You might become the next Michael Dell or the next Bill Gates.
Starting a business in your dorm room and having it grow to a multi-billion dollar enterprise can happen. It just doesn't happen very often.
Most college students, in fact most adults, who start businesses do so because they want to live the American dream of owning their own business.
Too often that dream becomes a nightmare.
Here are some things you can do to ensure this does not happen.
The reality is that starting a business is easy. All you need is an idea. There never is a good time or a bad time to start. Many profitable companies have been started in the depths of recessions. Many successful companies die during economic booms. You just have to provide something that people are willing to pay for more than once.
That's the key. Staying in business - much harder than starting a business - requires that you find profitable repeat customers. These are people who have bought your product or used your service once, and are willing to use it again and tell their friends about it. Word of mouth is some of the best advertising you can have. Customers may be willing to pay, but are they willing to pay enough over the long term so that you can stay in business?
You have to know your costs of operation. There are direct costs for producing the product and service. There are also indirect, or overhead, costs that you have to pay whether or not you sell one dollar of product. You're starting in your dorm room, so you don't have rent or utilities to pay. That's true. But what happens when the business is successful and grows too large for your dorm room? You'll have to pay those costs then. Make sure that you price your products and services high enough to cover realistic overhead even if you aren't paying it at the present time. Save the difference. You'll need it when you expand out of your dorm room.
Learn to read financial statements. They are your score card. Accurate statements produced every month help you spot minor issues before they become major crises. Even if you are very small, selling only $100 of product per month, generate a financial statement each month. By starting the habit when your business is small, it will be engrained when it grows.
Don't like to sell? Learn to like it. Business is all about sales. It's promoting your company all the time. It's giving your business card out all the time. It's asking for the order. It's accepting rejection. You'll always get more rejections than acceptances. Get used to hearing the word no. The more you ask, the more yeses you'll get.
Going into business with a partner? Make sure that you and your partner have different strengths. Partnerships get into trouble when all the partners like to do the same thing. Have a strong partnership agreement that is created when you two are still friends. Partnerships are like marriages. There are always ups and downs. Divorce is ugly when one partner doesn't hold up his or her end.
Becoming an entrepreneur and owning your own business gives you much more freedom than you'll ever have working for someone. It also gives you much more risk. As a college student, you have an advantage. You risk very little for some potentially large rewards. If you find you don't like being in business, remember that you haven't lost the house, car or other assets that most adults pledge for when they start.
You still are a student with a dorm room and a meal plan. If you fail, figure out what you learned and don't repeat that mistake again. If you are successful, use that business as a springboard for what you want to do when you graduate.
There is nothing like receiving that first check. The memory keeps you going when things don't happen as you want them to. Business is all about risk and dealing with the inevitable challenges. Be creative. Meet the challenges head on and you'll ultimately be successful.
Ruth King (E 78) started her first business two years after she graduated from Tufts. Her latest book is titled "The Ugly Truth about Small Business: 50 Things That Can Go Wrong and What You Can Do about It."
Submitted through the Young Entrepreneurs of Tufts (YET)
