How to Start a Small Business When You Have Student Debt
Dan Levenson October 10, 2017
Around 70% of graduates leave school with some degree of student debt. With an average of more than $37,000 accepted as the norm for the Class of 2016, that’s not a debt that’s going to be paid off in the first couple of years in the workforce.
If you’ve always dreamed of starting your own small business, but you’re struggling to get out from under the load of student loan debt, there’s hope! You can start your company while carrying this burden—you just need to be practical and scrappy.
Start by Shifting Your Balances
Have you attended several colleges throughout the course of your education? Are you paying balances in several different locations? You can consolidate your student loans and possibly reduce your monthly payments as a result.
In some cases, you may also be able to embark on a program that will allow you to temporarily put off paying on your student loans while you get your small business off the ground. Keep in mind, however, that these programs won’t stop your student loan from accumulating interest, so it’s still critical that you take whatever steps you can to pay off those loans as soon as possible.
Boost Your Savings
Starting your own small business is a financially risky proposition with or without debt. If you’re successful, you have the potential to significantly increase your personal income. On the other hand, times may be lean for a while when you first start the business.
Before you jump in, make sure you have a savings account that will support you for at least three to six months. This is important before any major change in your income status, but it’s doubly important when you have student loan debt that you need to pay off.
If you genuinely want to get started with your small business venture as soon as possible, be prepared to live lean for the first little while. Starting this process as you’re building your savings is a great way to test your personal commitment and make sure you’re willing to live within your means while you’re building your small business.
This might include steps like:
- Purchasing an older car that’s paid off
- Living with a roommate for a while
- Reducing your entertainment expenses
- Avoiding eating out or purchasing expensive food items for the time being
If you genuinely want to start a small business, but you’re not sure that it’s going to be successful immediately, consider starting your business as a side hustle.
You can start growing your client base and your income without giving up your current job. This will allow you to test the waters locally for clients, see how you like working for yourself, and offer a financial safety net at the same time.
Not only that, if you’re still working at your other job, you can put more of the money your small business generates back into the business itself, which can help it grow faster.
Make Sure You Know What You’re Doing
Your college classes prepared you for plenty of things in the business world, but there may still be some holes in your education. Before you start your small business, make sure you’re prepared. You need to:
- Ask questions of trusted advisers—hopefully other small business owners who are willing to help you through the process.
- Make sure you’re familiar with the financial side of running a business.
- Develop a working knowledge of when to outsource.
- Understand how to get help if you need it, whether it’s help with bookkeeping or answering your questions about networking.
Starting your own business is an exciting journey. Make sure you’re prepared for every aspect of it, then, even if you have student loan debt, dive in! It’s a process that’s well worth the effort you’ll expend.
One important part of preparing for your daily business operation is securing the insurance you need to be successful. Contact us today to learn how we can help set your business up for success despite the potential disasters that could try to stand in your way.