It’s no secret that the graduate job market is an extremely competitive environment, so it’s understandable why more and more young people want to set up a business of their own, however, it certainly doesn’t come without its risks. Here are 8 questions to consider before starting a business after university.
1. Are you starting your business for the right reasons?
In the world of social media where ‘entrepreneurs’ are plastered across Instagram with their luxury cars and fancy cocktails by the poolside, it’s easy to pick up a false sense of what it’s actually like to be an entrepreneur. If you’re just looking to set up a business because you want to be rich, you don’t want to get a corporate job or you want to have more flexible working hours and more free time…in reality, it’s unlikely to be that straightforward.
“You need a lot of passion for what you’re doing because it’s so hard. Without passion, any rational person would give up.” – Steve Jobs
2. Is your business idea feasible?
Most entrepreneurs have plenty of passion for their business idea, but sometimes it’s just not commercially viable. The best place to start is with a business plan or a one-page plan – map out your idea, do your research and remember to be realistic with your projections as it may be a while before the business takes off.
Discuss your idea with family, friends and even lecturers, people that you trust to give you honest feedback. Be prepared to take some constructive criticism as this could enhance your business plan and identify areas that you haven’t already thought about.
3. Are you ready to startup straight after university?
Young entrepreneurs may not have life and work experience on their side but are often free from the commitments of mortgage payments and family life so decisions about your business can often be made quicker, easier and with faster results. However, be careful not to take unnecessary risks with your business without taking advice.
It’s important to weigh up whether or not it is the right time for you or whether you should get a few years of work experience under your belt before you start your first business venture.
4. Do you have enough capital?
You may be sitting on a great business idea but without the capital, it’s unlikely your business idea will become a reality and taking it to market will be difficult. So, how are you going to fund the startup?
Do you need an investor? Are you willing to risk any savings that you may have? Would you consider crowdfunding? It’s important to think about where the money is going to come from as your student loan won’t last very long.
The initial setup costs of the business are vital but don’t forget to consider the day-to-day running costs of the business. Remember to take into consideration that it may be a while before you start to generate an income from the business, so think about how you are going to support yourself in the meantime.
5. Are you prepared for the hard work?
You will have more flexibility as your own boss, but don’t confuse that with thinking you will work fewer hours and have a lot more free time. The reality of starting your own business is that you will work harder and longer than all those hours slogging over your dissertation for example, but the rewards could be much greater.
6. Will you be starting the business on your own?
Do you work well on your own and are you happy to make all the decisions? Perhaps you would prefer someone that you can share ideas and opinions with?
If you are thinking about finding a business partner then make sure it is someone that can be relied upon when things get tough. A partnership can work really well if you complement each other and can offer different skill sets but this is a big decision so it is important to think about what will work best for you.
It’s worth noting that although you and your best friend think you could be the next big entrepreneurs after several nights out in the student union! The truth is…they may not be the right person to set up a company with.
7. Are you thinking too big?
Make sure the foundations of your business are in place and don’t get too carried away in the early stages of planning. There is certainly nothing wrong with dreaming big but at the beginning of your business life-cycle, it is sometimes best to think small and remain realistic with your initial expectations. Success is not always defined by how quickly you grow sales, how much profit you are making is key too.
8. Do you have a backup plan?
Sometimes things don’t always go to plan and you may encounter obstacles that are out with your control. The reality is that 50% of all small businesses fail in the first few years, which is often caused by a lack of planning and research at the very start.
It’s always worth exploring some alternative options and graduate schemes to keep your options open.
Starting a business could be the best decision you ever make…
Starting a business after university could be the best decision you ever make but it’s not a decision to be taken lightly. Answering these 8 questions is a good place to start and will help you set some of the foundations to hopefully make your first business venture a success.
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