22 year-old college student with $10,000 to start a business

[YoungUpstart]

I'll be finishing college soon, and I have an interest in becoming a business owner. At this stage I think it would be more prudent to start an online business, something involving sales, rather than opening a store. Of course starting a business is no simple endeavor, and legal considerations and such must be made. I have a few ideas of my own, but I wanted to request some input. I'm obviously not in a position to start a huge company, but given what I have in cash (which is not even considering what potential government loans/grants may be available), what kind of business enterprise(s) would be advisable?

[Steve B]

It depends on too many things to give you any kind of meaningful answer (skills, interests etc.). The only think I would point out is that you won't make any money for many months with almost any kind of business that you start. So, you will likely have to use the $10,000 to live off of while you are starting the business.

[sarahfriedlander]

What are you passionate about? What do you want to share with the world? These are questions that you should be asking yourself as you try to shape your business idea and ultimately your business plan. While $10,000 might sound like a lot of money Steve B has a point that the money will go very quickly.

It may be more prudent to have another source of income while you work on your business plan and ultimately get your business up and running. Find a few people that can be your mentors and advisors. This will help you formulate ideas and action plans that will hopefully work when you go to execute them.

Good luck and let us know about your future endeavors!

Also, shameful promotion I know but go and check out my company's website, GoBee (link in my signature). We put together a lot of really educational (and cheap) instructional videos to help entrepreneurs like yourself startup a business. Might give you some good guidance :)

[nealrm]

As Steve stated above, you didn't give us much to work. What is your degree in? Were are your passions, your likes, dislikes? What experience and skills do you have?

I will give you some general advise. Determine you passion and then find a job in that passion. Once you have learned the ropes, then start thinking about starting a business.

[billbenson]

I'm an online distributor. I wrote my own web site and only deal with online orders or phone orders. I'm a 56 y/o career salesman. I have a degree in Electronics Engineering. With 22 years working as a sales guy for a couple of different companies gave me the sales experience I needed for sales. The engineering degree gave me the technical abilities to put together a web site. Some of my recommendations you may have skills in, some you probably won't. Here are some of my recommendations:

1 - Find a product that you can sell at a high margin. Say 30% markup. The more expensive the product the better. Also a microniche product helps. You would never have heard of the company I sell products for but they are a 1.2 Billion dollar company. And example of an area I'd recommend researching is the oil industry. They aren't affected much by the recession. Expensive stuff. They are constantly repurchasing products because of the harsh environment they work in. Additionally, find a product you will be able to get at a wholesale price. You will probably be able to only buy through a sub distributor at first. When you get some volume, you can approach the manufacturer do be a direct distributor. Make sure that the manufacturer you sell the products for will allow you to be a direct distributor and what you need to achieve that. Call them. They will tell you.

2- Write a site in WordPress. Study SEO, Adwords, PHP (the language WordPress is written in). Incorporate that into your site. Just do a product information site for now. Study the heck out of the product you want to sell. Become an expert in it. When your site is within the top 5 on Google, you will be ready to add a cart and sell.

3 - Get a job for a small company that sells online. Say 10 inside sales people. Study all of their processes. Look at what the top sales guy does to get orders. Look at their website thoroughly and figure out why it sells or what defects it has.


Consider all of the above getting your masters degree. Depending on your knowledge and skills its a 2 to 5 year process.

I don't think you will find anybody on this forum who will recommend you immediately out of college to start a business and not get a job.

Good Luck!

[fayt]

I recommend staying away from online stores and opening up a brick and mortar instead. I started my business with $10,000 and now after two years up to $30,000 a year in sales.

[billbenson]

I recommend staying away from online stores and opening up a brick and mortar instead. I started my business with $10,000 and now after two years up to $30,000 a year in sales.

But why stay away from online?

[Wozcreative]

I recommend getting some real world experience first. Seeing as you have not given us a direction on what industry you would like to focus on, tells me you are not ready yet. Can't pull a business out of a hat without any real interest in something specific. If you told me you liked building computers, we that would be a good start.. but you are far too vague in your question and those types of people usually don't end up being successful with things without any experience.

[fayt]

But why stay away from online?

It really depends on the products but with high shipping costs, you'd have to sell dirt cheap to get many customers. You have hosting bills, virtual credit card terminals (unless hosted), if you work out of your house generally cities won't allow you to operate out of your home in many areas, plus you'd have trucks picking up and delivering every day. Customers will visit you thinking you are a store, it's very hard to advertise your online store, you'd have to do a ton of SEO marketing and put thousands into it.

With brick and mortar you just open your shop, stock products and are ready for the public.

[nealrm]

It really depends on the products but with high shipping costs, you'd have to sell dirt cheap to get many customers.
Something to keep in mind. Depending on the product, it may or may not be an issue.


You have hosting bills, virtual credit card terminals (unless hosted)
Hosting bills are minor compared to rent, utilities, insurance, store fixtures, inventory and other requirement of a brick and mortar business. You will need a credit card terminal either way, so the point is mute.


if you work out of your house generally cities won't allow you to operate out of your home in many areas
Many cities will allow online businesses. You may have more of an issue with your HOA. However, if no customers visit and you don't received huge shipments, it would be hard for anyone to notice.


Customers will visit you thinking you are a storeI rather doubt it. Unless you are putting your home address on your advertisements instead of your web address.


it's very hard to advertise your online storeNo harder than a brick and mortar store.


you'd have to do a ton of SEO marketing and put thousands into itOf course you will have to work at it. Instead of being at a store 10-12 hours a day, you are doing SEO work. Nor is there any reason to spend thousands on SEO work.


With brick and mortar you just open your shop, stock products and are ready for the public. My daughter's lemon-aid stand required more work than that. You are leaving out a HUGE amount of work.. Finding the location, laying out and setting up store displays, ordering and stocking the products, setting up utilities, creating and ordering signage..... Setting up a store is not a throw-it-together over the weekend type of project.

[cobase]

It depends on too many things to give you any kind of meaningful answer (skills, interests etc.). The only think I would point out is that you won't make any money for many months with almost any kind of business that you start. So, you will likely have to use the $10,000 to live off of while you are starting the business.

I'll second this notion. Don't get discouraged in the early days, and don't expect to come out with guns blazing. It takes time to set up a profitable business, so you should set aside some of that money to pay your expenses while you get to work. As long as it affords you time to hustle and focus on your business every day, that is probably the best use of cash in the beginning.

[billbenson]

It really depends on the products but with high shipping costs, you'd have to sell dirt cheap to get many customers. You have hosting bills, virtual credit card terminals (unless hosted), if you work out of your house generally cities won't allow you to operate out of your home in many areas, plus you'd have trucks picking up and delivering every day. Customers will visit you thinking you are a store, it's very hard to advertise your online store, you'd have to do a ton of SEO marketing and put thousands into it.

With brick and mortar you just open your shop, stock products and are ready for the public.


I started my business with $10,000 and now after two years up to $30,000 a year in sales.

In addition to what Neal said, I couldn't live on $30k in income, much less in sales. You are making McDonald wages. I was job hunting at the same time I wrote my web site. Within three months I was making 40K in income and quit job hunting. I cheated a bit because I already knew how to put a ecommerce site together and knew how to sell. I also knew Adwords which was the source of my initial revenue.

[fayt]

In addition to what Neal said, I couldn't live on $30k in income, much less in sales. You are making McDonald wages. I was job hunting at the same time I wrote my web site. Within three months I was making 40K in income and quit job hunting. I cheated a bit because I already knew how to put a ecommerce site together and knew how to sell. I also knew Adwords which was the source of my initial revenue.

The first two years you are going to be broke. Pinching pennies and borrowing from your parents.

[nealrm]

Never borrow from family. If things go wrong, you will spend the rest of your life looking at them across Thanksgiving and Christmas dinning thinking about how you failed to pay them back. If they are in a position they can GIVE you the money, with no expectation of it being return, then maybe as a last resort.

Before you say it, thing can and will go wrong. It is the nature of business. Sometime even the best plans fail.

[fayt]

I borrowed my $10,000 from my parents and they don't expect a repayment, they want to see me succeed. So it really depends.

[Harold Mansfield]

It really depends on the products but with high shipping costs, you'd have to sell dirt cheap to get many customers. You have hosting bills, virtual credit card terminals (unless hosted), if you work out of your house generally cities won't allow you to operate out of your home in many areas, plus you'd have trucks picking up and delivering every day. Customers will visit you thinking you are a store, it's very hard to advertise your online store, you'd have to do a ton of SEO marketing and put thousands into it.

With brick and mortar you just open your shop, stock products and are ready for the public.

You're only thinking about one kind of online business. 50% of all Small Businesses operate from a person's home. Particularly service based Small Businesses...Designers, Accountants, Lawyers, Wedding Planners, Medical Billing, and on and on. And the web is their number on marketing tool. There are no rules, as far as I know, against having that kind of business from a home office since your skills are the business and your computer is just a tool. Millions of people are doing it.

$10k is a nice start up fund for a Home Office type business if you already have a direction and know exactly what you want to do. However, $10k can go pretty fast if you are still looking for direction. You'll end up buying every "make money online" book, tool and service out there.

$10k is not a lot of money for a brick and mortar store, if in fact you are selling products. It may get you open, but it's not enough to go a 2nd month. If that's all you have and no other income, I wouldn't waste it like that.

[huggytree]

i dont get how anyone can be completely open to any business and go to website and ask for idea's......it blows my mind!

if you just pick 'anything' your going to fail

there's more to starting a business than just picking anything

YOU have to decide where the best opportunity is.....then you have to learn that business(get a job working in the field).....while in the field look for ways that your boss could improve or how YOU could do it better....after a few years THEN you go into business

My plumbing business has done very well for me....so i guess ill recommend getting a plumbing apprenticeship and in 7 years you can get your Masters license and go on your own....by then you may have $30k-$40k which is just right to get all setup with a van and tools

i recommend getting a job right now

[Harold Mansfield]

i dont get how anyone can be completely open to any business and go to website and ask for idea's......it blows my mind!

if you just pick 'anything' your going to fail

there's more to starting a business than just picking anything

YOU have to decide where the best opportunity is.....then you have to learn that business(get a job working in the field).....while in the field look for ways that your boss could improve or how YOU could do it better....after a few years THEN you go into business


It's because the last 10 years or so have seen an onslaught of "Make money online" and all kinds of "business systems" that make it seem as if going into business for yourself is some kind of general thing that you do, and you don't need any direction, specific skills or product...you just pick something, buy a book, and "BAM!" you're an entrepreneur.

I'll get a phone call or email every now and then from that person that is thinking of starting a business and wants me to build a website, and they are literally calling me for ideas of what kind of business they should start online. It's bewildering.

[Pack-Secure]

My words of advice are simply:

Even when you have a plan, be ready to change directions at a moments notice. You have to go with the flow and be able to adapt.

[Harold Mansfield]

I'll just add that , wanting to go into business for myself was kind of after the fact. The first realization was that I wanted to do this for a living and that I thought I could fill a need and make money at it. "May as well start my own company" was just the direction that it went.

I didn't walk around thinking "I want to open my own business. I wonder what I should do?". However I have always wanted to work for myself. But without an idea, pupose, or some kind of skill or product to sell, just blindly starting any old business it's like getting married just because you want a wedding.

[billbenson]

It's because the last 10 years or so have seen an onslaught of "Make money online" and all kinds of "business systems" that make it seem as if going into business for yourself is some kind of general thing that you do, and you don't need any direction, specific skills or product...you just pick something, buy a book, and "BAM!" you're an entrepreneur.

I'll get a phone call or email every now and then from that person that is thinking of starting a business and wants me to build a website, and they are literally calling me for ideas of what kind of business they should start online. It's bewildering.

It's nothing new though. Remember the pyramid schemes in the 80's, Multi Level Marketing scams (not all MLM is a scam). The greed and looking for the easy way out has always been here. It's just changing with the technology.

[fayt]

Find a need and fill it.

[ozetel]

What are you passionate about? What makes you want to get up in the morning and jump into? Seems to me like you have the opportunity to take the time to build a "job" so to speak, that you love to do. Now is the planning stage and a time you dont want to skip over quickly. It could be the difference between a successful, long standing business versus a gone in a month try where your $10K is thrown away.

Online is a good idea, I dont think its wrong to start there. It is the place you can get leverage rather then an hours pay for another hours work! and stocking a shop...no thanks!

Time to get out there and research, learn and see what really fits with your passion and drive to be successful and happy. You can be happy in the work you do!

[Wozcreative]

Are schools really failing students that bad when they think they can come out of school and pick a business out of a hat?

Just like you can't pick a place to live or a husband and wife out of a hat, you can't also pick businesses out of one either since that is what you will be spending your life doing! Unless you've been given a business by family to run (just like some people get arranged marriages), you can't just wake up one day without a clue.

I'm curious to know how the OP got this idea from?

[billbenson]

Are schools really failing students that bad when they think they can come out of school and pick a business out of a hat?

Just like you can't pick a place to live or a husband and wife out of a hat, you can't also pick businesses out of one either since that is what you will be spending your life doing! Unless you've been given a business by family to run (just like some people get arranged marriages), you can't just wake up one day without a clue.

I'm curious to know how the OP got this idea from?

I'm of the opinion that you can make money selling just about anything. Remember the pet rock! How many different products are there on the internet that people make money selling?

The thing is different products will have different business models, start up funds, skill sets, marketing requirements etc. Certain products or businesses have a different profit ceiling.

It is often said get into a business you enjoy or know. Makes a lot of sense. But it doesn't mean you can't make money doing something you hate. But if you hate work, your probability of success goes way down.

Do you need to start a business that you know? It helps. But you can learn as you go. I spent a 22 year career selling telephone switches. That career died in the late 90's dot com crash. So I learned to design a web site and I learned to sell a technical construction product line. None of which I knew anything about.

[thebritecompany]

I am young,.. don't have $10,000 though... Don't spend it all. I would recommend to only spend half on nessescities. You are not in a position to splurge yet.

I would take a stab at affiliate marketing for now to buffer your output input,...