How to Start Your Own Small Business After College
Posted on June 24, 2015
With continued uncertainty in the job market and an economy still in recovery, starting a business straight out of college is an option that graduates are increasingly considering. In fact, around 60% of recent graduates say they would like to start their own business.
However, with college debt at an all time high and graduates concerned about lack of experience and networks, the start-up rate for this group is much lower at 23%, according to research by the Kauffman Foundation.
There is no such thing as a career for life anymore.
60% of graduates are unable to find work in their field and over 70 graduates applying for each graduate position. However, one way of gaining skills and experience without having to rely on getting a job in an increasingly competitive labor market is to start-up your own business.
GET YOUR 100 WAYS TO MAKE $100K CHEAT SHEET PDF
(100% FREE DOWNLOAD CHEAT SHEET)
But is there a way to improve the start-up rate by encouraging more recent graduates to start their own business?
And is starting your business straight out of college a good idea anyway – or is it more sensible to get some experience in a ‘real job’ first?
OK, college debt aside, the reality is that for the vast majority of graduates, there is a relative amount of financial freedom.
Most recent graduates haven’t yet stepped on the housing ladder – and so have no mortgage payments that they have to cover each month.
They are also less likely to have dependents than older start-up entrepreneurs and, crucially, those who have just graduated aren’t yet used to earning a certain amount of money each month either.
This gives college graduates a far greater ability to live ‘lean’, taking home less pay than they would need to if they had other people relying on their income.
Many new graduates also have the ability to move back in with their parents – if they even left home in the first place. More and more young people are moving back in with their parents to save up the deposit for a mortgage. A graduate start-up entrepreneur can do the same to help them to reduce their living costs while building a business.
Let’s face it, if you’ve got a husband and 2 kids, the thought of moving back in with Mom & Dad is less appealing – not to mention that it might not even be feasible.
Recent graduates are more likely not to be working in full time employment, and so have more time to spend working on building a business than someone who is trying to get their start-up off the ground while still holding down a job.
Studying for exams means many graduates are still in the habit of pulling long days and nights and – without having to work a job the next day or get up to take the kids to school.
This means that you have time on your side when it comes to developing and building your business, and you certainly have the edge over other start-up entrepreneurs who will have other competing priorities on their time.
Coming straight from college and into a start-up means that you’re less likely to bring any baggage from previous jobs with you. As a result, you may be more open to new ideas and new ways of working because you don’t have any preconceptions about what ‘works’ or ‘the only way to do things’.
When it comes to starting with a clean slate, this is one of those examples where a lack of experience can be a good thing and will work in your favor.
Yes, it’s true, 3 out of 4 start-ups fail.
But start up graduates who find themselves in the position in the future where they are applying for a job for whatever reason, will be in a position with potential employers. After all, they can demonstrate that they have the ‘get up and go’, the creativity and the tenacity to start a business, which will make them stand out from all the other applicants.
College graduates who have run their own business will also be far more likely to have gained a well-rounded set of skills as they will, at some point, have had to do everything in their business.
This unique well-rounded skill set not only shows potential employers that this person is willing to try their hand at anything to get the job done, it makes them stand out more than the average employee.
Starting a business straight out of college means that you can build the lifestyle that you want from day one.
Sure, starting a business is hardwork.
If that’s your choice, you will work long hours and will have to do work that you really don’t want to do. But there are lifestyle benefits of controlling the work that you do that you just wouldn’t get in a job.
In the long run, graduate entrepreneurs have the potential to have higher earnings than their peers and – through a greater work-life balance tailored specifically for them – chances are they will enjoy a far higher sense of well-being too.
Build a Business You Love
As well as creating the life that they want, graduate entrepreneurs also have the opportunity to make a difference to the world by building a business that they are passionate about.
The most successful businesses are rarely focused on ‘how can I make the most money possible?’ but are usually shaped around ‘how can I make a difference to the world/this particular problem?’.
Starting your own business means that you’re not just earning the green stuff while you help someone else build their company. It means that you start making a difference to an area that resonates with you right from the start of your career.
Why wait to graduate?
If you’re reading this while you’re still in college and already have a burning desire to start a business before you leave, the good news is that you don’t need to wait until after graduation to start up.
The entrepreneurial world is full of examples of people who started their business while they were in still in school – from Bill Gates to Mark Zuckerberg and everyone in between.
Research by the Young Entrepreneur Council and Buzz Marketing found that of 1,000 college students, 36% were side-preneurs – they were already running their own side hustle while still in college.
Starting a small business while in college to earn an extra income comes with a unique set of benefits over getting bar work or working in a store to pay your way through college.
Running a small business – or freelancing – involves marketing, building and growing a business, and running the finances and cash flow to keep a business going.
You could earn income through a side hustle to gain the necessary business skills that you’ll need in the longer term. For example, by building a business from a hobby, perhaps making jewellery and selling it on Etsy; by becoming a tutor and promoting your services around town; by setting yourself up as a dog walker; or by offering freelance writing services.
All of these might not be the business that you want in the long run, but they will help you to learn about promotion, marketing yourself and how to tailor a business to meet market demands.
Access to experts
Recent graduates have access to a large number of experts already.
Think about it. You’re in college – or you’ve just left and you still have warm contacts there.
Speak to college professors who specialize in marketing or business or entrepreneurship. Another idea is to speak to your alumni department asking them to put you in touch with entrepreneurial alumni who might like the idea of helping out a fellow graduate from their alma mater.
Colleges are full of people with a huge range of expertise. Use the connections that you have there to your advantage.
Access to Support
While a recent graduate may not have the professional networks that a more seasoned executive enjoys, they have access to other networks that will help them to support and grow their new start-up.
Recent graduates may potentially live closer to their families – especially if they’ve moved back home to cut costs.
They are also far more likely to still be in touch with college friends than those who have been off building their careers – and their families – for many years after graduation. Competing priorities mean that more established executives are likely to be far more time-poor when it comes to their social lives.
This means that recent graduates can combat the physically draining longer hours of running a business – and the steep learning curve that they are facing – by having greater access to their personal support network of friends and family.
If that applies to you, then make sure that you use this lifeline.
Surround yourself with cheerleaders. They may offer a particular insight into the business – or they may just have your best interests at heart.
Starting a business is hard work. Starting a business with no support network is even harder. Be kind to yourself and get your cheerleaders onside from the start.
Chances are that you’ve spent your time at college surrounded by like-minded people. Perhaps you made some great friends who have the same ambition as you to start their own business. And guess what? They’re also likely to have all of the advantages that you have that I’ve just listed above given that they’re coming straight out of college themselves.
Founders of snapchat, Evan Spiegel, Bobby Murphy and Reggie Brown, met at Stanford while Microsoft founders Bill Gates and Paul Allen met at school (although they didn’t start the company until after dropping out of college a decade later).
You may already be studying alongside your fellow future business partner. So take a look around.
I couldn’t write an article on starting a business straight out of college without looking at the flip side too. However, while there are definitely disadvantages for recent graduates that their older, more experienced peers may not face, there are ways around these too.
The Kauffman Foundation’s research also shows that in the US alone, there is $1.2 trillion of student debt owed by millions of Americans. So it would be foolish not to consider that, while recent graduates may not yet be in the habit of earning and spending a lot of money, they are also likely to be saddled with an average of £35,000 of student debt. That makes gaining credit more difficult and make, in fact, make the whole idea of starting a business seem less appealing.
The most obvious way to avoid additional debt is to start a low-cost business – and with the Internet opening up global markets in a way that was never possible before, this is definitely the best time in history (so far) to do this.
Of course, if your start-up does need investment, there are other ways to fund it that don’t necessarily involve asking a bank for a loan.
The bank of Mom & Dad has increasingly become a source of income for Millennials and recent graduates – either by loaning start-up cash themselves or acting as guarantors.
If that isn’t an option, there is always potential to raise start-up money through crowdfunding or peer to peer lending.
Boosting your credit rating can also help you to gain access to credit in the longer run. Start out by checking out your current credit rating. (Google ‘how do I find my credit rating’ for a list of sources).
Then, you want to establish a credit history for your business.
You can do this by putting business expenses – such as your mobile phone – in your business name.
Opening a commercial bank account will also start a credit history for your business. Make sure you pay bills on time and, particularly if you’re selling business to business (rather than business to consumer) make sure you check out your customers’ credit history to avoid running up debt thanks to debtors.
No-one is pretending that graduates are superhuman, and pulling long hours will take its toll on anyone.
There is a danger for any budding entrepreneur that the constant focus on the business means they forget about themselves, their health and their mental wellbeing.
One advantage that recent graduates have, is that they don’t have to build their new business as a side hustle while holding down a full time job, as many other older entrepreneurs have to do in order to maintain their lifestyle and income.
That means, potentially, you have more time available.
Use your time wisely, and make sure to take time out to go to the gym, take a yoga class, eat healthily and carve out some time to focus more on you than on the business – even if it’s just for half an hour or an hour.
Remember, being an entrepreneur is a lifestyle choice too, so make sure you have a lifestyle that you WANT.
As a new graduate, it’s highly likely that you will lack experience about running a business. In fact, you may lack any type of business or work experience at all beyond what you’ve learned in the classroom.
Start out freelancing.
This will not only give you an idea of how to run and promote a business on a smaller scale, but you’ll also start to build networks and connections in the corporate world – ideally, within the marketplace that you want your business to operate in longer term.
Freelancing, while not an option for everyone, is a good way of starting out on a smaller scale, low-cost and low-risk BEFORE you build a start-up business with employees relying on your business acumen to pay their wages each month.
Doing the Stuff you Hate
The reality is that, for all entrepreneurs, there is a time – usually at the beginning of your business journey – when you have to do things that you hate doing or that are not within your natural comfort zone. This can be getting your head around the figures if you’re not a financial whizzkid, or networking if you’re an introvert.
You will gain experience from starting your own business that you wouldn’t have gained if you’d gone straight into a job. And, as I highlighted above, this will make you stand out should you need to get a job in the future.
However, assuming that, if you’re reading this, getting a job is precisely what you DON’T want to do, then the reality is that having to do everything from the start of your business journey also means that you will gain greater knowledge about your business and how it actually works.
You will become the Jedi Master of your business. That can’t be a bad thing surely? And of course, once you’re earning more, you will have the ability to delegate the stuff you hate or aren’t particularly good at.
Lack of Networks
It’s true that you are less likely to have corporate networks than a seasoned professional who is starting up their own business after 10 or 15 years of employment. That is just a reality of starting a business straight out of college.
Networks exist everywhere. Tell everyone what you’re doing – peers, friends, family, and college professors.
I once won $10,000 of work through a conversation with another Mom in the playground (I had no idea she was looking for someone with my exact skills – it was just a chat about our kids that led on to ‘and what do you do?’).
Use Twitter to reach out to your potential clients making sure that you become known as an expert in your field by answering questions in your area of expertise or posting links to blog posts that you’ve written.
Post questions and start conversations in Groups on LinkedIn and make connections to your ideal clients.
Never before have we lived in an age where technology has brought us so close to our customers. Use it to your advantage.
The reality is that gains in your business are likely to be small to start with.
Income will fluctuate and it might be more difficult to hang out with your friends from college – who incidentally, will probably be making more money than you at the start and won’t be pulling all those long hours.
Your income will most likely be put straight back into the business – at least at the start – and no, you can’t make that regular Thursday night meet up because you’ll be working.
Stay focused. Remember why you’re in this. Your friends might be building a career but you’re building an entire lifestyle around your passion. You’re making a difference to the world.
If you’re getting really fed up then give yourself small treats whenever you have a business success.
Promise yourself a night off to catch up with friends when you make your first $5,000 or get your nails done when you win that first client. Whatever floats your boat (just don’t blow all your profits in one go!)
I don’t know anything
You might think that you don’t know anything or anyone. That’s highly unlikely to be true, but it is easy to fall into that trap when you don’t have concrete evidence to show your expertise to others.
If your lack of experience really is crippling you, get a mentor. Start out by asking former professors either if they would do it, or if they know anyone who would.
Network with people that you admire and aspire to be like. Just as negativity leads to more negativity, success breeds success.
Look to those that you admire or who are where you want to be and surround yourself with them through networking online & offline.
Of course, debt will make most college graduates think twice about starting their own business and you may think that you are starting out with a disadvantage against others with greater experience, networks and proven ability. But never before has technology given graduates access to low-cost business models, potential customers and business networks.
And while there are disadvantages, there are many benefits for recent graduates – from greater freedom thanks to a lack of financial commitments, to flexibility over location and time, to access to an entire college full of experts are all worth their weight in gold.
Perhaps the real question is, has there ever been a better time for a recent college graduate to start their own business?