How to Start a Business ... When You're 22
Many people would rather be their own boss than a wage slave. Fresh grads in particular might find it tempting to take the entrepreneurial plunge, rather than start at the bottom of a steep corporate ladder.
But you'd be scared. After all, you know that most new businesses fail. And it's intimidating to think about taking out more loans, hunting down clients, and battling competitors. Besides, what the heck do you know about running a business? You're a liberal arts graduate.
The good news is that 20-somethings may have a few advantages in the self-employment derby. If you start a business before starting a family, you won't have to choose between company and family expenses, or between working in the evening and playing Monopoly with Junior. Plus, you haven't yet developed bad business habits.
To maximize your chances of success, follow these guidelines:
Status is the enemy of success. Most top graduates are too prestige-conscious to start a business that lacks status. So, they start la-di-da enterprises, like a software company or froufrou restaurant. Or they become doctors or lawyers in private practice. So if you start a business that's lower down the food chain–think mobile-home-park maintenance, a chain of espresso carts, a used-truck-parts brokerage–your competitors may be less sophisticated. You just might eat their lunch. Also, low-status businesses tend to be simple, so there's less to go wrong.
Don't innovate; replicate. If you try to come up with a great new idea, it might work, and it might not. You're the guinea pig, and while you won't die if your experiment fails, you could go broke. A case in point: I had a client who invented a new kitchen gadget. To keep costs down, he found an overseas manufacturer–that promptly stole the idea, ignoring U.S. patent laws. Suing was prohibitively expensive, so our hero went bust. Even if he hadn't, there are a zillion other reasons that innovative businesses fail: cost overruns, the product doesn't work as expected or doesn't impress consumers, a competitor comes up with a better product–or simply markets a similar product better.
Better to copy a proven concept. Produce a cheaper version of a hot product, knock off a popular website, or find the most successful store in town and create a variant in a similar location. For example, if you see a number of burrito shops doing ay-caramba business, incorporate each one's best features and open your own in a great location.
Beg for honesty. The oldest business axiom is "talk to your customer." But that's not enough. Customers lie, especially if they're your friends and you're asking what they think of your idea. Will they really tell the truth if it sounds like a stinker? You have to beg them to be honest with you: "Better to tell me you wouldn't buy my product now than after I've invested a bundle in the business."
OK, so you think you have a workable idea. Now you need excellent execution. How do you pull that off?
Start by developing a simple business plan. Don't know enough about business to do that? Use the free Small Business Planner offered by the U.S. Small Business Administration.
Be a cheapskate. Making six figures as your own boss doesn't require a lot of capital. Sure, you need big bucks if you're trying to create the next Olive Garden. But the old saw "it takes money to make money" is dead wrong if you're running a simple business. What you need to do is save at every turn. Work from home. Hire help only on a just-in-time basis, paying by the hour. Buy stuff cheap by using price search engines such as shopzilla.com and bizrate.com.
Hire wisely. Look for people you already know and trust, or who come highly recommended by people you know. Don't put much stock in résumés or basic interviews: There's too much lying. Don't ask stock questions like, "What's your greatest weakness?" Interviewees often prepare sanitized answers to such questions. Instead, give them a challenge. Ask how they'd handle specific, demanding on-the-job scenarios.
Hire people who will stay with you. And remember, by hiring people just in time and by the hour, it's easier to fire a bad worker, with less worry of a wrongful-termination lawsuit.
Work long. No matter what the work/life balance cheerleaders say, most successful business owners don't just work smart–they work a lot. That advice will never get me on Oprah, but it's the truth.
Rebound. Stuff happens. Losers usually quit prematurely, while winners struggle to find solutions and overcome obstacles. Only if they find their business to be a constant struggle do they fold their cards and try another hand.
Never do anything you couldn't tell your parents about. The bottom line is only half the reward. Earn your money while also doing the right thing. Sleazebags can be successful, but it's not worth selling your soul for money.
More from the College Grad's Career Kit:
• Commencement Clichés, Debunked
• Digging Up a Career's Downsides
• Eight Ways to Thrive at Your New Job
• The Case Against Grad School