The Decision to start a business may be one of the smartest things you can do to maximize the value of your college experience. But, if you are already busting your butt in school trying to get good grades, does it make a difference? Yes, in many cases it does, and I will tell you why I think it makes sense. But before I do, I’d like to share a few thoughts about why not want to start a business:
Why Not to Start a Business
To be your own boss: A lot of would be entrepreneurs believe they can start a business and not have to take orders. Sorry to break it to you, but if you found a company you will be accountable. You will be accountable to your customers, to your co-founders, to your employees (if you have them), and to the various government entities that have an interest in your business.
To get rich: Yes, this is one possible outcome, but it is the exception and not the rule. And it usually takes a long time to build a successful company.
Because you have a great idea: Yawn. Ideas aren’t the critical factor, execution is. You need a good idea, but you also need a viable business model and the commitment to work hard.
Why You Should Start a Business
Note: Most of the items below assume you are starting a business in an area related to your field of study.
To amplify your academic education: Rote education has a place, but putting it to use in the real world will provide context and will reinforce what you have already learned.
To gain experience: Even if your goal isn’t to own a business after graduation, the experience you can add to your resume will set you apart from other job seekers.
To leverage your support network: During your time in college, you have access to a vast network of helpers. You have support from your family, you have professors who are experts in their field, you have other student entrepreneurs, and you have organizations on campus dedicated to helping entrepreneurs. Once you graduate, many of these resources become limited.
To build a network: Life on campus is a bit insulated; however if you start a company you will establish relationships with customers, other local business owners, partners, potential investors, etc. Once you graduate this network will be one of your most valuable assets.
To learn how to sell: If you start a business, you will learn to listen to the needs of your customers and how to close business. You need to know how to sell. This portable skill will be valuable regardless of what you do after graduation.
To live without regret: Let’s say you are passionate about a problem and have a solution. How will you feel in ten years if you ignore your idea and are stuck in a career that doesn’t excite you? Hopefully, you never have to answer that question.
To have a job: If you build a business during your time in school, you have a job waiting for you when you graduate. There is no need to interview, and no need to compromise on what you want to do with your life.
Imagine for a moment two fictional students – let’s call them Jack and Diane, both seniors in business management at a top-tier university with a minor in entrepreneurship, and both plan to start a business.
Jack is highly motivated and an A student. In fact, he is so motivated, he has taken classes each summer in order to complete his degree in three years. In his “spare time,” Jack organizes and attends entrepreneurial events on campus.
During his final semester, Jack and two friends took an MBA level course on business planning and strategy. The course required them to do the following:
- Review the existing technology being researched at the university
- Identify a specific technology and evaluate the market applications for that technology
- Develop a business plan
- Market opportunity
- Team and organizational structure
- Product plan including engineering and technical development
- Marketing and sales strategy
- Funding plan
- Five year financial projections
Jack and his friends identified a billion dollar opportunity for manufacturing a game changing medical device. Based on the quality of their plan, the each received an A in the course. In addition, they entered into the annual student business plan competition where they finished second and won $5000 in prize money.
Next steps: After graduation Jack and his friends plan to incorporate so they can begin the process of licensing the technology and pursue funding.
Diane is also a highly motivated A student, but her path has been slightly different. In order to earn money for tuition, Diane took a summer job after freshman year selling Cutco Knives door-to-door. Her first few weeks were difficult, but by the end of the summer she had earned enough money to pay her fall tuition.
Back on campus, Diane found a part-time job at the online student newspaper selling ads to local businesses. She loved the job because the hours were flexible and she was able to learn about each of the businesses she sold to. In addition, Diane was learning the advertising business. She learned about cost-per-impression versus cost-per-action, and how to show ROI to her customers.
In spite of her success, Diane wasn’t satisfied with how the newspaper was selling its inventory. Nearly 60% of the premium ad space was being wholesaled at 1/20 of the price that she was able to charge. Near the end of her sophomore year, Diane approached the newspaper with a proposal where she would purchase a portion of the wholesale ads at 2x what they were currently selling for. She was no longer paid a commission from the newspaper but was paid by the advertisers. And she was limited to non-local advertisers in order to not compete with the other sales reps.
Diane set up a simple LLC, opened a bank account, and signed her first advertiser, Cutco Knives – Cutco needed to recruit a new crop of sales reps for the summer. Diane had a real business.
At the start of the fall semester, and after selling much of her inventory, Diane decided to test an expansion plan. She approached three additional university newspapers with a similar proposal and was able to sign two. With the success of the business, Diane was obligated to hire another sales rep and a friend in computer science to handle the technology.
As she prepared to graduate, Diane was running an ad network for thirty college newspapers, with five part-time employees, and twenty advertisers.
Question: Which student, Jack or Diane, has made the most from their college experience, and who is in a better position not only to start a business but to actually succeed? My money is on Diane.
photo credit: gilmorec