From buppie to biz-wiz: forget corporate America - Generation X is choosing the entrepreneurial path to success.
But times have changed, and today entrepreneurship has become a key career choice for young Americans. Highly publicized corporate downsizings have cast a pall over the traditional path to success, and fueled a general perception that well-paying jobs with room for advancement are scarce. College graduates are finding that the offers for high-paying entry-level positions aren't coming as fast and furious as they'd been led to believe.
"I've seen too many African Americans come out of college and work years [in corporate America] with no career advancement to show for it," says Sidney Warren, a 32-year-old co-owner of a TCBY Treat/Mrs. Fields Cookies co-branded franchise in Cincinnati. Warren, who left a full-time job to become an entrepreneur, believes that "You can graduate cum laude and still end up in the mailroom."
The affirmative action programs that gave many buppies a boost onto the corporate ladder have sent only a few to the executive suite - and those programs are now under fire. The days when professionals could expect to stay with the same company for a lifetime are long gone. Human resources professionals estimate that today's worker will have an average of five to 10 career changes in their lifetime.
As a result, interest in entrepreneurship has grown among all age groups. "Both the baby boomers and Generation X are realizing the futility of investing in corporate America ... one through experience and the other through observation," says Granville Sawyer Jr. of Norfolk State University's School of Business and Entrepreneurship. But Generation X may be the first to widely embrace entrepreneurship as a primary goal, rather than an afterthought.
"This generation has seen how little corporate America has offered their parents," explains Sawyer, who heads the school's Entrepreneurial Studies Department. "As a result, they are choosing to start businesses early in life." Some of this new crop of entrepreneurs have already had a taste of the corporate life and found its rigid confines and lack of rewards a bitter pill to swallow. Motivated by the desire for autonomy, greater job security, and a larger share of the profits, Generation X may have finally found its true calling - entrepreneurship.
This has led to a much needed growth in the African American entrepreneurial ranks. At the same time, it increases the likelihood of African Americans patronizing our own businesses, thus investing more of our collective $400 billion income back into black communities. In turn, the growing turnover of black dollars in our communities will lessen our dependency on state or federal aid, which is usually slow in coming - if at all. But just as important is the example set by these new entrepreneurs for future generations, who will hopefully follow the trail blazed by Generation X and the many generations of African American entrepreneurs who preceded them.
SEARCHING FOR SECURITY
"With all the downsizing going on, there isn't even the appearance of security in corporate America," says Warren. In 1994, he and his partner, Chuck Baker, now 27, were looking for a way out. Moving up through the corporate ranks was slow and uncertain. Baker was working as an assistant brand manager at Procter & Gamble in Cincinnati. He had been an entrepreneur throughout his student days at Georgetown University, with ventures ranging from computer cleaning to arranging step shows. He viewed his job as a pit stop en route to his return to the ranks of the self-employed. "It [entrepreneurship] gives you the ability to control your vision and see it through, while allowing you to enjoy a higher financial reward," says Baker.
Meanwhile, Warren was working in the advertising department of the Cincinnati Herald and, with Baker, had toyed with the idea of opening a coffee shop - but nothing concrete had come of it. Then in 1994, opportunity knocked loudly. Warren happened across an ad requesting proposals for a minority-owned franchise opportunity in the Greater Cincinnati/Northern Kentucky International Airport. "I wanted to take my education to the next level and open my own company," says Warren, who attended Wright State University. He immediately placed a call to Baker, whose position at Procter & Gamble had given him experience in writing business plans. The deadline for applications was just seven days away.
There was one problem: The franchise application required 10-15 years of food and beverage experience, which neither Baker nor Warren had. Undaunted, the duo enlisted Joey Nugent, a white neighbor of Baker's, to join the team. Nugent owned a restaurant in northern Kentucky and brought with him the requisite food and beverage experience. The trio, all equal partners, completed the business plan and proposal in just six days and presented it to Host Marriott, which was offering the franchise opportunity, including a start-up loan.
In May of 1994, only three months after Warren saw the ad in the newspaper, their TCBY Treat/Mrs. Fields Cookies joint franchise opened for business in the airport. Within 45 days, the team recovered their $33,000 down payment on the $200,000 start-up loan from Host Marriott. Baker quit his job at Procter & Gamble as soon as they were approved for the franchise, and Warren left the newspaper just before the store opened. At first, they often worked 80-hour weeks, but Baker says it was worth it. "To me, entrepreneurship is all about enjoying a bigger piece of the pie you create." From May to December of 1994, the store grossed nearly $400,000. Sales shot up to $830,000 in 1995 and the trio pulled down $1.2 million in sales in the next year.
Motivated by the success of their first store, they attempted to duplicate its success in another location. In May of last year, Baker and Warren opened a second TCBY/Mrs. Fields location in the Tower Place mall in downtown Cincinnati - this time without a third partner. They took out a $125,000 loan, which they secured with $25,000 cash, in order to build the second store. This new venture grossed $250,000 between May and December of 1996, and Warren expects 1997 sales to top $500,000. Together the stores have nearly 30 employees, mostly African Americans. Warren manages the day-to-day operations of both stores, and Baker - who now lives in Philadelphia - acts as a consultant and handles much of the accounting for the businesses.
Baker and Warren's decision to leave corporate America was typical of many in this new generation of entrepreneurs. "Dissatisfaction with the corporate world is cited as one of the main reasons for members of our organization," says Richard Bright, marketing director for the Virginia-based Young Entrepreneurs' Organization. (YEO is composed of entrepreneurs under the age of 40 who are founders, co-founders, owners or majority stockholders of companies grossing $1 million or more per year.) "Our organization grew 40% in 1994 and 67% in 1995," says Bright, who expects YEO to show a similar gain for 1996.
A member of YEO, 32-year-old Marc Cormier is CEO of AeroTech Services Inc., an $8.5 million security firm based in Queens, New York. Started in 1986, AeroTech provides security guards and security-related services, such as closed-circuit television installation and document destruction. A member of YEO since 1994, Cormier attends classes in entrepreneurship sponsored by the organization and finds the resources an invaluable asset in his role as an entrepreneur.
"YEO lets me benefit from the experience of my peers, who are also entrepreneurs and have already gone through situations I may be going through," says Cormier. He seeks to expand his firm into the Midwest, and already has over 300 employees in New York, Pennsylvania, New Jersey and Connecticut. Cormier also uses YEO as a worldwide network. "When I'm looking to enter new markets, I already have a contact in any part of the world because of my affiliation with YEO."
SWEET TASTE OF SUCCESS
Lolita Sweet was discontented with the career prospects offered by corporate America. "I've seen people work for 10 or 15 years only to be downsized right before they are due to receive their pensions," says Sweet, the 30-year-old owner of San Francisco-based BAYE Limousines. Sweet left corporate America after having worked in accounting and as a managerial assistant at several companies. The California State University graduate, who has a degree in business management, was disgusted with the lack of reward and recognition. "The most anyone was willing to pay me was $10 an hour, and most weren't that high," she recalls. "Why should I give 110% to a company that doesn't appreciate my work or even offer me a decent retirement plan?"
In 1992, Sweet decided to start her own business, a record company. But the record deals were slower in coming than the job offers, and she took a job as a limousine driver to make ends meet.
After her first night on the job, Sweet was amazed at how lucrative limousine driving was. That's when she decided to start her own limousine company. In February 1993, with help from her mother and brother, the San Francisco-native purchased her first limousine for $14,000, a 1988 10-passenger stretch Lincoln Continental - and BAYE (which stands for Bay Area Young Entrepreneurs) Limousines was born. The company grossed only $24,000 in its first year, and much of that went to repair the limousine.
In the beginning, Sweet was a one-woman enterprise managing everything, from advertising to negotiating service contracts. "At times it got overwhelming but I had my mother and brother to help me," says Sweet. Her brother helped drive the limousine and her mother provided mechanical expertise when the car needed service. "My mother kept me from being overcharged by mechanics," she explains. Sweet's mother, who formerly worked for a car dealership, buys and sells used cars as a hobby.
For the first two years, Sweet operated as an independent limousine driver. In 1996, she decided to expand her company and, fortunately, there was an opening for limousine services at the San Francisco International Airport. The permit, however, required that the applicant have at least 10 limos and drivers. Sweet found nine drivers willing to subcontract their services to BAYE Limousines in short order, and won the permit. One of only eight limousine companies permitted to advertise in the airport, BAYE's business picked up sharply within months. Today, the company uses 16 limousines and has 18 drivers. Last year, revenues reached $312,000.
RACING TO REVENUES
Craig Reynolds, 25, also felt the sting of corporate America, but in a much different fashion. Reynolds, an AA Pro BMX Racer, is ranked in the top 20 athletes on the bicycle racing circuit. Typically, successful racers receive sponsorship from bicycle and other BMX-related manufacturers to ride, wear and endorse their products. Sponsors pay for the riders to attend races and generally include performance bonuses. Most recently, Reynolds was sponsored by Badd & Co., a bicycle manufacturing firm.
In 1993, after two years with the company, Reynolds felt it was time to renegotiate his contract. "I had proven my value to the sponsor, and I didn't feel comfortable that I was being paid less than some amateurs," says Reynolds, a native of Park Forest, Illinois. Badd & Co. didn't think so, and wouldn't give Reynolds a better contract.
Reynolds terminated his contract, and the search began for a new sponsor. (Coincidentally, Badd & Co. went out of business shortly thereafter.) But this wasn't the first time that he felt he'd been treated unfairly by a sponsor in his 15 years of BMX racing. In fact, he'd coined a motto to characterize his dealings with sponsors: "There's no loyalty in BMX." After his latest experience with sponsorship, Reynolds' parents suggested that he cash in on his popularity by starting his own bike company.
Later in 1993, with an $8,000 loan from his parents, he launched Reynolds Racing, which sells BMX frames and accessories. He worked out a deal with a local welding company to produce bicycles made to his specifications. "The bikes were a hit," says Reynolds, who worked from his parents' garage. "It's so satisfying to do something on your own, and it works."
When the company began to take off, Reynolds left Northern Illinois University, where he was in his junior year as a business management major. In its first three years, Reynolds Racing sold nearly 2,000 frames; they went for about $220 apiece in custom bike shops throughout the U.S. and England. During that period, the company averaged profits of $30,000 per year.
By 1995, running a business and maintaining his status on the track was taking its toll on the young businessman, the only AA Pro to own a bike company. His company's sales and his racing performance were beginning to lag. "I couldn't concentrate on my racing because I was always trying to make money for my business," says Reynolds. In 1996, he began looking for a distributor to help take off some of the load, eventually settling on System Cycle Supply (SCS) in Dayton, Ohio.
In September 1996, Reynolds inked a deal for the company to distribute his bikes. The relationship allows Reynolds to concentrate on his racing, while giving him advertising support and access to SCS's database of over 30,000 bike shops around the world. He expects the relationship to triple his sales, and the fact that his bikes were on back order before SCS even had them in stock lends support to these expectations. As for racing, Reynolds says that "this year I'm going to get back on the top of my game." If his business moves are any indication of his skills on the track, he'll be in the winner's circle quite often.
Jimmy McNeal, 24, also got his entrepreneurial start on the track. CEO of Bulldog Entertainment, a New York-based record management and production company, McNeal is a former BMX racer. He became an entrepreneur by arranging sponsorship deals with athletic apparel companies for himself and many of his fellow racers. "I knew I wanted to be an entrepreneur after I had my first taste," says the budding entertainment mogul.
McNeal started UPJAM Records in 1989, which he rechristened Bulldog Entertainment after moving to New York and teaming up with 24-year-old Joel Sylvain, who became Bulldog's COO. (Vice president Diamond J., 25, joined the duo in 1994.) The company negotiates production and product endorsement deals, produces logos on several major labels, manages recording artists and provides marketing expertise for companies seeking to penetrate the Generation X market. "We're the Generation Xperts," they say. The company now has product endorsement deals with Boks (a division of Reebok), Oakley Sunglasses, Fox Racing and Greg Norman Sportswear. In 1995, the company grossed nearly $300,000, and expect to do even better after their group, FTN Clique, an R & B duo, debuts on Bulldog/Elektra Records.
The increased interest in entrepreneurship isn't being lost on colleges and universities. Responding to student demand, many schools now offer entrepreneurial programs and classes as part of their curriculum. Some even offer degree programs in entrepreneurship. Steven Rogers, who teaches classes in entrepreneurial finance at Northwestern University's Kellogg Graduate School of Management, estimates that there are nearly 800 schools with entrepreneurial programs or classes.
"The interest in entrepreneurial programs will increase as it continues to play a larger role in our society," states Rogers. Forty-five percent of the students who enrolled in Kellogg in 1996 were interested in entrepreneurship. Since 1991, the school, ranked among the top 25 business schools for entrepreneurship by Success magazine, has tripled its entrepreneurial offerings from three to 11 classes. Other business schools, such as Wharton School at the University of Pennsylvania, Harvard Business School and Anderson School of Business at UCLA, have also incorporated entrepreneurial classes or programs into their curriculums.
"The future in corporate America doesn't hold much promise for this generation and entrepreneurship means economic independence," remarks Rogers. Historically black colleges and universities are also looking to help Generation Xers learn about entrepreneurship.
"We wanted to offer our students something more," says Granville Sawyer, explaining why his school, the Norfolk State University School of Business and Entrepreneurship, has offered a major in entrepreneurship since 1992. "We're helping them to understand how to be capable and successful executives and entrepreneurs." Undergraduate students who major in entrepreneurship will receive a bachelor's of science in business administration, with a concentration in entrepreneurship. And according to Sawyer, the response has been tremendous.
Of course, black businesses tend to hire more minority employees, and a boost in African American entrepreneurship should mean more job opportunities for African Americans. If the success of Baker and Warren is any indication, then the theory holds true. "This store was designed by a black architect, built by a black construction company and we employ black people at all levels," states Warren proudly of his Tower Place location.
For Sawyer, "true [entrepreneurial] success is defined in terms of employing more black people, and encouraging economic turnover in black communities." Lolita Sweet also employs a majority of nonwhite employees. "Our staff is like the United Nations," she beams. But Sweet also contributes to economic development in another manner - she teaches entrepreneurship to minority students.
Sweet is a member of the San Francisco chapter of the National Foundation for Teaching Entrepreneurship, which teaches the nuts and bolts of starting and running a business to minority high school students around the country. "I try to encourage the students to build the businesses they want to see in their communities, other than the usual Chinese food store, funeral parlor and liquor store," asserts Sweet, who teaches two days a week. She has recruited over 200 students to the program since 1996.
McNeal and Sylvain also lecture for the foundation. McNeal, who attended a NFTE course at Wharton before launching his business, believes, "it's only right that I pass the information that helped me get started on to the next generation of entrepreneurs." The pair taught a workshop at BE's Kidpreneur Konference.
Part of a nationwide trend, the move toward entrepreneurship is crucial for African Americans. Members of Generation X have decided to take their future in their own hands rather than put their trust in a faceless, heartless corporation. In so doing, they are playing a leading role in the economic empowerment of African American communities. Generation X, or otherwise, African American entrepreneurs need, and deserve our support.
Young Entrepreneurs' Organization 1010 N. Glebe Rd. Suite 600 Arlington, VA 22201 703-527-4500 YEO provides mentoring, entrepreneurship education and peer networking to members, who must be under age 40 and founder, co-founder, owner or majority shareholder of a company grossing over $1 million.
Ewing Marion Kauffman Foundation 4900 Oak St. Kansas City, MO 64112 816-932-1000 The foundation's Center for Entrepreneurial Leadership helps develop entrepreneurial programs and refers entrepreneurs to their Fast-Track programs.
National Association for the Self-Employed PO Box 612067 Dallas, TX 75261 800-232-NASE NASE acts as an advocate for self-employed and small independent business owners at the state and federal levels. The organization also sponsors a young entrepreneur's scholarship program.
National Foundation for Teaching Entrepreneurship 120 Wall St. 29th Floor New York, NY 10005 212-232-3333 With programs in 14 cities, NFTE teaches students how to start and run businesses. A leader in entrepreneurial training, it graduates over 4,000 students per year.
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|Title Annotation:||The New Tycoons; includes a list of organizations for young entrepreneurs|
|Author:||Muhammad, Tariq K.|
|Article Type:||Cover Story|
|Date:||Jan 1, 1997|
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