A budding expert on college entrepreneurship—himself only four years out of NYU—answers readers' questions.
As a sophomore at New York University, Michael Simmons co-authored The Student Manifesto with classmate Sheena Lindahl. In the 2003 book, the authors encourage young people to consider entrepreneurship as a cool alternative to working for someone else. They also champion business ownership as a great and empowering lifestyle. Three years later, Simmons and Lindahl decided to practice what they preached, co-founding the Extreme Entrepreneurship Tour, a for-profit business that sends speakers by bus from college to college to teach business concepts to students. The company should reach $500,000 in revenue this year. Since he has written about entrepreneurship and practiced it himself, we asked Simmons to field questions from students who aspire to follow in his footsteps. To submit a question, send an e-mail to us at firstname.lastname@example.org or contact us via Twitter @IncMagazine.
QWhen starting a business, approximately what percentage of the total money invested do you think should come out of your own pocket? --Stephanie Elizondo, Arizona State University
It really depends on the size and type of the business. On the one hand, the more money you put into a start-up, the more you show potential investors that you are really serious about the project. On the other hand, too many schools stress the importance of raising money right away. Today, you can often start a business online with very little money down. And when you begin, it is not necessarily the best use of your time to try to convince other people to give you capital. This was a mistake that I made by the way.
Meanwhile, schools typically don't teach students about sales. Only a handful of major universities have a class on sales of any kind. But I think it's often a better use of a student-entrepreneur's time to learn how to sell a product or service. You can go out and try to raise money after you've found your first few customers and gotten a little traction. I would advise you to try to minimize your start-up costs as much as possible. Use your own money to fund the business until you have a few initial sales and then, if you still need to raise money, go out and pitch investors.
QHow do you write a formal letter to ask individuals to join your advisory board? --Demica Hatcher, Stark State College, North Canton, Ohio
We have an advisory board for our company, which includes the founder of the National Foundation for Teaching Entrepreneurship, a venture capitalist, a retired sales manager at Microsoft who managed 200 people, an administrator from NYU who helps us to understand the higher education market, and a successful entrepreneur. Before you think about the letter you write to invite someone to join your advisory board, you have to find the right people—people whom you trust, who really want the business to succeed. If people have already showed strong interest in you and your concept, the importance of a formal letter becomes less important.
Still, it's important get to put a few things in writing. In your letter, you'll want to describe the format of the advisory board, and make expectations really clear. For ours, we asked board members to agree to meet three times a year for three hours each time, and we offered to pay for a meal for them at each meeting. (Although, generally, one of the board members will host the meeting at his or her office and cover the catering costs.) Our expectations for advisors are that they will be at those meetings in person or on the phone and, in between meetings, they will be available to give us advice and to answer our questions. We also asked them to be honest with us—painfully honest at times. As an entrepreneur, you always tell yourself happy little stories to keep your spirits up. The purpose of a board is to ask tough questions and challenge assumptions. They're not always right, of course. You have to have people on your board with whom you would feel comfortable disagreeing. But it's good to have a board to help you focus on what's important. Our board, for example, really impressed upon us the importance of going on more sales calls. Bob Jones, the former sales manager from Microsoft, is actually going to be sitting in on calls with us for next few weeks to help us get better at it.
QI've built a website, abidewithme.us, that connects those who need assistance (the elderly and disabled) with those who need housing (college students, single parents, widows, etc.) The site has been up and running since August, but we have only received three posts so far, one each in Ohio, Virginia, and Florida. Where should I focus my advertising? --Andi Michelson, Stark State College, North Canton, Ohio
I like your website a lot, but I think your paradigm—if you build it, they will come—is all wrong. Instead of looking to do mass-market advertising, I'd like to see you hustle a bit. Before you spend another dollar on the business, you should pick up the phone and call some schools and churches. Try to identify people who will be able to spread the word about your site. You want to talk to the one person through whom you can reach 50 people. I think you should also contact people who have posted for housing situations on Craigslist.org, and invite them to post on your website. Ask your friends to help you find people who would be likely to post on the site.
After you get more than three posts, you'll be ready to do some micro-testing with advertising, to find out what's the most effective vehicle—Facebook, local papers, etc.—for you to promote the site.