Advice for budding small business owners
I’ve recently graduated from college and I want to start my own business. What advice do you have for me?
The job market is so challenging for recent college graduates that some young people are considering starting their own small business, instead of working for a company. While I think this would be an exciting proposition for any ambitious young person, I have some words of advice that would apply to them, or anyone thinking about starting a truly small business (staff under 10).
A Small Business is a Major Commitment
To me, making the decision to start a small business is not unlike the commitment you make to have children. It truly impacts your life in every way. There are some who say they can separate their personal and business life. But most small business owners I know spend more time on their business on a daily basis than their 9-to-5 job, and their families are also more invested in making the business a success.
If your family had an established small (or large business) before you started college, and you worked for them, and wanted to continue to do so, then this advice wouldn’t apply to you, of course. But if you are not working for a family business, I would advise first getting to know other small business owners and talking to them about the sacrifices they have had to make to determine if you have realistic expectations.
Give Your Small Business The Best Possible Start: Get Experience First
I don’t think it’s wise to start a small business right out of college. You lose the valuable opportunity to learn while getting paid by someone else! I advise obtaining at least five years (preferably more) of solid work experience in your field or industry before starting your own business (in that same field or industry).
Developing a support network while you are still employed is also important. Now is the optimal time to join professional associations and network with people who can help you now and later. At this stage in your career, more experienced people are most willing to help you learn the business and make valuable contacts. Foster those important connections with vendors, clients, and partners while you are still employed. They will be important resources — and possibly your first customers and testimonials — as you start your own business.
The Importance of Savings
Starting a small business involves financial sacrifice. When you are first starting out in life, frankly, you have a lot of stuff to buy, from dishes to work clothes to a reliable car. Saving money is always an admirable goal, but not a lot of young people are thinking about creating a substantial nest egg while they have college loans to pay. Also you may find it easier to save while you are employed, while large companies offer attractive employee benefits programs to make that easy for you to do.
Having a healthy amount of savings is recommended before you start a small business. Some say you should have at least a year’s worth of living expenses saved. This means that while your other friends are going on fun vacations and out to eat, you may be scrimping and passing up on on social opportunities. Do you really want to do this now? You can start a small business anytime, but you are only going to be in your young twenties — and have all the liberty that goes along with that life stage — once. You can’t really turn back the clock.
The Impact of a Small Business on Life Experiences
It’s also important to recognize that running a small business when you are under thirty (versus working for a company) will impact your other life decisions in many ways.
For example, you may sacrifice valuable, career-building job opportunities by striking out on your own. Also the risk of small business failure is fairly high. This is a lot of risk to take on when you factor that those first ten years of independence generally also involve
- Moving a few times before you settle into a community and long-term home
- Major purchases, such as a car or home
- Paying off student loans
- Becoming seriously involved or married (or even divorced)
- Obtaining an advanced degree
- Becoming a parent
- Aging parents, with changing needs
All of these major life activities demand tremendous resources of money and energy. Consider postponing starting a small business, perhaps even for a decade or so, until life is more settled and established (e.g., when kids are in elementary school and you have a wage-earning partner with good health insurance for the family). If you foresee that these kinds of life experiences may be probable for you, down the road, as they are for many people, then it may be a better to wait ten years before you take the risks that are involved with starting a small business.
When To Take The Leap…
Still, there are situations when the idea is too good, the opportunity is too wonderful, and the timing is too right to pass up. If this is true for you, if this is your dream, and you have your eyes open about the risks, then you might want to go ahead and take a chance. But make sure you have plenty of support, as well as a Plan B.
There are many successful young people who are running small businesses. This might be the right time for you.
Good luck, graduates!