The Truth About America’s College Dropouts – OnlineBusinessDegree.org
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Steve Jobs, Mark Zuckerberg, Bill Gates, Michael Dell, and Larry Ellison all have two very important things in common: they’re all fantastically successful and wealthy, and they’re all college dropouts. Big names like these, often in technology (though examples exist in other types of business), have spurred on a growing movement aimed at discouraging entrepreneurs from heading off to college and instead pushing them toward using their intelligence and great ideas to start a business without spending four years or more in school.
In a time when college tuition is reaching record highs, jobs are scarce, and more people than ever are bootstrapping their own businesses, this may not seem like a bad road to travel, especially with examples like these proving that it can be done. Yet what most people don’t realize is that the vast majority of college dropouts won’t be as successful as their college-educated peers, just as most businesses don’t succeed, and very few, college-educated or not, will ever go on to achieve this incredible level of success.
While entrepreneurs should certainly test out their startup chops while they’re still young, more and more are realizing the benefits of getting a degree before focusing on business full time. Why? Because it might just be a smarter choice than some of today’s leading business pundits and entrepreneurs would lead you to believe. Here, we’ll address some of the biggest drop out myths about dropping out and offer some ideas on how students can get their businesses off the ground while still getting their degrees.
Myth: Dropping out of college will help you fulfill your dreams of financial success in business.
Is it possible to drop out of college and go on to become a millionaire or even a billionaire? Yes, it’s possible, but it’s actually much more rare than you might think. Most college dropouts don’t end up heading large companies or raking in millions each year; instead, they actually face bigger obstacles to success than their college-educated peers.
First among these is a tendency to have a higher level of unemployment than college grads. College dropouts are 71% more likely to be unemployed than those who stick with their college degree programs, which is where many may find themselves if early business ventures don’t work out and money runs short. Secondly, even if you do find work, you’re likely to earn much less than if you had completed your degree. How much less? About 32% according to the latest data. That’s a significant sum and one that can add up over a lifetime, hampering plans for retirement or even to head back to college.
In fact, getting your college degree won’t just help protect you financially. Research suggests that getting a degree can also increase your chances of launching a successful business. A study of 500 tech startups in 2008 found that college graduates had twice the average revenue and number of employees as those who skipped college. Why? Scott Shane, author of The Illusions of Entrepreneurship, says that research points to college simply opening up more doors. “Many studies show that better educated entrepreneurs have greater access to external capital, lower business failure rates, greater business sales and employment growth, and more profitable ventures,” he says.
Still think you’ll be the next Gates or Zuckerberg no matter what the stats say? It’s worth noting that the most famously successful dropouts were never average college students to begin with. They went to top-tier schools, they were often already well-versed in their areas of expertise, and many of them spent their first years in college building their businesses.
Dale Galiniak, CEO of Txt2Teach.me, explains, “The Zuckerbergs of the world are dramatized for how they dropped out of school. If you’re incredibly lucky, your business will grow to an international sensation where you just don’t have time to run a multinational organization and somehow go to class at the same time, but remember: they built up their networks at college before quitting.” Which is a good set-up for the next point:
Myth: You can’t start a business and go to college at the same time.
Think starting a business and going to college are mutually exclusive endeavors? They’re not, especially in an age when more and more schools are embracing entrepreneurship. College is actually one of the best times to start a business. You have little to lose, numerous resources available to help, and plenty of free time to experiment and work on new ideas. In fact, there’s no shortage of students who have used their time in college to launch a business.
Daquan Oliver, a junior at Massachusetts Babson College, has started several businesses while working toward his degree, including a non-profit called Recesspreneurs that helps empower at-risk youth through entrepreneurship. Oliver hasn’t felt college has held him back in achieving his entrepreneurship goals, even admitting that it might just have helped. He explains: “When I am in class, I have a section of my notes called ‘applications.’ This is where I put every single thing that I feel can apply not only to my ventures but also my personal growth and development.”
He’s certainly not alone. Numerous college students have started businesses while taking classes, and the majority of these students still go on to graduate. Indiana University business student Zac Workman even raked in a million dollars in sales in his first year of selling his all-natural energy drink Punch, proving that it’s entirely possible to blend business (even a very successful one) and getting a college education.
Myth: Colleges don’t foster entrepreneurship and innovation.
One of the most common ideas spread in the media about entrepreneurship and college is that colleges stifle innovation and make it hard, if not impossible, for students to focus on starting and growing their own businesses. While there are always exceptions, this couldn’t be further from the truth at most of today’s colleges.
According to the Kaufman Foundation, there are now 400 endowed chairs in entrepreneurship programs, with more than 200,000 students enrolled in the programs they provide. If students are smart about choosing a college, there are numerous opportunities to take courses focused on entrepreneurship and even to find help starting a business through a business incubator.
In recent years, these kinds of incubators have become popular, and many schools, both public and private, have started their own. In 2012, the National Business Incubation Association estimated that about one-third of the 1,250 business incubators in the U.S. were on college campuses, up by 20% from just six years ago. While many are located at top-tier and tech-focused colleges, you don’t have to go to either to get in on the incubation trend, as a wide range of colleges now offer this kind of support.
Even better, it seems to be paying off. Arizona State University student Greg Rudolph, a junior, started his first company as a sophomore with the help of the school’s entrepreneurship campus and business accelerator Skysong. “I’ve chosen to stay in school because of the many resources that Arizona State University offers student entrepreneurs,” he says. “What I learn running the business applies to what I’m learning in class and vice versa. I understand that it is very unlikely that a student’s first venture will be successful, but having the school’s support acts as a safety net that I’ve found very worthwhile.”
For many students, college is no longer a place to delay entrepreneurship but to find help in learning the best ways to build a business, get access to mentors, and learn how to become a venture that investors actually want to fund.
Myth: All you need is one great idea to succeed.
While it is possible to translate your first great idea into a prosperous company, that’s not likely to happen, at least not for first-time entrepreneurs. According to the Small Business Administration, 90% of small businesses fail within the first two years of operation, usually because entrepreneurs lack the basic knowledge and experience to handle the challenges of managing a company in its initial stages — something college might be able to teach you.
Part of becoming an entrepreneur is learning to fail, but if you’re banking on your startup to pay the bills and help you get by, you may not exactly have the odds in your favor. In fact, Shane says, “The success rate of the average first-time startup is so low that it makes playing the lottery look like a good investment.” And consider this: even if your business is successful, you likely won’t be earning as much as your college-educated, corporate-employed friends. On average, entrepreneurs can expect to make 35% less than they would working for others.
In reality, you’ll need to go through several great ideas to finally find one that sticks, and without a backup plan in the form of a college degree, you may find yourself with very few options for supporting yourself while you get these various ventures off the ground.
So why stay in college?
College is about much more than a degree. It offers students the chance to connect with one another, learn, find mentors, and hang out in an innovative atmosphere. It’s no coincidence that bastions of innovation and entrepreneurship are often located close to universities (Silicon Valley is one great example).
In fact, college may just offer you opportunities you can’t get on your own or won’t have access to later in life. According to Galiniak, “During college, you have plenty of free time to pursue new ideas. It’s where you will meet your co-founders, both for businesses that you start in college and the ones you will start after.”
In many ways, it may be a bigger risk not to get a degree, despite the cost. College offers benefits individuals won’t get elsewhere. Dr. Alfred Poor, a success mentor for young grads, says, “Sure, college graduates earn $500 more a month on average than those without the degree, but the real value comes in developing the skills that you’ll need to become valuable to your company, be successful in your job, and find fulfillment in your work.”
Even if these reasons don’t seem compelling, at the very least college can provide students with a backup plan. Some entrepreneurs may burn out on building businesses a few years into the game or find that their interests lie elsewhere. A college degree offers the chance to find work with companies and businesses that you don’t have to own and operate, opening up doors to new opportunities for career success and personal satisfaction.
Diana Zimmerman, President and CEO of CMS Communications, sums it up succinctly: “Is finishing college essential? No. Is it the better path for most individuals? Yes.” She adds, “The number of individuals who make it on their own is very small, and they will be successful in any regard. Most people need the type of guidance that college provides. And most companies won’t hire without a degree. Like insurance, college is a good safety net.”
Building Your Business in College
As a young entrepreneur facing tough competition, your question shouldn’t be whether you’ll drop out of college, but how college can help you achieve your goal of starting a company. There are a number of things you can do while you’re still in school that will help you prepare to go it on your own after graduation.
- Surround yourself with supportive people. Find like-minded students through classes and campus groups who can help motivate, support, and ever partner with you to build your next business.
- Find a mentor. College is a great place to find a mentor, whether it’s a professor, a speaker who came to class, or an alumnus. These kinds of relationships can help you grow as an entrepreneur and gain a better understanding of what it takes to succeed.
- Learn as much as you can. One of the greatest benefits college is the incredible array of resources at your fingertips. Take advantage of them. Enroll in courses, use incubators, listen to speakers, read books, and learn all you can while in school.
- Network. Often, the people you meet in college will become huge assets to you later on. Angela Betancourt, President of AB Public Relations, recalls how college helped her career: “College is about creating relationships, bonding, and expanding your network. I got my first client for my new PR company through a connection I made while I was in college eight years ago! That person then introduced me to another contact who brought me new business.”
- Major in the type of business you want to run. While minoring in business or entrepreneurship can be useful, those who have a passion for a certain type of business should major in that field. Why? Because this will give you an in-depth knowledge of what can be done, how to do it, and what is currently lacking for consumers.
- Experiment. Many college students are supported by their parents, and school can also mean free time and few responsibilities. This is the perfect time to experiment with business ideas and see what works and what doesn’t. Later on in life you may have a lot less time and a lot more to lose.
While there are a number of entrepreneurs who got to the top without a college education or after finishing just a few years of school, most will find their path to success significantly more difficult without the skills and personal connections that come with earning a degree. It might seem like a slower road to take if you’re anxious to start a business, but it may ultimately end up being the more successful and smart path to business ownership.