Starting a business out of college
August 1, 2007
When I came out of college, I went to work for a variety of places for very short periods of time (thanks to the dot-com bust). Looking back, I wonder if I would have just been better off skipping half of college and most of my early jobs—and going straight to entrepreneurship. What stopped me? Money.
Money is what drives businesses. While there are a lot of factors going into entrepreneurship, money has to be the #1 reason why a new business succeeds or fails. Start-ups run out of capital, entrepreneurs go back to their day jobs because of financial constraints, and most college students take their innovation straight to a large company where it gets squashed just to pay off their student loan debt.
It’s been a while since I’ve thought about my student loans (thanks to auto-pay), but I was reminded of them after reading all 141 comments left when Ramit Sethi asked his readers to tell him about their debt. The stories were just incredible—I thought my (currently, after 7 years of payment) $28K in loans was bad until I read stories of recent grads being in debt for several times that amount. The overall implications and financial burdens on the lives of the commenters is just astounding.
Considering this amount of debt, it is pretty obvious why most post-grads would want a stable job vs pursuing entrepreneurship. Their loans payments start just a few months after graduation, and who would want to add to their existing debt by taking out a business loan? This is why we are losing a lot of potential innovation in this country, because those new grads are wasting away in corportate America instead of using the cutting-edge technology they just experimented with while in college.
I don’t have the answers, only more questions. How can we encourage innovation by changing the structure of post-college debt in this country? Is there any end to this trend with college costs rising every year? Who will pass us up when our innovators (at any level) can’t afford to innovate?
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Not everyone can do this, but: One of my daughters is going to college and paying for quite a bit of it through scholarships, paying for more by working while studying, and living frugally. Some family savings are involved, but she’s doing this on a pay-as-you-go basis.
Not everyone can do that, I know.
Changing the way post-college debt is handled could help, but I think a more radical idea should be put forward.
Who says college is important?
Bill Gates is a college dropout.
Online courses and information is available at a fraction of the cost of a traditional brick-and-mortar-and-frats-and-beer college or university.
I believe that traditional higher education is important as a social setting for people interested in learning alternative ways of thinking and perception.
I believe that traditional higher education is important for those seeking employment from organizations that insist on seeing a certificate from an accredited institution.
I even believe that traditional higher education is important as a setting in which people like professor Ward Churchill may earn a living.
However, in terms of learning useful skills and developing ideas, I believe that contemporary information technology may be joining the halls of ivy as a viable venue for learning.
I second the opinion. No money, debts and the fact that it is just that much more difficult to start a business, the better the entrepreneur shapes up. What say?
Well said Norski! Very insightful post.
I like Loral Langmeier’s (sp.?) approach to debt. In her latest book she advocates creating a business suited to your financial ability to start up - in some cases a microbusiness. She calls it a “cash machine” and advocates it as a faster way to get out of debt. I’m oversimplifying it, obviously, but faced with crippling debt I’d rather take my odds as an entrepreneur.
Thanks for the thoughtful article.
Arleigh Cee
http://homepreneur.blogspot.com
Who is Loral Langmeier? …and what is the name of the book? This sounds like something that could help my situation. Please email me with answer or post: kosignlady@yahoo.com