
  
• Test your idea: Try small campaigns before investing fully.
  

Avoid

• Assuming you know your customer without proof
  
• Overestimating market size
  
• Ignoring trends and changes in the industry
  

3. Improve your financial health

You can’t always count on outside investors. Many entrepreneurs use their own savings, retirement funds, or personal cash to start.

Start building your credit early, pay down debts, and manage your finances well. A good credit score makes it easier to get a loan for your business and helps you stay disciplined with money.

Step-by-step approach

• Build credit with a secured credit card
  
• Monitor your credit score regularly
  
• Pay off high-interest debts first
  
• Save 3–6 months of expenses before starting
  
• Create a budget for your business costs
  

Avoid

• Using all your credit
  
• Missing payments
  
• Closing old credit accounts
  

4. Be ready to make sacrifices

There’s no such thing as an overnight success. Even businesses that seem to grow quickly are usually the result of years of work.

You’ll need to give up some free time and personal spending to focus on your business. While it may be hard, these sacrifices are easier to make when you’re young.

Step-by-step approach

• Track your weekly time use
  
• Cut back on low-value activities
  
• Plan a work schedule that supports your business goals
  
• Reduce personal spending
  
• Set boundaries with friends and family
  

Avoid

• Working so much that you burn out
  
• Ignoring health and relationships
  
• Giving up everything you enjoy
  

5. Find a mentor

Running a business requires skills you may not yet have. A mentor can guide you, share experiences, and help you avoid costly mistakes.

Studies show that entrepreneurs with mentors often see faster growth and higher earnings.

Step-by-step approach

• Identify where you need help
  
• Look for experienced people in your industry
  
• Use LinkedIn, alumni networks, and events
  
• Join formal mentorship programs
  
• Come to meetings with clear questions
  

Avoid

• Being unprepared
  
• Expecting the mentor to do the work for you
  
• Forgetting to help others when you can
  

6. Learn business basics

Your idea might be exciting, but you also need to understand finances, operations, marketing, and legal requirements.

Poor money management is a major reason small businesses fail, so learning these basics is critical.

Step-by-step approach

• Learn to read financial statements
  
• Research legal and licensing needs
  
• Create systems for operations and customer service
  
• Understand marketing strategies
  
• Track key performance metrics
  

Avoid

• Ignoring finances
  
• Forgetting about legal compliance
  
• Not keeping cash reserves
  

7. Make a business plan

A business plan helps you set goals, track progress, and stay focused. It also keeps you accountable and prepared for challenges.

Step-by-step approach

• Write a summary of your business and goals
  
• Research your industry and target customers
  
• Explain how you’ll make money
  
• Create financial projections for at least three years
  
• Outline your operations and growth plan
  

Avoid

• Making it too complex
  
• Using unrealistic numbers
  
• Forgetting to review and update it
  

8. Hire the right people

When your business grows, you’ll need help. Hiring skilled people who also fit your values is important for success.

Step-by-step approach

• Define your company values
  
• Write clear job descriptions
  
• Use interviews to check both skills and values
  
• Check references
  
• Train new hires on your culture and expectations
  

Avoid

• Hiring too quickly
  
• Focusing only on skills
  
• Ignoring employment laws
  

9. Be flexible

Business rarely goes exactly as planned. Being able to adjust and take advantage of new opportunities is key.

Step-by-step approach

• Track important performance numbers
  
• Stay connected with customers
  
• Keep cash reserves for changes
  
• Build adaptable systems
  
• Network with other business owners
  

Avoid

• Changing direction too often
  
• Forgetting your strengths
  
• Making decisions based only on emotions
  

10. Take action

Planning is important, but action drives results. Be ready to take risks and move forward, even if things aren’t perfect.

Step-by-step approach

• Set specific goals with deadlines
  
• Focus on the actions that give the biggest results
  
• Hold yourself accountable
  
• Celebrate progress
  
• Learn from mistakes
  

Avoid

• Overthinking instead of deciding
  
• Aiming for perfection instead of progress
  
• Letting fear stop you
  

Starting your own business is exciting and challenging. You will face obstacles, but by following these tips, tracking your progress, and committing to learning, you’ll be in a strong position to build a successful business that benefits both you and your community.