The Good Grad 2.0
The art of war by Sun Tzu - Image supplied by Penguin Random House
The liberating effect of starting a business
Pumped up after completing a qualification, individuals excitedly run the gauntlet to find employment. The concept of working hard and getting paid to do a job that one enjoys is a utopian dream that the newly indoctrinated graduates strive for but only a fraction of achieving. Some work smart whilst others end up in the first of endless career changes. Often some have no choice but to bear the burden of paying off student loans or needed to support various financial responsibilities including family.
As careers shift as do life choices, many turn to the prospect of running their own businesses - seeking self-autonomy and control of one’s career and financial destiny. It is a large step into a risky environment but as the saying goes: the greater the risk the greater the reward!
So, what does it take for a graduate to start a business, enterprise or company?
Let’s first look at the various types:
The student or graduate: wearing the battle scars and dogged approach...
Graduates who start from scratch and enter the business world earlier on tend to see this path less travelled as a more enterprising one. Some start a business while studying and at times resulting in them having to skip the completion of their education to pursue their business opportunity holistically. It is possibly, in terms of financial responsibilities, the sensible time to enter the business world with the idea to grow from and with it. When one is young with fewer little responsibilities (such as starting a family or haggling a 9-5 job) - why not then?
The main challenge however with this route would be the lack of experience in the business world – not to mention a subsequent difficulty in sourcing funds without a solid (often brand-new innovation) product offering.
Post Graduate: learning to swim with armbands...
It might be the case that the individual has generated enough capital from their employment to finance their project or have the financial stability to pursue this often with little early risk. In such cases it is during their working times or interactions, they see opportunities in the market from an industry perspective which leads to the pursuit of an owning a business that solves that opportunistic need. It involves a payoff between a guaranteed salary and going all in into a business. It is the individuals, however, who create a manageable combination of both that successfully end up in the start-up scene.
If business was easy...then everyone would do it.
One of the obvious yet unnoticed tools a graduate already possesses is an education - which provides the building blocks of being able to understand commercial activity. However, knowing something and putting it into practice is not the same, and whilst a plan looks awesome on paper - the execution of a plan (even with all the know-how in the world) is never an easy task.
The reality is that one needs to be resilient enough to take the knocks, get up again and can stand tall towards a challenge.
This is the reason why some of the best drivers of business are the ones who went into business without an education and entered the business world with hard working street smarts.
Universities and colleges are also coming to the party with business programs and interactive competitions within their ecosystems to train and cultivate business talent so it is not a shock for graduates when they enter the world of commerce for the first time.
The funny thing about money...
Capital is critical to the success of any enterprise but naturally, it doesn’t come for free. The odds of inheriting free cash is generally paralleled to the odds of gambling. So how does one finance a business?
1. Your own capital - savings etc
2. Loans - banks or financial houses - generally they expect a security to back the loan. This is a difficult option for a graduate or student to obtain.
3. Selling equity - giving up a stake in the business - this often comes at a cost of control in the management of your business affairs...
4. The friends and family loan – the ‘have to pay it back in some way, shape or form’ – a rarity depending on how closely knit your family or friends are.
5. Grants - takes a lot of administration but attainable with some hard work and application efforts. These often require selective criteria such as being a specialized area of an industry of interest in your local government.
Going public to raise cash
Whether you are a start-up, medium-sized enterprise or a big conglomerate - there are various public methods of generating capital. It comes at a cost though, whether it is giving up the intellectual property (IP) of a company (which, is the life-blood and identity of your product) or equity control through shares. Keeping a company privately controlled and fuelled with capital is never easy. From sourcing venture capital, incubators, and accelerator funds, to taking a company to the stock exchange or doing the popular crowdfunding route - it all comes at some sort of price. Be sure to read the fine print to ensure that you are indeed ready to take a funding route.
Fuel the business with sales:
Generating capital with sales. The sooner an individual can generate a sale for a business, the sooner it establishes a chain of capital to re-invest into the business. Sales are the lifeblood of any business and if you are not selling your product or service - you are not in business. Setting up channels to allow you to turn every euro, dollar or unit of your local currency into double, treble or tenfold is what you should always be striving to do. The plan of how it will work financially out is something you will need to even document in your well thought out business plan – something your potential investors will also be looking at to ensure they will be guaranteed some sort of return on investment (ROI).
Get advice and possibly a mentor or group of mentors - but most importantly create your own story...
The world is filled with advice and lessons to learn from. Gaining sense from the noise of (not always sound) advice is super critical. What you be focusing more on however, is creating your own story that will be worth telling others...
What's good to watch and read for graduates entering the business world?
Like business advice, there is so much material that can inspire an individual to ignite a business but here is a film and book that should get you motivated:
- Film: The Social Network is interesting because it sheds the light from a student-founded business into an empire.
- Book: The Art of War by Sun Tzu