Q: I am a single African American female who will be graduating with a bachelor’s in business administration next year. I have $20,000 put away to start my own business, but I don’t have a clue where to start or what to do. I subscribe to your magazine and am very impressed with the individuals who have started million-dollar businesses with little or nothing. What can you tell me about getting something started before I blow the money and have nothing to show for it?
–F. Spencer, Milwaukee
A: Whatever you do, do not blow the money. If you want to start a business, you’re going to need every cent of that money to cover your overhead, which can add up quickly. With that said, the first thing you have to do is decide what kind of business to start. Readers often ask me what type of business they should start, but that’s a decision that should be determined by your personality, interests, and skill set.
However, I advise that you be sure to pick something that you like to do because if you become successful at it, you’ll be doing it often. Also, learn the challenges in the intended industry before you decide. I also recommend reading the Black Enterprise Guide to Starting Your Own Business by Wendy Beech ($19.95, John Wiley & Sons).
In the meantime, I’d recommend (and I spoke to our Personal Finance Editor Matthew S. Scott about this) that you put your money into a short term (12-month) CD or a money market fund, so that you know you will have it available when you’re ready to take the entrepreneurial plunge. Most major banks can provide information on both of these investment options.