So, you’ve decided to start a business in college? First and foremost, congratulations on taking a step towards your future security. Before you jump in, however, there are some things you’ll want to be aware of. From profit margins to startup costs and finding the right audience, starting a business can be challenging and might not make you any money for the first few years. Here are some things to know before starting a business in college.
You Might Not Profit for a Few Years
Most businesses will turn no profit for the first few years. In fact, the sweet spot for many businesses seems to be around the five-year mark. When starting your business, you’ll need to decide if this is something you can handle. You’ll likely need to set aside some cash for emergency situations and plan on not turning a profit in your first year.
This can be incredibly taxing on top of school loans, so be sure you’re ready to meet the financial obligations that accompany such a venture. If you’re already buried in debt, there’s a good chance you may not be able to afford to go without a steady income for the next few years. You’ll also need to determine if you’ll be running your business while working another job to meet your financial obligations.
While it’s certainly possible, it will be a challenging few years with schooling and what amounts to two full-time jobs. Don’t expect to have too much free time!
Depending on the type of business you’re forming, there will likely be startup costs. Legal filing fees and attorney’s fees, inventory startup costs, and more will create a strain on your finances from the get-go. Most businesses start with a deficit in the hopes of building a profitable enterprise from there. If you’re borrowing money, you’ll want to consider the total cost of your borrowed funds as a startup cost as well.
A good business plan is a must; especially if you’re hoping to secure funding from a lender or investor. Money doesn’t come for free, and most lenders won’t touch a business that doesn’t have a plan to back it up. This shows the lender that you’re serious about the business, and have created a plan for any problems that may arise down the road. Remember that lenders and investors want to see their funds returned, and that’s difficult to do if there’s no plan for repaying your loans!
The Tools of the Trade
Another consideration for starting your business is knowing the industry you’re going into; and the tools of the trade. Without the right tools, you won’t find much success, whether you’re starting a retail store, ecommerce store, or construction business.
Having a point of sales system for your retail store or the right heavy equipment for your construction business will help you achieve success and do the job right. Customers don’t want to pay for a service or product from someone who doesn’t know what they’re doing; they come to you because you’re supposed to be the expert in the field!
Be sure to do your research and spend the extra money on the right tools for the job. These tools should be tax-deductible at the end of the year, so you’ll be able to recover in some way a portion of their cost.
A Business Takes Time and Effort
You’ll want to be prepared to put forth maximum effort when you start a business. Prepare for long nights, early mornings, and a potentially empty wallet for a few years. If you’re running the business on your own, you’ll be doing all the heavy lifting (both physically and metaphorically) and can become prone to exhaustion or burnout.
While it’s certainly important to give your all to the business, don’t do it at the cost of your physical or mental health. If you’re feeling overwhelmed, don’t be afraid to give yourself a short rest period. The business will still be there tomorrow, but your mental health may not be if you push yourself too hard. Burnout is a real condition that can cause a myriad of issues if left unaddressed.
Who is Your Audience?
Knowing your audience is one of the most important components of starting a business. You can have the greatest product in the world, but if you don’t know who’s going to buy it, you likely won’t sell many units. Do some research on your target audience; Where do they live? How old are they? Are they male, female, or are you targeting both? What websites and social media outlets will your audience frequent? Knowing these details will help you reach the customers you’re looking for and begin boosting your sales.
Starting a business can be quite the venture, requiring much attention and many hours of hard work, but in the end, the freedom you’ll feel from being in control of your own destiny can’t be understated or given a monetary value. There’s simply no price on freedom