Do universities do enough to teach students to make it on their own/START companies?

[Iamme]

I heard on the news last night the Hewlett pPackard is to lay oiff 18,000 employees. This got me thinking.....

Throughout recent history we have been hearing about many such mega-layoffs. And then people ask, "Where is everyone going to find work?" Good question. Everyone expects some company to hire them. But...somebody at some time had to have started those companies everyone hoped to get work at.

It's as if the companies are this mysterious feeding trough that appeared, and all that young people out of school can realize is how can they make their way to the trough? Not much mental deviation from when you were a kid and thought money grew on trees. Everyone just expects to get work. Work from places someone else started.

Shouldn't universities be promoting to the young adults ways that they can get companies started, and/or becoming self-enterprising?

Does anybody know if anything like this is already happening today.? And if not...what do you think of such an idea?

 

[drkitten]

Shouldn't universities be promoting to the young adults ways that they can get companies started, and/or becoming self-enterprising?

There are some universities that do that (look up enterpreneurship programs sometime), but the programs tend not to be especially successful.

Elementary business fact -- most new businesses fail within the first year or so, usually through running out of money. (One could argue, in fact, that "running out of money" is the definition of business failure.) According to the U.S. Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years.

In his book Small Business Management, Michael Ames gives the following reasons for small business failure:

1:Lack of experience
2:Insufficient capital (money)
3oor location
4oor inventory management
5:Over-investment in fixed assets
6oor credit arrangements
7ersonal use of business funds
8:Unexpected growth
Gustav Berle adds two more reasons in [/i]The Do It Yourself Business Book[/i]:
9:Competition
10:Low sales

"Young adults," in particular, are extremely likely to have these kinds of problems -- almost by definition, they lack experience (hey, "entry level" jobs are called that for a reason), and they usually don't have deep pockets for business capital. They are unlikely to have the sort of established histories or contacts to generate the needed credit or sales.

So if starting a business is a risky proposition, starting a business straight out of college is is doubly so. I'd be extremely leery suggesting to most of my students that they're in a financial, intellectual, or emotional position to be able to successfully create and run a (profitable) business.

It usually is best for the students to, as you put it, "make their way to the trough." They get a chance to enhance their skills in an "entry-level" environment and develop new ones. But if you think the problem is that students -- how did you put it?

Not much mental deviation from when you were a kid and thought money grew on trees. Everyone just expects to get work. Work from places someone else started.

Shouldn't universities be promoting to the young adults ways that they can get companies started, and/or becoming self-enterprising?

If you think modern students aren't self-enterprising enough to compete for a job with a corporation, how do you think that they could possibly compete as business owners, where the stakes are so much higher?

 

[pgwenthold]

Re: Re: Do universities do enough to teach students to make it on their own/START compani

1:Lack of experience
2:Insufficient capital (money)
3oor location
4oor inventory management
5:Over-investment in fixed assets
6oor credit arrangements
7ersonal use of business funds
8:Unexpected growth
Gustav Berle adds two more reasons in [/i]The Do It Yourself Business Book[/i]:
9:Competition
10:Low sales

Where is

11: Dumb idea to start with

You can have all the qualities you need for a business owner, but if you start a company that sells, for example, only mismatched pairs of shoes (for those people with two different sized feet), you are going to struggle.

Call it what you want, poor merchandise or whatever, you have to sell something that somebody wants. If you don't have that in the first place, you won't be successful.

 

[drkitten]

Re: Re: Re: Do universities do enough to teach students to make it on their own/START

Where is

11: Dumb idea to start with

I think that would probably qualify under "Low sales."

I also think, though, that "dumb idea to start with" isn't that common a reason, simply because dumb ideas are generally, well, dumb. Even if you're not smart enough to see that a wine-and-anthrax bar isn't a good idea, your wife, best friend, lawyer, and brother-in-law probably are.

Especially if you need to borrow money from one of them to get the business started.

 

[pgwenthold]

Re: Re: Re: Re: Do universities do enough to teach students to make it on their own/START

I think that would probably qualify under "Low sales."

I also think, though, that "dumb idea to start with" isn't that common a reason, simply because dumb ideas are generally, well, dumb. Even if you're not smart enough to see that a wine-and-anthrax bar isn't a good idea, your wife, best friend, lawyer, and brother-in-law probably are.

Especially if you need to borrow money from one of them to get the business started.

Actually, I think "dumb idea" might qualify with some of the others. Particularly, "competition" might qualify. For example, a recent local "Scrapbook" store just failed. Heck, as far as I know, there might be enough recent interest to almost make it worthwhile, until you realize that they could go over to WalMart and buy the exact same materials for much less the price.

Is that a competition problem, or was it silly to think that they could compete in a niche market against existing businesses? I go for the latter. You have to bring something to the table that they don't, and although scrapbooking is pretty popular now, does it really need its own store?

OTOH, my brother's business was one that failed because it overexpanded - too successful on a small scale, and then outgrew what it could handle. Actually, perhaps the biggest problem he had was getting capable employees.

 

[Jorghnassen]

I'm going to say it's not the university's job to teach this kind of stuff to every student (outside of course, of business type programs). It's the students' job to learn how to make it on their own/start companies if they want to.

 

[Tmy]

Who says starting your own business is a good thing?? Small business have a high failure rate. So then you end up unemployed with a bunch of debt.

 

[Earthborn]

Call it what you want, poor merchandise or whatever, you have to sell something that somebody wants.

There is always something called 'marketing' which basically means 'making people think they want whatever you have to sell.'

Of course big companies have more money to spend on marketing. Any start up business will likely have to compete with them, and the big companies will simply be more noticeable in the public eye, therefore better able to convince people to buy from them even if what they sell is a stupid idea. Even with a brilliant idea it will be difficult to compete with all the stupid ideas of big business.

 

[Iamme]

I'm going to say it's not the university's job to teach this kind of stuff to every student (outside of course, of business type programs). It's the students' job to learn how to make it on their own/start companies if they want to.

..............................

Well...we kinda know that that is exactly what goes on NOW. And therein lies the problem, I think. How are we going to get or teach the young ones how to succesfully start up a hydronuclear fusion processing plant that will end up employing hundreds of thousands of people that chaindown throughout the industries.

Or...do you suppose we really don't NEED any more companies, businesses on large or ma and pa scales? Do you suppose that..........nah...forget what I just said. I want someone to teach the students how they can start insurance companies so that my health care costs become more competitive.

 

[Jorghnassen]

Or...do you suppose we really don't NEED any more companies, businesses on large or ma and pa scales? Do you suppose that..........nah...forget what I just said. I want someone to teach the students how they can start insurance companies so that my health care costs become more competitive.

Yeah but the thing is, what do people go to university for? You don't need a university degree to start your own company (though I recognise it'd be useful to start in the insurance business).

Some people just go to university to get a diploma then land a job somewhere. Others go to get an education so they can later find work in their field of interest. How many people who go to university do it because they have the ambition to start their own business? Should universities attempt to foster this kind of ambition on everyone? For example, we can consider the case of starting an insurance company? What kind of program is required to learn all that is necessary for that? How implementable is such a program?

If some universities aspire to be little entrepreneur mills, that's fine. On the whole though, this problem reduces to a question of allocation of funds, and I don't believe it would be that useful for all universities to overall put more resources into encouraging their students to get company starting skills.

 

[WildCat]

Re: Do universities do enough to teach students to make it on their own/START companies?

"Where is everyone going to find work?"

And yet, unemployment is at historic lows, in fact it's at the theoretical minimum, 5%. So apparently, people are finding work.

 

[Jorghnassen]

Re: Re: Do universities do enough to teach students to make it on their own/START com

And yet, unemployment is at historic lows, in fact it's at the theoretical minimum, 5%. So apparently, people are finding work.

Theoretical minimum in what sense, absolute or optimal?

 

[drkitten]

Re: Re: Re: Do universities do enough to teach students to make it on their own/START

Theoretical minimum in what sense, absolute or optimal?

Job-changers will always be "unemployed," as will students on vacation, seasonal workers, and so forth. However, I don't think that there is any well-developed "theory" of what the actual minimum unemployment rate is, other than the obvious 0%.

The "real" problem is that if unemployment gets too low, uncontrollable wage inflation is expected to result -- employers will have to compete too much to fill the jobs lost in the ordinary course of life events (death, retirement, job switching, returning to school, family/medical leave, etc). As American Prospect put it,

The Fed's reasoning rests on the theory of the natural rate of unemployment, which maintains that if the unemployment rate falls below a certain level, inflation will accelerate. No one knows what this minimum unemployment rate is--some have said 8 percent, and some now say 3 percent. The estimates tend to change as the economy changes: The natural rate is what the actual unemployment rate happens to be. As long as unemployment is low, the Fed always wants to do something about it.

This kind of thinking ranks the danger of inflation above all else. While no thought is given to the goal of zero unemployment, Chairman Greenspan's Fed has dreamt of zero inflation. In their zeal, the inflation fighters fail to distinguish between different causes of inflation, which may demand different policy responses. This undiscriminating inflation phobia, of course, carries its own risks. It could prove to be dangerous for the economy's health if it leads to the unnecessary sacrifice of jobs and living standards.