The first risk you should ever take as a student: Starting your own business.

Introduction

Before you read my tips for starting your own business as a student, allow me to introduce myself and to give you some context to my recommendations that follow. I am a senior marketing major and entrepreneurship minor at James Madison University. I founded Dukes in Suits, a JMU Business spirit shop, which offers causal apparel and merchandise in the spirit of JMU Business. My experiences have lessons and pitfalls that I wish I had known before starting. From my knowledge and experiences, I hope to give you the best guidance to starting your own business as a student so that you can gain the most success and avoid fewer mistakes.

What does it mean to start your own business?

It means using your own resources and time to create a new entity that provides value to a customer. You should know that it requires a great commitment of time, resources, and acceptance of risk. A lot of time is spent doing the common activities to successfully start a business including research on its market and competitors, identifying required resources, planning how you will deliver to your customer, then executing your business. For my business, I must sacrifice the time given to my favorite activities and hobbies. Therefore, you should be excited and passionate about the idea for your business, before starting. Next, it is a guarantee that you will have to use your own money and resources to start your business. This is simply because your business will not be convincing enough to make others want to invest in it. This means you must be more creative and efficient with the resources you have. Lastly, starting your own business means being comfortable with accepting all the risks from it failing. The risk can mean losing everything that was invested into your business: time, money, etc. Factors from your market and competition always pose a threat to your business. But accepting the risk this is not entirely a bad thing because anything you invest into your own business makes you are entitled to the profits from the business. On top of that, you can gain skills and experiences that can transfer to more opportunities. For example, from my business, I have gained skills in merchandising, which are desired at hiring merchandising companies.

Why should you take this risk as a student?

i. You have little to lose and a lot to gain

As mentioned before, the reward of starting a business is the ownership of profits and equity. In general, students have very little resources. This means if you start a business with a great idea now, then there are a few things likely to happen. In the most favorable outcome, the small invest into your business could turn into millions of dollars if it grows into the next Amazon or Tesla. In least favorable outcome, you will lose the very little resources you invested into assets for your business. For a moment, how I have explained it might make this sound like any other gamble, like a lottery ticket or sports bet. But this is much smarter invest because you will have gained knowledge, experience, and at the very worst any remaining assets that can be transferred into capital.

ii. Enhance your learning: apply what you are learning to your business.

Despite profits and equity not being a guarantee result of your business, the knowledge, and skills that you gain from starting own business are things that you are guaranteed to acquire. Furthermore, starting your business as a student means you can apply what you are learning in school to your business. I use this reason as major factor to convince myself to start the business I have now. It has enhanced my success in my academics and with my business. For things I’m learning in school, applying them to my business has helped in reaching my goals for mastering the curriculum and doing it at a faster pace. At the same time, the things I learned improved parts of my business. For example, I still use the analysis table I learned how to make in business analytics to plan the costs of my business.

iii. Your university’s resources can help you start your business.

Lastly, your status as a student can give you access to resources and opportunities from your university that can benefit you and your business, at no extra cost. Depending on your University, these resources can include access to technology, research databases, or mentorship from professors. On top of that, there can be opportunities to develop a network of business partners and gain funding for your business. These resources and opportunities are hard to acquire outside of college, and they are important for growing a business. You will only be a student for so long, which means it is important to recognize the window of opportunity to start a business as a student.

What are some key pitfalls student business founders should keep an eye out for?

Like me, you are likely to run into obstacles that could make or break your business. There are a couple things that I wish I had known before starting my business. Along with them, there is one thing you should keep an eye on throughout your journey with your business. Because these pitfalls are specific to my business, these problems may not be applicable to your business. Moreover, I hope you can at least gain a lesson from them.

i. Businesses that require you to be or lean heavily on you being a student.

The first things I wish I had known were what are the implications of starting a business that leans heavily on you being a student. This applies to me because I need to be a student to have my pop-up shops at my school’s college of business. My recommendation to you would be to think about how much your business relies on you being a student and how much time you have remaining as a student. I am not the only one to have started a business that relies on being a student. At several colleges mentioned in University Backed Businesses That Put Students in the Driver’s seat, students have started businesses, then the Universities acquired them and continued to give students the opportunity to run the businesses. One of the key success factors was the year in which students started the business. The best time was when students were underclassmen. For you, this could me starting your business now, rather than later.

ii. Businesses that require licensing with another organization.

The second thing I wish I knew more about was licensing and its implication on a business. For my business, I must license my merchandise through James Madison University. The obvious implication was having to pay the University royalty fees for any material protected by their copyright and trademark. The factor that I did not expect to be a disadvantage was the reduced access of options to suppliers and distribution channels. For my Dukes in Suits, I must buy my merchandise from JMU approved vendors. When supplies were low, this was a disadvantage because it was difficult to buy certain products with few or no JMU approved vendors having them available. I could become a JMU approved vendor, which would allow me to find supplies from any vendor to produce my products. But to become a JMU approved vendor, my business must be insured, and I must pay vendor fees. These requirements were hard to meet without enough money. For my business, my objective was to create a brand that could be seen for its quality. The disadvantages of licensing had a major impact on the success of the brand because the smaller supply pool and extra fees made it more expensive to run the business. If you are thinking about starting a business that requires licensing, please remember the lessons from this experience before making that decision.

iii. The structure of your business.

Lastly, the one thing that I think everyone should be aware of is the business structure they choose to operate in. The standard structures of a business are a sole proprietorship, a partnership, a limited liability corporation (LLC), and the different levels of a corporation. It is important to not only know about these, but to remember them because as your business grows you will want to consider changing your business structure. Each of these structures has different advantages and disadvantages, which mainly involve the amount of risk you are exposed to and the business’s ability to gain capital resources. For example, at the sole proprietorship level, there are few requirements to start the business, but it is difficult to gain investments. Plus, all your personal assets are at risk for any liabilities attained by the business, as the owner. As an LLC, it is easier to gain investments and your personal assets are not as exposed to the business’s liabilities. However, in the structure, you are required to register with the state it is in and to pay taxes as a separate entity. I recommend that as your business grows larger and larger, you should consider changing to a structure suitable for larger business, which are normally an LLC, a S Corporation, or a C Corporation.

Good Luck!

I wish all student business founders the best of luck. I hope you found these lessons helpful and motivating. Starting your own business will be a challenge but a unique experience. I always reflect on that what I create for my business will be something I will truly appreciate looking back as the thing I regret the least. That said, if you see it, take the opportunity to start a business as a student! I would love to hear about your own experience as a student business owner. Visit the contact page of my website to write a response about your own experience.