Starting Up Right Out of College
Here's what you'll need to consider before deciding whether entrepreneurship is a good option for you.
It's a brave new working world for recent college grads. Find out if entrepreneurship is a good option for you as we weigh the pros and cons.
You're a graduate. You have a framed document that says you're qualified to work in your field. You could apply for jobs at established companies and small businesses. You're different, though. You crave the excitement and control of entrepreneurship. You want to start a business.
We live in a world with an uncertain economy that's driving people toward self-employment -- particularly young grads who can't find work. However, starting a business straight out of college comes with pros and cons. Here, we explore those and open up a conversation for graduating students thinking about business ownership.
Pro No. 1: You have the time (and energy!) to fully devote to a startup.
Most college students, when they graduate, have more time than their seasoned counterparts to devote to a newly formed business. This allows graduates to start and become immersed in a business without feeling adverse effects elsewhere in their lives (like with their spouse and kids, or at an existing job).
The long work days and lack of sleep also won't have the same effect on someone who's used to spending nights cramming for tests and writing long papers. The discipline you gained in school will carry through to your business.
Also, the stakes often aren't as high. Graduating students typically aren't trying to pay off a mortgage or support a family, which means that the business revenue can stay in the business to help its growth.
Con No. 1: You may have a difficult time securing financing and business credit.
One of the most important aspects of starting up is securing financing in some form or another. Sometimes that comes via personal investment, other times through angel investors, and often it's accomplished through a business line of credit. As a new graduate, you may have a harder time securing that financing if it involves an investor or lender.
Mark Zuckerberg, founder of Facebook, had his best friend contribute $1,000 to help launch Facebook. According to "The Facebook Effect," by David Kirkpatrick, Eduardo Saverin later contributed $20,000 more before Zuckerberg was able to secure a $500,000 investment from PayPal co-founder Peter Thiel. Know what resources are available to temper the energy you put into your business idea.
Of course, you can start a business with little to no overhead. Online, service-based businesses tend to require little more than a website and Internet connection to run.
Pro No. 2: You aren't yet jaded by many, many years spent inside a corporation.
For many potential entrepreneurs, years spent working for a corporation can lead to feeling jaded about business in general. This is usually because of all the red tape, which can make employees feel overly regulated or governed instead of open, able and creative.
New graduates often don't carry the same baggage about business and instead feel excited, hopeful and anticipatory about their business ventures. They have the mindset of "anything is possible" and can take leaps of faith without worrying as much about hitting bottom.
Remember to carry that initial spark into the years that follow the launch of your business. That zest for success, and the fearlessness that accompanies launching ideas and putting big things out into the world, is something that can be tough to maintain for a long period of time.
Con No. 2: Starting a business means taking on roles you may not want.
When people think about owning their own business for the first time, they might picture working from home (or the beach), schmoozing with other business owners, and cash flowing in to help pay the bills. Unfortunately, that's usually not realistic -- at least, not for a long while.
Becoming a business owner means you're not only the leader of the company, but you're also the sales team, the marketing department, the billing and collections department, and the receptionist. Essentially, you become every aspect of the business until the business can start hiring.
Before you start up, ask yourself if stepping into each of those roles is appealing and if the benefits of owning the business outweigh having to do those tasks for an undetermined amount of time.
Pro No. 3: Starting a company will provide you with amazing life and business experience.
Even if your business doesn't survive, launching a company is an amazing experience that will bolster your resume. You can't understand the blood, sweat and tears that go into building a company until you've actually built one -- and you can't understand the value of a customer until you see how difficult it can be to acquire one.
Business ownership will also teach you more about yourself, and other people, than any psychology course ever could. It forces you to truly examine how people think and what the motivations are behind the actions they take. Regardless of where you go in your life and career, that is powerful information to learn.
Con No. 3: 9 out of 10 businesses fail in the first five years.
Starting a business doesn't equal instant success. It's going to take some time before the business starts earning revenue and you can bring home a paycheck. Even if the business starts off strong, there are no guarantees of its future success. When you consider the statistic that nine out of 10 businesses fail in the first five years, you can see why it isn't exactly a "safety net."
Even though that statistic might be sobering, you also need to be fearless if you decide to start a business. Avoiding the fear of failure, which can be paralyzing, will help you keep your eye on success so that thoughts of failing don't slow you down.
Resources for young entrepreneurs
If you do decide to start a business after college, here are several amazing resources for young entrepreneurs:
Image from Shutterstock.com / Jason Stitt