5 Tips for Starting a Small Business in College

It started as a class assignment: Write a business plan for a company you’d actually want to start. Leigh Ann Tona, then a senior at the University of Delaware, dreamed up I Don’t Give a Fork – a food truck that’s all about forkless fare.

Success followed, but it wasn’t instant. It took lots of planning, help from her professors and parents, and time spent scanning Craigslist for a used cart (she later moved up to a truck). Tona opened for business in September 2012, four months after she graduated with a degree in business management. She’s been serving up sandwiches – including her signature item, the Mac & Cheesesteak – full time ever since.

Like Tona, some students pursue entrepreneurship straight out of college, or even while they’re still in college. In 2014, a quarter of U.S. entrepreneurs were ages 20 to 34, according to the 2015 Kauffman Index: Startup Activity report. While more than half of 18 to 24 year olds see entrepreneurship as an opportunity, only about a third say they have the skills to start a business, according to a 2014 entrepreneurship report by Babson and Baruch colleges.

If you’re a college student looking to launch a business, here are five tips to help you find success.

1. Take advantage of your status as a student.

Follow Tona’s example and take entrepreneurship classes, using assignments to do feasibility studies and market research about the business you want to start. Interview owners of existing businesses in the field you want to enter. They’ll share insights with students that they wouldn’t normally tell another business owner, says Erik Monsen, an associate professor at the University of Vermont’s Grossman School of Business.

“Find out all the difficulties in starting the business, because you’ll probably have similar challenges,” Monsen says.

If your product or service targets college students or young people in general, turn to groups such as sororities, fraternities and clubs to test your ideas. Ask what they like and dislike about your competitors. Then use that feedback to improve your offerings.

2. Participate in school-sponsored entrepreneurship events.

If you’re still in college, don’t just learn about entrepreneurship – practice it. An entrepreneurship program that offers guidance for starting a real business, as opposed to theory-based curriculum, is more likely to help you become a successful entrepreneur, according to a study Monsen co-authored in the Journal of Small Business Management this year. Many colleges and universities host hackathons and startup competitions, and some campuses have accelerators and incubators that offer office space, mentorship and sometimes funding.

After Tona turned in her business plan assignment back in 2011, her professor encouraged her to apply to the school’s business plan competition. Tona tied for first place and won $1,000. That’s wasn’t a lot of seed money, but “winning was validation,” she says.

3. Leverage relationships with your professors.

Tona graduated three years ago, but she’s still in touch with her business professors, many of whom are former business owners themselves. They give her advice on planning and growth, and she speaks to their business classes about what she’s learned as an entrepreneur.

Monsen says he likes it when his former students stay in touch, and he has facilitated internships for current students with alumni who are looking for part-time help. He adds that alumni groups can be an unexpected source of advice, customers and even funding.

4. Be business-minded. 

Although this tip may seem obvious, many people get so caught up in their passion – whether it’s cooking, jewelry making or coding – that they neglect their business plan and budget. So when you choose to launch a company, make sure you’re committed to running it as a business, not just as a hobby. If you’re already out of college and need help doing market research, writing a business plan or creating a budget, visit your local Small Business Development Center. There are hundreds of these federally sponsored centers around the country that offer free, objective business consulting.

5. Compare your financing options. 

Finding startup financing is one of the biggest challenges that entrepreneurs face. Getting a bank loan is nearly impossible until you’ve been in business at least two years; that’s why nearly a third of entrepreneurs rely primarily on personal savings to fund their business, according to a 2014 report by the Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia. As a college student or recent graduate, you probably won’t have that kind of savings – especially if you’re saddled with student loans.

Online lenders are more willing to lend to new businesses, and their application processes are much faster and more convenient than those of banks. Their rates and fees, however, are more expensive than those on bank loans, and many still require that you be in business at least one year. If you need a small business loan, compare your options to get the best deal.

Last month, Tona celebrated three years in business with I Don’t Give A Fork. She’s planning on using the winter, when her business shuts down because of the cold weather, to plan for the future – she’d love to open a café in addition to the truck. Longer term, she’d like to teach college entrepreneurship courses because it was valuable to her to learn from adjunct professors with real business experience.

“I want to be able to give back to those students who were like me,” Tona says. “If I can do it, they can do it, too.”

SOURCE: http://money.usnews.com/money/blogs/my-money/2015/10/09/5-tips-for-starting-a-small-business-while-in-college