Are you thinking of starting your own business? Well, it turns out, you are not alone. When it comes to the entrepreneurial spirit, research has shown that it is alive and kicking among America’s recent college graduates. According to a study by MAVY Poll and The American Institute of CPAs (AICPA), 70% of college graduates would like to start their own business due to the freedom of being their own boss. Additionally, 53% of them said they are likely to start their own business in the future. While the process can be challenging and intense, it does come with a long list of perks — if done right and while armed with the right tools.
The Benefits of Starting a Business Right After Graduating From College
Starting a business right out of college often means you get a head start on other competitors with more energy to devote to launching a business. Launching a new business can often mean long hours in the beginning and a recent college graduate can often devote the needed time. It is also a great alternative career option if you are having trouble finding employment after graduating.
However, launching a business right out of college can also come with its drawbacks. For instance, younger graduates can find it difficult to secure financing due to a lack of or minimal credit history. Inexperience in the corporate world can also count against you as you try to beat the stark odds of 9 in 10 businesses failing within the first five years. However, the key to having the best chance is taking the time to prepare.
How To Prepare Yourself To Be an Entrepreneur
Deciding to be an entrepreneur is not an overnight process. It is important to prepare yourself both mentally and financially before launching your own business. A good place to start is by setting a goal as motivation. It also helps if you can pinpoint why you want to be an entrepreneur and the skills you can bring to the business. This helps you to know what business functions you may need to outsource in the future. For instance, if you are specializing in marketing during college, devising good marketing strategies for your business may be a strong point of yours. On the other hand, business functions like accounting and IT may require the expertise of someone else.
Learn About Your Options for Financing
Your finances will be a crucial part of being a successful entrepreneur. As a new business owner, you can expect to wear many hats — including that of the business’s credit controller and in-house accountant. Most small businesses do not hire a financial team until they are more established and profit margins begin to grow. With this in mind, it helps to prepare yourself for the financial side of running a business including brushing up on the different kinds of financing options you can access, taxation rules and deadlines, or basic bookkeeping skills. Even if you do end up hiring a financial team, it helps to have a solid understanding of business finances so you can make informed decisions. If you are still in college, you may want to speak to Student Affairs about signing on for an entrepreneurial finance or basic bookkeeping class. Alternatively, you can always sign up for basic business finance courses online using e-learning platforms like Coursera and edX.
It is also recommended that you spend some time thinking of how you will finance your business. Will you be using savings or relying on a business loan? If it is the latter, find out what the requirements are for a business loan right now, including credit profile and interest rate requirements. There are options like the Small Business Administration (SBA) grants, traditional business loans, and Community Development Financing Institutions. Make sure you understand the pros and cons of each option, including the overall costs attached to it. Finally, prepare a financial plan for your business. While the figures do not necessarily need to be exactly accurate, it helps to have them reflect statistics in your proposed industry for validity and accuracy. Having a financial business plan will also help to boost your chances of securing funding as most investors and lenders often ask to see one.
Do Your Research on Your Business Structure Options
Once you have decided on a business idea, it is time to decide what form you would like your business to take. Most startups tend to be sole proprietors or partnerships but you should take the time to weigh the pros and cons of all business structures including limited liability companies and corporations. The requirements of registering each business structure will also be different depending on your choice and your business location. For instance, the steps on how to start an LLC in Texas include drafting an operating agreement and a state franchise fee of $300. However, some states like Delaware, California, and Wyoming impose an annual franchise tax on LLCs — something that limited liability companies in Texas do not have to pay. For this and other reasons, Texas remains one of the best states to start a business right now.
Familiarize Yourself With Networking and Brand Building Techniques
Knowing how to promote your business and build valuable business relationships will also be a critical skill you need to develop as a new entrepreneur. Partnerships and collaborations help to get your business’s name out there. It aids in brand visibility and can also help to forge useful business relationships with creditors, suppliers and friendly competitors. Multiple studies and research have shown that networking can lead to more job offers and career progression — it is no different as an entrepreneur.
If you are looking to improve your networking skills, start with assessing your current opportunities within your current network. It will also help to register and attend business networking events for startups in your industry. For instance, local chambers of commerce often host monthly/annual networking events for the local business community. If you want a list of business networking groups, this networking list by Insureon’s Small Business Blog is a good start.
Making the transition from student to entrepreneur can be jarring but remember to be patient. It is not an overnight process and certainly requires some preparation. However, the rewards it can provide are often more than worth the effort. Once you identify your motivation, have a solid business and financial plan and take the time to equip yourself with the right tools, you are off to a great start.