College isn't just about dorm rooms, sororities, late-night cramming sessions and parties. If you're really on the ball, you can also build a lucrative business while you're earning your degree. Think college isn't the best time to start a business? Think again.
There are tons of benefits to starting a business in college. You have a slew of campus resources to help you out, and it's likely you're not bogged down with lots of responsibilities (children, mortgages, etc.), yet you're chock-full of creativity and passion. "[College] students are extremely creative at how to cultivate market relationships," says Caron St. John, director of the Spiro Center for Entrepreneurial Leadership at Clemson University in Clemson, South Carolina. "They haven't had any losses yet, so they will take a risk someone else might not take. Their fearlessness, coupled with their creativity, gives them opportunities to do interesting things."
But don't get the idea that it's an easy venture. Experts liken starting a business while in college to starting a business while maintaining a full-time job. Still, with some good planning, a solid idea and a lot of hard work, you can make a successful go at it.
The founders of AllDorm Inc., a college furnishings manufacturer in Santa Clara, California, did. Ryan Garman, 23; Kevon Saber, 23; Chad Arimura, 23; and Ivan Dwyer, 23, met at Santa Clara University. Garman got the idea for the business while hauling his belongings from Las Vegas to Santa Clara during his freshman year. "It was miserable," he says. "I thought, 'There has to be an easier way to get this done.'" What if students could buy all the things they needed and have them shipped directly to their dorms so they would be waiting for them on their first day? He wrote a business plan and, by sophomore year, got his friends into the venture.
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But not just any friends. Garman took the idea to partners he knew would make the business successful, and they've maintained that hiring philosophy to this day. The AllDorm Inc. founders also recruited business experts to serve on their board of directors--a wise move, according to experts. "I often tell students to team with a more experienced businessperson," says St. John. "That person could bring accounting and finance skills or contacts in the marketplace."
Garman and his partners met their board members through various ways--from their high schools, through Garman's father, at Santa Clara University's Center for Innovation and Entrepreneurship and at a business plan competition. The professionals had worked with companies like Nordstrom Inc. and Stuart Anderson's Black Angus, Cattle Company Restaurants and had Ivy League contacts to keep the company in tune with the needs of students from other universities. "Never turn away a possible contact," says Garman. "Give them a reason to be part of your team. [Attracting advisors] usually doesn't have anything to do with money."
The partners had a head start on getting to know the college market because they were still in school when they incorporated in 2000. Still, AllDorm Inc. didn't skimp on market research. They got friends and siblings at other universities across the nation to weigh in on dorm furnishings and amenities. This type of word-of-mouth research was powerful. Although the AllDorm Inc. founders are now out of school, they have at least two college student interns on staff so they can stay in tune to student needs--a practice that has no doubt helped grow annual sales to more than $1 million.
The AllDorm Inc. founders also used resources the campus offered, from the individual phone lines and Internet connections in every dorm room to the meeting rooms on campus that were free to students. Having a separate place to meet clients helps project a professional image, say experts. "It's the same situation if you're a nonstudent operating a business out of your house," says David Gumpert, author of How to Really Start Your Own Business (Lauson Publishing). "Thanks to technology, it's possible to appear professional [without] a lot of money." You can use your cell phone as a business line or get a p.o. box address if you don't want clients to know you're based at a university.
Choosing a Business
You may already know what kind of business you want, but if you're not brimming with ideas, look at the needs of your community. Perhaps a laundry service or term-paper typing service are in high demand at your school, says Gumpert. Or, if you're thinking of expanding beyond the college community, you might check out Web design or other computer-based services. "The [businesses] that are most likely to be successful don't require much money, but do require a lot of hard work and creativity," says St. John.
Looking at what you're passionate about can also provide clues as to what business to start. For Gabe Ermine, 26, founder of OHEV Records Inc., his love for underground music inspired him to start his company. The Tamarac, Florida, entrepreneur started his record label in 1997, with his experience as a record store employee and a member of various bands under his belt. His job at a record store led to contacts with distributors. "My boss wanted me to order mainstream music," he says. "There was a huge market for underground stuff, but she didn't want me to order that because [it doesn't sell as much]."
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Still convinced this type of music had a large college audience, Ermine started with $2,000 in savings and signed one band. Because he knew the distributors, he was able to get the record out to retailers across the country, including Best Buy and Tower Records. He maintained the label part time while getting his undergraduate degree.
Now in law school, Ermine devotes part of his time to his studies--he wants to bone up on contracts and transactional law to help him grow the record label. Still, grossing about $30,000 a year from his part-time business, he's avoided the loans that plague most law students. In fact, he's on his way to success when he graduates--like one of his bands, which received a multimillion-dollar contract with the Warner Bros. label.
Financing Your College Business
Though you won't have millions to work with in the start-up phase, you do have financing options. It will be a challenge to get money, and you'll have to do a lot of bootstrapping. Experts say most college students finance their businesses with funds from parents and friends of their parents, credit cards and the like.
Tara Cronbaugh, founder of The Java House, a chain of four coffeehouses in the Iowa City, Iowa, area, founded her business in 1994 after a visit with her brother at University of California, Berkeley. She loved the local coffeehouses and saw that the area around her school was sorely lacking in such groovy hangouts. Then a junior at Iowa University, Cronbaugh, 30, threw herself into researching what it would take to open a coffeehouse. She took entrepreneurship and accounting classes and picked the brains of all her professors.
With a business plan in hand, Cronbaugh went hunting for the money to open her first location. Luckily, her local Small Business Development Center (SBDC) office was on campus. "I found applications for equity grants--in my situation, it was called the Targeted Small Business Program," she says. "It was based on being a woman-owned business." (To find an SBDC near you, go to www.sba.gov/sbdc.) She also received an SBA loan and used some of what was left from her Stafford student loan. "I still look at alternative ways to acquire financing for [my new] stores," she says. Her resourcefulness has helped Cronbaugh build The Java House locations to sales of $2 million annually.
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The ultimate challenge, after choosing your business, learning your market and securing your funding, will be balancing your studies with your business venture. Gumpert suggests taking a year off while you build your business, or taking less demanding classes during the difficult business start-up phase.
Or you could form partnerships to share the load. Garman of AllDorm Inc. took a year off from his studies to focus full time on the business while his co-founders finished school. When they graduated, Garman went back to get his degree. Ermine of OHEV Records Inc. is balancing law school classes by working evenings and weekends on his record label business. Whatever method is right for you, it's your creativity and drive that will help you earn a degree and a successful business at the same time.
And, admit it, it sure beats job-hunting after graduation.
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