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One of the most fundamental questions future MBAs (and students in general) face is whether to plan on entering the job market after graduating or devote time and energy to founding a small business.  We break down some of the factors involved in the decision.

Capital considerations.

Many college students are frightened of starting their own businesses because of economics and capital.  “I don’t want to go into debt even more than I already have”, they tell me.  Fair enough.  But there are a lot of great small businesses, like services and software, that require relatively little up-front investment.  And some of the capital intensive businesses, like hardware, are developing economies of scale, with the ability to do short runs at factories.  Plus, fundraising can be a really transformative experience for people interested in business, and sales is a vitally important skill.

Don’t let capital stand in the way of your business idea.

Time considerations.

Starting a small business in college can be a really daunting undertaking.  Expect to be devoting anywhere from 10 to 40 hours a week to your business, depending on how involved it is.  This is time you won’t be spending networking, volunteering, taking internships or (of course) studying.

This is certainly one of the biggest sacrifices involved when weighing the pros and cons of starting a business.  There’s no cut and dried answer — a lot of it depends on how certain you are about your future career plans.  Are you seriously considering business school?  Do you want to take a job after graduating, or are you more interested in having a sustainable business already built?  How much appetite for risk do you have?  All of these questions are vital to consider before creating a small business in college.

Success or failure?

Of course, the vast majority of startup businesses fail in their first couple of years.  This observation has been borne out by our clients’ experience.  Many founded businesses in college that never became profitable.  Others made small profits, but the founders lost interest and moved on to other things.

There’s nothing wrong with failing, particularly failing boldly — and starting your own small business is always a bold step to take.  The important thing is that you are able to articulate WHY you failed in a way that demonstrates maturity and responsibility.  Blaming your friends and bad luck is going to kill your chances at HBS, but identifying one or two valuable leadership takeaways that you made use of in subsequent endeavors shows that you know how to turn lemons into lemonade.

If your business is still operating and profitable, it’s important not to ‘declare victory’ — after all, if you were so completely satisfied with the results, why would you be applying to business school?  Instead, either explain how the business will play into your future career plans or how you plan to scale it back over time.  Don’t leave schools guessing about your intentions.

Resume considerations

From an admissions standpoint, a startup on a resume is a good thing — it shows initiative and dedication.  The risks come when applicants start trying to massage their startup experience and make it seem bigger than it actually was — no one likes a braggart — or, more commonly, applicants are ashamed of their ‘failure’ and try to minimize the role their startup played in their growth and maturity.

The smart applicant will walk a middle ground between these extremes, assessing his strengths and weaknesses as a leader honestly and pointing out how they contributed to her business outcomes.  In this way, startup experience becomes an attractive resume item that shows a candidate’s diverse abilities.  

Relationships

Starting a business with someone is an acid test of a friendship and a potential professional partnership.  One great reason to start a small business, therefore, is to find potential partners that you enjoy working with and would like to work with again in the future.

This doesn’t only go for the big fish, by the way.  Relationships with vendors, suppliers and B2B entrepreneurs can all help you the next time around.  For this reason alone, many startup ‘failures’ are worth their weight in gold.

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