It’s graduation season, a time when many individuals embark on their career journeys after completing their education. In today’s ever-evolving job market, an increasing number of graduates are choosing entrepreneurship. According to a global survey, around 11% of students already own and run businesses, with at least 18% of students aspiring to become entrepreneurs right after graduation and an additional 32% expressing interest within five years of graduating. This surge in entrepreneurial aspirations is driven by the desire for independence, financial freedom, flexibility, and the opportunity to pursue one’s passion. However, the path to entrepreneurial success is not without its challenges.
The entrepreneurial landscape has dramatically changed over the past few years, providing aspiring business owners with more tools, resources, and access to talent. Businesses today can operate their businesses across several channels, expand their reach and engage with their audiences in new ways. While this presents immense opportunities, it also creates a more competitive environment and nuanced challenges. As a result, it becomes crucial to adopt strategies that ensure success. And, for any aspiring business owner, it’s important to consider the following invaluable tips as a compass to navigate the exhilarating journey of entrepreneurship.
Identify the problem you’re solving:
When starting a business, it is important to identify the problem you are solving to help shape your value proposition. When I started ConnectOne Bank, I was an entrepreneur who was frustrated by a series of bad banking experiences and knew that it could be done better. I was motivated to build a bank that was dedicated to serving the small business owner. This will also help shape your product set and roadmap along with your go-to-market strategy.
Create a comprehensive business plan:
After deciding what your business will be, the first step as an entrepreneur is to create a detailed business plan. The plan should include a clear description of the business and what it solves, a market analysis to see how the business matches up to competitors, assessing the size of your market, a marketing and sales strategy, and most importantly, financial projections for the business over the next 1, 3 and 5 years. Keep in mind that a business plan is also a sales pitch and an opportunity to secure different forms of financing – whether that be through potential investors or lenders. Presenting a well-structured plan that evaluates the long-term viability of the business can help secure financial support and backing. Your business plan should essentially define your business, how you’ll acquire customers and the cost to operate and grow, and risks that should be considered. It should be well thought out, but also nimble enough to adapt to changing economic and social environments.
Determine financing requirements and seek an appropriate banking partner:
Evaluating the financial needs of the business and whether you have sufficient funds to start and sustain the venture until it becomes profitable is an important next step. Seek expertise on managing investments, leveraging funds, and understanding when to borrow versus bootstrap. Consider the advantages of working with a bank that understands your industry or specific niche and who can serve as an adviser but also understands the local area in that your business will be operating in. This will provide valuable insights and guidance on optimizing the utilization of newly raised funds, ensuring efficient allocation and strategic investment decisions that align with the business goals and growth trajectory. Be mindful of predatory lenders who are not transparent about the true cost of borrowing. If it’s too good to be true, it’s a red flag.
Prepare finances and navigate student debt:
It is crucial to fully grasp the significant financial challenges that arise when embarking on a business venture, which includes effectively managing the burden of student debt. Recent statistics reveal that a substantial number of business owners are burdened with student loan obligations. More than 43 million Americans have student loan debt and half that number are entrepreneurs trying to take out loans. This eye-opening statistic underscores the pressing need for entrepreneurs to collaborate closely with their banks to mitigate the impact of student debt on loan applications—especially in today’s unforgiving economic environment. Don’t be put off, you can still open a business with student loan debt but work together with your local regional lender. Be upfront about student loan payments and make sure they are included in your budget. Our SBA lending group managing director David Canet says student loan debt can affect your debt-to-income ratio and your credit score, which are criteria banks use to approve loans. Make sure you can show sufficient cash flow to support your personal expenses, including the student loan payment along with your business loan payments.
Build the right team:
Surrounding yourself with individuals who share similar visions and possess the skills necessary to help the business thrive. Jim Collins made famous the concept of having the right people in the right seats in his book Good to Great. I’ve learned over and over again that having the right team is critical to the performance and success of your company. Your employees are the most valuable asset in your company so spend the time to find those that buy into your mission, align with your culture and invest in their growth.
Beyond your employees, make sure you surround yourself with the right set of partners. I often tell my clients to think of it as building an advisory board. From your attorney, accountant and banker to your centers of influence and vendors, aligning yourself with the right stakeholders will support your company through its various stages, and support you in challenging times.
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Embarking on an entrepreneurial journey can be both exhilarating and challenging. To increase the chances of success, it is vital to plan accordingly and come equipped with the necessary knowledge and resources. It’s an ever-evolving field, requiring continuous learning, adaptability, and perseverance. When approaching entrepreneurship as a career choice be certain to consider emphasizing the importance of planning and leveraging available support. Remember, success as an entrepreneur is not guaranteed, but with the right mindset and strategic approach, dreams can become a reality.
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