Students don't need to be reminded how expensive college is—but we might. Did you know the average cost of tuition at a private college this past year was $43,289, or nearly $175,000 for four years? And students can expect to pay an additional 25 percent on top of that, since tuition has typically increased 8 percent a year (which means it doubles every nine years).
With the average annual compensation for a small-business owner at just over $62,000—more than $17,000 higher than the annual starting salary of this year's college graduates—some may think it's a smart move to skip the ivy halls and jump into the fray. There are certainly convincing examples of billionaires who dropped out of college to start their own companies—people like Steve Jobs, Bill Gates, Mark Zuckerberg and Michael Dell.
School's Out Forever
So is all that education really worth it? Or does it make sense for the eager entrepreneur to skip or drop out of college and plunge head first into the sometimes rocky seas of entrepreneurship?
For these six entrepreneurs, the best school was the school of hard knocks. Take a look at what they learned when they dropped out of college, left behind the degree (and the accompanying debt), and got on the fast track to entrepreneurial success.
Real life is the best classroom. Just two terms away from graduation, Simon Tam dropped out of college to join a touring rock band. Later, he started an Asian-American dance rock band called "The Slants" and treated it as a business. Tam learned how to use seed money and develop a very distinct marketing strategy. He traveled around the world with the band and continued his education by devouring books on leadership, marketing, philosophy, law and religion.
"Everything I know about marketing and business comes from being a rock star," Tam says. "If you want to learn how to do digital marketing properly, you watch Lady Gaga or Justin Bieber, not a business professor." Instead of a formal education, Tam believes the best way to start a business is just to jump in. "It forces you to learn how to survive," he says, "to be cutting edge, to really decide if you're willing to risk [everything] on something that has no guarantee of success."
A mentor can point you in the right direction. Scott Starbuck grew up a middle-class family where everyone was expected to get a college degree. But when Starbuck was kicked out of high school for punching a teacher who had abused him, everything changed. Although he started college, Starbuck also started working at a local shoe store. And that's where he found his lifelong mentor, Bill Coveny, the shoe store's owner. Coveny saw something special in Starbuck and invited him to partner with him to build a nationwide chain of shoe stores. So Starbuck quit school and, through his experience growing Backstage Shoes with Coveny, learned to negotiate leases, and hire, train and motivate employees. Unlike his college friends, Starbuck says he learned how to "feed himself when he was hungry." The partners eventually sold the stores, and Starbuck went on to start his current venture, City Soles, an online shoe store.
You must be accountable for your actions. Many high school seniors go directly from the safety of their parents' homes to college dorm rooms, which offer all the benefits of home without any of the restrictions. But that doesn't teach them to survive in the real world, Tim Kerin believes. Kerin dropped out of college to start a commercial cleaning franchise with his future wife, Tracey. Along the way, they learned a lot of hard lessons as they went from being almost bankrupt to being homeless. But, Kerin says, no professor can teach you as an individual what to do next.
He and Tracey faced a multitude of business problems, including unemployment, sexual harassment, lawsuits, cash flow and IRS audits. Kerin says, "[We] moved forward through all this by being accountable for our actions. We blamed ourselves instead of pointing fingers." Today, Kerin and his wife own several successful businesses and help other entrepreneurs through their coaching and consulting business.
You've got nothing to lose. Brian Scudamore, founder and CEO of international junk removal franchise 1-800-GOT-JUNK , started his $120 million company at age 18 as a way to pay for college. But when his phone started ringing while he was in class, he decided to drop out to focus on the company full time. With not much money and nothing to lose, Scudamore got creative in spreading the word about his business. He tried guerrilla marketing and free advertising tactics: He'd wear blue wigs and hold up signs at busy intersections. Although he was forced to learn a lot of things the hard way--like having to fire his entire team a few years into the business because they didn't share his vision--he says it made him a stronger and better business owner.
By trying—and failing—you'll gain valuable experience. Sid Savara dropped out of college to start a business that failed 12 months later. But during that year, he learned critical customer service skills by selling actual products to real customers, something that he says can't be learned in the classroom. Savara says that working to build a team to develop a product that customers would buy later proved invaluable in his software development career. Savara is now a personal development trainer.
Learn to make your own decisions. Jeet Banerjee quit college at 18 after trying to balance his classes and his business. The hardest part of running your own business at that age, he says, "is going from the classroom to making decisions in real life. Classrooms never teach you how to make the right decision in business, and not knowing that caused me to make tons of mistakes that really sent me spiraling backwards." Banerjee believes businesspeople can only learn to make decisions from their experiences and lessons in real life. "That's something no professor, course or classroom will ever be able to teach you." Today, Banerjee is a serial entrepreneur and digital marketing consultant.
Did you skip or drop out of college to start a business? What did you learn?
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