4 Tips for Starting a Business When You Have Student Loans

October 20, 2014

Connect Member

Entrepreneur and co-founder of SoFi, specializes in student loan refinancing

sofi.com

Starting a business while you’re paying off student loans may seem intimidating, but with smart strategy it’s entirely possible.

Just ask Chiara McPhee and Jennifer Kessler, members of SoFi’s Entrepreneur Program and co-founders of Bizzy, a mobile marketing tool designed for small businesses. Chiara and Jen created Bizzy in 2013 after graduating from the Stanford Graduate School of Business, and have been successfully juggling student loan management with entrepreneurship ever since.

Chiara and Jen’s journey as business owners and partners began when they discovered they had a shared belief in the idea that all businesses – no matter how small – deserve access to excellent marketing tools. Many small businesses encounter obstacles such as a shortage of data, English not being a first language or simply being too busy running the company to spend a lot of time on marketing. Bizzy allows these companies to run marketing campaigns powered by an intelligent, predictive system that analyzes industry, business and customer behavior – putting them on more equal footing with big companies from a marketing perspective.

So how did Chiara and Jen get Bizzy off the ground while also tackling sizable business school debt – and, more importantly, how can their experience help others in the same position? I asked them to shares some helpful tips based their experience.

Tip #1: If you’re still a student, take advantage of available opportunities.
C & J’s take: Everyone knows that getting relevant work experience during your MBA (or other) program is exceptionally valuable after you graduate, and this idea applies whether you’re planning to start your own company or going to work for somebody else. Knowing that we were interested in entrepreneurship, we both worked for startups throughout business school and tried to get as much experience as possible with the challenges we knew we’d eventually be facing.

Another thing to take advantage of while in school is all the free advice and mentoring opportunities that exist. Most people love to help out students, but mentors might not make themselves as available for post-grads. We capitalized on that by connecting with anyone and everyone that we thought could give us valuable information while we were still in our program.

Tip #2: Conserve, conserve, conserve.
C & J’s take: When it comes to cash flow in a new business, these are the three Cs to live by – especially when your monthly expenses include student loan payments. We’ve made cash conservation a pillar of our company philosophy and have been careful about expenses every step of the way.

We’ve found that getting from conception to launch takes determination and sacrifice – with a little bit of creativity thrown in. For example, Jen took a cat-sitting gig that proved to have a downside (she was allergic to cats) as well as an upside (hey, it was still free rent). And during the fundraising stage Bizzy was operated out of the grad school dorm room that Chiara lived in while her fiancé was finishing law school. We covered the walls with white boards and even hosted investor meetings there.

Even now that we’re off and running, we still monitor all of our expenses carefully. Bizzy is headquartered in a more affordable part of San Francisco, and we’re vigilant about keeping track of our personal budgets using online tools. (Jen loves Mint, while Chiara uses Personal Capital.)

Tip #3: Optimize your student loans so they don’t hold you back.
C & J’s take: We both graduated from business school with significant student loan debt, but we were determined not to let that get in the way of our venture. Paying off student loans is a top priority, and working with SoFi to refinance them at a lower interest rate has made both of our monthly expenses more manageable.

We also became members of SoFi’s Entrepreneur Program, which offers qualified entrepreneurs valuable mentoring, networking opportunities, access to investors and up to six months of loan deferment. While we haven’t yet taken advantage of the deferment option, having that as a fallback plan provides us with some peace of mind.

Tip #4: Have a winning attitude.
C&J’s take: We embrace the fact that entrepreneurship is all about learning and problem solving, especially when you’re a new grad on a tight budget. When we encounter problems in our business, we seize the opportunity to research different solutions and employ whichever one (or combination) suits the situation.

In fact, one of the things we both find exciting about entrepreneurship is the opportunity to learn new things about a plethora of different subjects – literally every day. The biggest thing we’ve learned throughout this experience is that it’s possible to learn anything, and since we both enjoy learning so much, any challenge that comes up feels surmountable.

Even a challenge like balancing student loans and entrepreneurship.

Daniel Macklin is a member of the DailyWorth Connect program. Read more about the program here.

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