After college, most graduates start looking for work with traditional employers. But it could be even more effective to start your own business, especially if you have a good idea for one. 

There's no guarantee of profitability, but with ample planning and the right modifications, you can optimize your post-college startup for lean, early profitability.

How do you do it?

The Rewards and Risks of Starting Your Own Business

There are lots of advantages associated with starting and running your own business. It's an opportunity to set your own schedule, choose your own clients, and control your own destiny. It's a way to have an uncapped, hypothetically unlimited income – and even if your business fails, it's a great experience that can teach you a lot about the world.

However, as a recent college graduate, you aren't going to have much business knowledge or experience to work with – and running your own business is somewhat risky. Your income may be inconsistent, your expenses may be excessive, and your products and services may not be as eagerly demanded as you anticipate.

So how can you balance these sides of the equation and make sure your new business is profitable?

Tips for Early Profitability

These are some of the best strategies to optimize your new business for early profitability.

•   Plan in advance. Don't expect your business to be profitable, or even functional, unless you have a solid plan in place. Long before you launched the business, you should spend some time thoroughly researching and developing your business plan. At minimum, you should understand your unique value proposition (UVP), your target market, your competition, and your basic plans for financial success. The more challenges you're able to foresee, the better you'll be able to plan for them.
•   Control your labor costs. One of your biggest expenses as a new business owner is going to be labor. Accordingly, you need to have a plan to control your labor costs. Start by hiring only the people you need and consider hiring based on talent, rather than experience, since experience is typically much more expensive. If you have to pay overtime, you’ll be spending even more money, so have a plan in place to deal with excessive workloads – such as hiring contractors to fill the gaps.
•   Focus on a minimum viable product (MVP). Generally, it's a wise strategy to focus only on developing a minimum viable product before launch. Your product doesn't have to be perfect, nor does it need to have every feature you imagined from the start. Instead, you can get to market faster and start generating revenue sooner if you launch with the minimum version of your product and work on improving and enhancing it later.
•   Start small. You’re not going to have the money, experience, or competence necessary to launch a nationally competitive business right out of the gates – but you can be successful starting with a smaller scope. Instead of competing nationally, compete locally. Instead of dumping $15,000 into marketing, start with making free posts on social media.
•   Network and take advantage of referrals. Speaking of social media, be aggressive with your networking and take advantage of referrals. You can mitigate marketing and advertising costs and establish a solid foundation for your business revenue by building a bigger network and promoting yourself through word of mouth (at least at the beginning of your operation).
•   Focus on retention, rather than acquisition. Customer retention is less expensive and more rewarding than customer acquisition, so make it your priority. Instead of hemorrhaging money on marketing, advertising, and sales, work on improving your customer experience and your relationships with your clients.
•   Avoid overspending on unnecessary items. New business owners are sometimes tempted to spend money on vanity items, such as a bigger office or more recognizably branded software. As you can probably guess, this is unwise. Focus on spending money on strictly necessary items, and only splurge when you can find an objective reason to do so.
•   Find alternative solutions. Consider looking for alternative solutions that cost less than their mainstream, traditional counterparts. For example, instead of paying for another business’s products or services, consider bartering with them. Bartering and negotiating can help you save money on the items you need while simultaneously building relationships with other business owners in the area.
•   Avoid growing too quickly. As your business begins to develop momentum, impose strict controls on your growth rate. Growing too quickly can lead you to spend too much money – and compromise the quality of your offerings.

There's no way to guarantee business profitability, even with a great idea in an environment with minimal competition. However, with proper planning, good expense controls, and a focus on revenue generation and profitability, your chances of success will be much higher.