New Venture Lab: Equipping Christian Entrepreneurs

Questions on Preparation for Entrepreneurship from a 12 Year-Old

Question

My name is Daniel and I would like to learn from you by asking you a few questions.  What do you think of bonds and mutual funds?  Are they a worthwhile investment?  My brother and I have a lawn business and I was wondering if you had a business when you were my age.  I was also wondering if you ever owned a hotel.  Do you think hotels are good investments?  How do you think the real estate market is doing and do you think that it will start to go up in value?  One final question: Understanding that God is the giver of all true success, what else did you do to become such a successful businessman?

Answer

  • Bonds and mutual funds: The answer that follows does not constitute investment advice and I am not an investment advisor; any investment you make is at your own risk.  To answer the part of your question about mutual funds and pubic equities, I will direct you to this post.  I would recommend the same type of strategy for bonds as I do for stocks in terms of bond funds and bond index funds instead of individual bonds and an allocation strategy across various types of bond sectors.
  • Business at your age:  I did not have a business, per se at your age, but I started selling door-to-door in the communities near my farm home at age seven and continued with direct selling actively all through my high school years.  I sold everything from light bulbs to greeting cards to holiday decorations to medical supplies.  Those early sales experiences served me well in later years.  In addition to selling, I started working in construction at 12 years old and worked full time during high school (usually the 4 p.m. to midnight shift, but sometimes the midnight to 8 a.m. shift) and I worked full time in college.  In college while I still worked in construction, I continued to "sell" stuff, but shifted from door-to-door sales to larger "deals" by producing dances and concerts since I could make more money on larger "at-risk" projects.
  • Hotel ownership:  I have not ever owned a hotel and I would not recommend investing in the travel and leisure segment as it is tied significantly to the state of the economy and experiences large swings in demand and profitability.  I would recommend the investing strategy outlined above and cut across all sectors and segments.
  • Real estate market:  The overall market is still far below where it once was and with the combination of the vast inventory of foreclosed homes, more limited mortgage debt availability compared to historical levels, and the high unemployment rates, real estate will likely continue to be depressed for some time.  For an enterprising investor, buying in at the bottom would be a good strategy, but it is more timing- and luck-based than skill-based investing and not likely to be the best strategy to pursue.  Investing in broad-based REITs on a monthly or quarterly basis over the next few years should give a real estate investor a diverse portfolio with a below-than-market average acquisition price when the market does finally recover.
  • Reasons for success in addition to God's blessings: 
    • I would credit a strong work ethic instilled by my family and my Mennonite roots
    • I would credit an excellent business education and work experiences (acquiring wisdom and knowledge is as critical as having excellent work experiences)
    • I would credit my many years of sales and marketing experiences as being a very important foundation
    • I would credit having excellent mentors throughout my career

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