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The advantage of starting a business young

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Eric Sanford/Newscom/File

(Read caption) Young entrepreneurs are at a disadvantage in terms of experience, but their low personal overhead makes it easier to turn a profit.

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Starting a business right out of college has challenges -- being light on experience and low on cash come immediately to mind.

But it offers a very important advantage. These young entrepreneurs have very low personal overhead.

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Typically my MBA students and other older entrepreneurs we work with have a mortgage, car payments, tuition, and so forth to pay every month. When they start a business this personal overhead, in effect, becomes part of the overall overhead of their business. To break even they have to cover not only the costs of the business, but their own monthly expenses, as well.

On the other hand, my undergraduate students don't bring much personal overhead to their new start-ups. They are used to living on ramen noodles and sleeping on couches. Because their monthly personal expenses are so low, the breakeven point of the business (when it can cover business expenses and cover the salary the entrepreneur's needs to get by) is much, much lower than their older competitors. This makes getting cashflow positive a much easier task, thus increasing the odds that they will survive the trials of starting the venture.

Erin Blaskie offers her views of the pros and cons of starting a business right out of college in an article at Business on Main.