Maintaining a Business You Started in College

by | March 10, 2009

Lemuel Anaejionu started a successful business that buys and resells textbooks. Jennifer Woodsmall imports Vietnamese handbags and craft products. Josh Kowitt rents out minifridges and microwaves.

It's amazing what you can do in college these days.

Undergraduates who start businesses are a growing bunch. Some, like the three above, are inspired more by their own ideas than what they learn in class. But soaring demand has led more than 300 four-year institutions to offer courses in entrepreneurship for non-business-school students, according to the Ewing Marion Kauffman Foundation, a Kansas City, Mo., group that focuses on youth development and advancing entrepreneurship. Also by Kauffman's count, entrepreneurship departments on campus grew to 18 this year from seven in 1999, and more than 2,100 colleges and universities now offer at least one entrepreneurship course.

Nominations for the EO Global Student Entrepreneur Awards, meanwhile, which go to three top college entrepreneurs a year, jumped to 300 this year from 135 in 2005, says Erik MacKinnon, GSEA emerging programs facilitator.

"Honestly, these kids are willing to work themselves to death," says Mr. MacKinnon. "They believe in the business that they're running. They're committed."

Their stories don't end after four years, either. Those who start a business while pursuing the equally tough job of earning an academic degree still have a daunting challenge ahead of them: keeping the business going after they graduate.

To learn what drives undergraduate entrepreneurs and how their businesses ultimately fared, we talked in depth to several students. What follows are some of their experiences and thoughts about entrepreneurship.

Grade A Books

Mr. Anaejionu was fed up with the textbook prices in the main bookstore on the University of Texas at Austin campus. The store, he says, had a monopoly on the market. So what did he do?

"I just started a little textbook arbitrage on the side," Mr. Anaejionu says. With a colleague he met at an entrepreneurship society, Kunal Das, he set up Grade A Books, which sold used textbooks at a kiosk one block from the main campus. A chief strategy: Grade A Books pays more than the main campus bookstore when students sell their books at the end of each semester. (The main bookstore doesn't compete with Grade A on price, he says, since Grade A is so small.) Grade A also undercuts the main bookstore by 20% to 30% when students buy their books from them.

It was a very simple business model, Mr. Anaejionu says. But he and his partner had to stay on top of things: monitoring their main competitor's prices, managing 10 to 15 full-time and part-time workers, and arranging schedules in what were the busiest times for both their business and their education -- the start of the school year and during finals. Because of the business, Mr. Anaejionu says, he often had to start studying for finals a couple of weeks before other students did.

Of his double life, Mr. Anaejionu says that "most teachers were cool with it," despite his periodically missing the first week of classes. He remembers one English teacher, though, who wouldn't let him back in class after he missed the first three days. He tried to explain that he was running a business and making money he needed to stay in school. But the professor wouldn't relent, and Mr. Anaejionu had to drop the class.

Other difficult periods were during finals, when the business had its busiest buyback period. He had a hard time finding employees at those times, since they, too, had to study. His solution: pay them a little more during that crunch period.

After graduating in 2004, Mr. Anaejionu realized that his used-textbook business wouldn't be a career jumping-off point. "I wasn't really growing as a businessperson" he says.

Now 24, he has just started law school at Columbia University in New York. He says he has handed the reins of the business to a couple of his employees, but still retains part of a majority stake in the company.

JL Lane

Ms. Woodsmall was a Wake Forest University sophomore studying in Southeast Asia when she fell in love with some handbags she saw in Vietnam.

This provided the seed for JL Lane, a business she started that imports and sells leather and suede handbags and other craft products made by women-run businesses in Vietnam. Ms. Woodsmall started the business in the spring of her junior year, back in Winston-Salem, N.C.

She found it tough balancing the business and her two majors, psychology and religion. Late at night, after studying, she'd work on new handbag designs or communicate by email with her Vietnamese suppliers. During the day, between classes, she took samples of the bags to upscale boutiques around Winston-Salem.

Because she wasn't in the business school, she was at first not allowed to take Wake Forest business classes. Getting the business going would have been easier, she says, "had there been more support on campus in terms of access" to mentors, strategy groups and professors. "Without that, it was really challenging," she says.

Not giving up, however, she took an online accounting course from nearby Greensboro College and started learning from the Small Business Administration Web site. Particularly difficult, she says, was trying to learn by trial and error how to register her business, communicate with the Vietnamese and understand different tax laws.

Her situation improved, though. The next summer, she attended an entrepreneurship class at the London School of Economics, and in the fall of her senior year she persuaded Wake Forest to let her take a marketing class. By that time, the Kauffman Foundation was working with Wake Forest to build an entrepreneurship center there.

The center would come too late for Ms. Woodsmall to benefit. But with more cooperation from the administration, she got more support from the business school, and JL Lane started growing. After graduating in 2004, she tried to manage her company and work full time for a health-care research firm in Washington. But it was too much of a struggle, she says, without the help and structure she had gotten used to in her last year at Wake Forest. So she quit her job and devoted herself full time to JL Lane, with her mother, Linda Woodsmall, as her partner.

The Washington-based business is doing well. She sells her bags at retail for $80 to $200, and hopes to reach $150,000 in revenue this year, up from an estimated $50,000 in 2005. Until recently, she and her mother were the only employees, but Ms. Woodsmall says they are beginning to work with sales reps. Ms. Woodsmall also says that she plans to give 15% of her revenue each year to help start other women-run businesses in Vietnam and India.

Sometimes, she has to remind herself to stop focusing too much on day-to-day details and spend more time on strategy. "I think it's a challenge," she says, "to define those next steps and to choose one course over another."

Collegeboxes

Josh Kowitt built his minifridge-renting business because he was bored.

Mr. Kowitt was a freshman at Washington University, in St. Louis, when his girlfriend, attending Emory University, in Altanta, gave him the idea, he says. He soon talked it over with his suitemates, and they pooled their resources to create ResFridge Etc. The plan wasn't complicated: buy a minifridge from graduating upperclassmen for $25, clean it with industrial-strength cleaning agents, then rent it for an average of $200 for the academic year, mainly to freshmen. The service also included delivery and pickup.

"No one wants to own them really," says Mr. Kowitt of the minifridges.

While he was making deliveries one day, he kept running into Scott Neuberger, another college entrepreneur, who had a general delivery and storage company -- for personal belongings and furniture -- called University Trucking. The two not only ended up as fraternity brothers, but as partners in a new business -- a combined rental, delivery and storage company serving the college market. In addition to minifridges, the two would rent other appliances, such as microwaves, and furniture as well.

At the start, they had 400 customers. By the time Mr. Kowitt graduated, they had about 1,500.

Running the business proved hard on Mr. Kowitt physically: "I can't tell you how many times I threw my back out," he says.

But it wasn't bad for his grades. "I found it to be very helpful," says the political-science major. He had to be rigorous about balancing work with student commitments. For instance, he'd finish picking up fridges by 6 p.m. and then go straight to the library from the warehouse for three-hour study sessions. "I really attribute a lot of it to the business helping me focus when I studied," he says.

Today, Mr. Kowitt and Mr. Neuberger own Boston-based Collegeboxes Inc., the largest college-focused storage and rental business in the nation, serving about 50 schools and 8,000 customers a year. Mr. Kowitt won't disclose revenue and profit figures.

The challenges now are different, Mr. Kowitt says. He has had to learn to be more of a manager, with 15 full-time staff and 125 college students who work with the business on different campuses. Then there are the little fires that continuously pop up.

He says he sometimes misses going to classes and lectures, which in his college days provided a periodic escape from his responsibilities to the business. Without those diversions, all his thoughts are narrowed to making Collegeboxes run better.

"I feel very fortunate to operate such an incredible company at such a young age," Mr. Kowitt says. "But at the same time, it's not without a tremendous amount of stress, probably more than what a 24-year-old should be having."

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