You’ve heard the horror stories about recent college graduates. There is an unprecedented amount of student loan debt and despite an improving economy, 10.5 percent of recent grads are unemployed (as compared with 8.4 percent in 2007).
As the Economic Policy Institute put it in a May 2015 article, college graduates have been “idled” by the economy. Here is a quote from the report:
“Due to the progression of the economic recovery and a modest improvement in the unemployment rate, members of the Class of 2015 currently have better job prospects than the classes of 2009–2014. However, the Class of 2015 still faces real economic challenges, as evidenced by elevated levels of unemployment and underemployment, and a large share of graduates who still remain “idled” by the economy. In addition, wages of young high school and college graduates have failed to reach their prerecession levels, and have in fact stagnated or declined for almost every group since 2000.”
But what if recent college grads were able to beat the odds by owning their own small businesses? Can a young college grad start a successful business fresh out of college? Mark Zuckerberg and his phenomenal success founding Facebook as a Harvard student aside, the answer to this question is yes. In fact, according to 2015 data from The Kauffman Index’s Start-up Activity Report, about one fourth of American entrepreneurs are in the 18 to 24-year-old age group.
However, there are several qualifying steps to any recent grad’s path to successful entrepreneurship.
Use Your Time as a College Student Wisely
As a student, you can research the industry you plan to enter from a solid vantage point. Take classes in entrepreneurship and interview business owners. You will find that business owners are eager to help students and are surprisingly forthcoming with details about running their businesses to them.
If you have a new idea or product, use your peers as a test market. Solicit honest feedback about what they like and do not like about your product or service and make changes accordingly.
Enter School Events and Competitions Focused on Businesses
Many colleges and universities have competitions for start-ups, some of which offer funding and mentorship opportunities. Take advantage of any opportunity to test out your business skills. You will learn valuable lessons from the process of trial and error, and from your professors’ and classmates’ feedback.
Stay in Touch With Your Professors
After you have built strong relationships in college, don’t forget about them. Your professors can be great resources, references, mentors, and they may even be a source of both internships and paid work.
Similarly, join your school’s alumni organization, since it can be an ongoing source of advice and support as you establish your business.
Develop a Business Plan
Being fresh out of college is no excuse not to be professional. No matter what business you are going into, you need a solid plan and a realistic budget. Conduct market research on what your competitors are charging for a similar product or service. Aim to beat the competition on quality and value, or offer something something unique that fills a void in the market.
Secure Your Financing
Since bank lenders usually look for at least two years’ experience, it can get frustrating finding the funding you need to launch a business. According to a 2014 report by the Federal Reserve Banks of New York, Philadelphia and Atlanta, almost a third of entrepreneurs rely heavily on personal savings to fund their business. But what if you have a great idea but no savings?
Get creative with funding. Try online lenders and crowdfunding to raise the funds you need. Also, visit the Small Business Administration website for ideas.
Be Ready to Work Long and Hard
It may sound perfect as you daydream about launching your own business fresh out of school. You’ll be the boss, and you’ll set the hours. The hard truth is that starting a successful small business takes long hours and hard work. In the beginning, at least, it is not as glamorous as it sounds.
Start Slow
You probably have heard the often-quoted statistic that nine out of every 10 small businesses fail within the five years.
Many businesses fail simply because the owner did not take the time to create a solid plan for success. They may have invested too much money in overhead and equipment early on. As a young entrepreneur, take the time to build your business and your reputation slowly, so you do not run out of revenue before you are up fully up and running.
One way to start slow and steady is to maintain a part-time job while you launch your business part-time. That way, you still have an income stream while you get things going for your business.
Build a Network
Seek our support from professional organizations and from others in your industry. In addition, there are many solid resources available for young entrepreneurs. Here are a few to consider.
- Public Service Loan Forgiveness Program
- The Youth Entrepreneurship Council
- The Small Business Administration
- SCORE
