FOR HIGH SCHOOL PASS-OUTS
Students, during the voyage of passing their high schools are usually seen to be unorganized and careless about their spending. They lack any control and checks and balances over their cash flows and never bother to keep track of their financial sources and consumption patterns. This is, primarily, due to the reason that they were, probably, never talked to about the significance of managing their cash flows to meet their needs within the finances available and the importance of budgeting their activities. Accordingly, they spend their part-time job savings and/or parents’ earnings without any financial plan. Passing out high school brings them at a stage where financial management and budgeting becomes extremely vital for them. An utter need arises to discuss with them about the importance of gearing up for financing their personal needs by themselves. Being self-dependent for them, from then onwards, becomes imperative. This realization for you, as a high school pass-out, is not possible unless they are taught to carefully plan their needs, estimate the expenditure to meet them and the budgeted sources to finance them. Planning to self-finance your future personal needs is the most integral part of personal financial management. What income stream do you prefer in the long run? What career path is more relevant for you to achieve your life goals? Whether you should opt for college or become an entrepreneur? A lot depends on your long term goals and dreams, where do you see yourself in the future and how challenging benchmarks have you set for yourself. But the career choice is highly determined by parental decisions, societal trends and individuals’ urge to pursue a certain career path in the light of pros and cons associated with them. Let’s evaluate possible career paths after high school; their immediate and long term investment requirements, benefits and setbacks and their future potential to pay back cash flows which ultimately impacts personal financial management.
FORGOING COLLEGE FOR EARLY ENTREPRENEURSHIP
It is often debated now-a-days if college education should be forgone for early entrepreneurship. This option is, however, proposed to suit those who plan to embark upon entrepreneurship as their mainstream income source. For them, it is now emphasized that years spent in college can be a big gret and a waste of time, energy, money and potential. The time spent in college, instead, can be capitalized in developing entrepreneurial grounds for future, i.e., more businesses, more entrepreneurial exposure and more opportunities to uplift the entrepreneurial status to a mature level. The time investment in college, in a nutshell, is viewed to have a significant opportunity cost if entrepreneurship is the ultimate career choice.
FORGOING COLLEGE – A DAUNTING OPTION
The idea of giving preference to entrepreneurship over college education is, however, seen as a risky and a daunting option by the chaps who either do not have aptitude or do not have any plan to start a business and instead feel safe with guaranteed cash inflows in terms of salary income streams. Business income streams are, since, characterized by significant variations even on daily basis, they are accordingly viewed as a risky option. Even the individuals carrying intentions for a business venture need to muster up courage to initiate because the thought of forgoing a conducive and smooth route for an uncertain one can feel scary, especially when all of your peers have opted for an opposite direction. However, the individuals wanting to become self-employed based on their professional education must also never skip college, e.g., those training to become a doctor, physician, lawyer, practicing chartered accountant, etc.
ANALYSIS OF SKIPPING COLLEGE FOR EARLY ENTREPRENEURSHIP
Without a doubt, bypassing college/university education avoids a huge cash outflow to finance the costly education system which serves as an immediate financial benefit. Instead, the same finance, guided by a welldrafted business plan, can be invested in your business venture. It may be expected that by the end of, say, four years – the time by which you would have graduated had you joined the college – he might take his business to a breakeven point (considering the moderate- or worse-case scenario and keeping the odds of facing a business failure constant). Since businesses need some years to reach the momentum of selling profitably, the college/university time can be consumed in the business operations. Want to know the scary part? The profits and business volume you forecasted and the vision you crafted in the beginning may not live up to your expectations and you might end up losing all your investment and the time you shifted from education to your business. At this stage, you having nothing to go back to. You don’t have a college degree and you have lost your investment in your business. According to a survey, around 20% of new businesses survive past their first year of operation. But again, this is just the worse-case scenario. In most cases, in the starting years, you need to carry on your business with initial operating losses until you enter into the phase of reaping out profits from your business. So, if you hit a severe obstruction in the early phase, you don’t need to worry because, the best thing as a young entrepreneur is that failure is affordable as it’s likely that you don’t have kids or a mortgage compulsions and compliances. Want to know the favorite part now? If your business achieves the breakeven and successfully enters the profitmaking zone, you are entitled to income with absolutely no ceiling. You can expect your income to increase in proportion to your hard work. In addition, you don’t have any student loan to tie you down financially which puts you ahead of your peers. Coupled with the potential income streams, you stand to gain from your business if you succeed and you can look forward to a financial and career headstart while your peers are studying for finals. Therefore, various questions are needed to be answered before choosing entrepreneurship over college – you should evaluate your industry, skills, passion, experience, financial stability and support system.
IMPORTANCE OF COLLEGE EDUCATION FOR ENTREPRENEURSHIP
The importance and role of college education in your entrepreneurial endeavors, however, is a separate debate and various arguments are put forward in support and against the same. Although, it may be accepted that college degree may not be mandatory for entrepreneurship but attending college can be very helpful for you being a business owner as it teaches you soft skills like ownership, accountability, time management, prioritizing and emotional maturity.
ANALYSIS OF OPTING FOR COLLEGE AFTER HIGH SCHOOL
Heading towards college/university, on the other hand, after high school doubtlessly requires a minimum of around four to six years to attain Bachelors and Masters level degree respectively for which immediate cash outflow is required which, in most of the cases, is financed through student loans. Unlike business, this model ensures fixed long-term salary income streams provided that you surpass the competition and are lucky enough to secure a handsome position in job market. On a positive side, it is not characterized by initial losses but, unlike business model, periodic cash inflows are subjected to a ceiling irrespective of the level of effort exerted except for annual promotions. Moreover, there is no operational freedom while you discharge your duties on your job which you can enjoy being a business owner. You have to plan your domestic expenditures in accordance with your salary disbursements. In the event of worse days faced by the employer, job insecurity is an additional element of worry and anxiety. An additional reason due to which college education is considered to be a safe play is that in case your mindset diverts towards entrepreneurship in future, you can make an easy shift which is not an option if you skipped college to become an entrepreneur after your high school.
OTHER CAREER VARIANTS
Interestingly, another option that cannot be considered as a separate way forward for the high school pass-outs is pursuing college/university education to secure a safe job, earn some andsome money over some years, gather some investment and start the business in the longer run and manage personal finances accordingly. This option is more of a hybrid model which may mostly be pursued by those who belong to middle income families having less capital to initiate a business. Although, now, through business models like drop-shipping model, you may start a business with quite a little investment but still, many business models still require to operate traditionally and accordingly require much investment. This model is also adopted by those who want to gain practical exposure before starting their business ventures, whether that be through relevant volunteer work, apprenticeship, internship or work experience. Another variation of this model is to get a job with moderate responsibility set and run a business side by side. This model is adopted usually by risk averse individuals who cannot afford the risk of business failure with nothing to bank upon financially but also wish to enjoy the independence feature of the business. This approach is not a suggested one since a business requires full fledge attention and investment of time, energies and money unless your business is based on your technical skillset. But again, this is more of a hit and trial model in which many would end up succeeding at none of the financial models in the long run. Only a few of them may be able to elevate their business to such a level that they ultimately shift from job to business.
Despite all the merits and demerits associated with different career choices after high school qualification, heading for college/university education leading to job is traditionally onsidered to be the most preferable career model as it is characterized by safe and secure financial inflows with multiple options to switch to. However, due to ease in internet access, associated technological advancements and advent of novel online business and other earning models over the last several years, the trend and inclination towards pursuing entrepreneurship has enhanced. This has started to make people realize that it is in fact the technical skillset, soft skills and practical exposure of pertinent business field which is the key pre-requisite for becoming an entrepreneur and years of investment in college and university life has, probably, become meaningless for the destined entrepreneurs in particular. However, still, to be an educated and informed entrepreneur, traditional college education may now be replaced with relevant certifications, trainings, courses, google-based learning, seminars/webinars and conferences.