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Managing the Risks and Opportunities of Student-Run Businesses

Managing the Risks and Opportunities of Student-Run Businesses. Luke Figora AVP, Risk Management Northwestern University Amaan Badruddin CEO Northwestern Student Holdings. Agenda. Types of student businesses Northwestern Student Holdings case s tudy Takeaways for managing risk.

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Managing the Risks and Opportunities of Student-Run Businesses

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  1. Managing the Risks and Opportunities of Student-Run Businesses Luke Figora AVP, Risk Management Northwestern University Amaan Badruddin CEO Northwestern Student Holdings

  2. Agenda • Types of student businesses • Northwestern Student Holdings case study • Takeaways for managing risk

  3. Models of Student Entrepreneurship • Independent start-up companies • Incubated start-ups • Participation in faculty start-ups or companies • Ongoing, operational enterprises

  4. Independent Start-Ups • Very limited ties to the university • Potential activity on campus (with or without institutional support) • “Unaffiliated” advisement by faculty or staff • Funding by the institution? By individuals?

  5. Incubated Start-Ups • Independent companies from a governance perspective • Significant support by institution: • Space • Funding • Guidance (financial, investors, legal, etc) • Connections • Usually eventually “spun out” of incubation

  6. Faculty Start-Ups • Independent of university (potential university investment) • Formal employment or engagement vs. experimental learning experience • Overlapping advisement, teaching and real-world experience

  7. Operational Businesses • Student organization? • Can either be part of, or independent of, the institution • Long-term, stable model • Operational business experience in addition to potential new venture opportunities

  8. Operational Businesses

  9. Case Study – Northwestern Student Holdings • Formed in 2006 • Approximately 120 Northwestern students involved annually (50% management, 50% employees) • About $250K in annual revenue • Opportunity for Northwestern students to gain experience with daily operations and long-term strategy • Fantastic alumni network

  10. NSH Business Over the Years • Chicago Unzipped 2007-2009 • NU Tutors 2008-Present • Wildcat Express Delivery 2008-2014 • Airhop 2010-2014 • CouponCat 2010-2011 • Project Cookie 2011-2014 • EccoLiving 2011-2013 • BoxCo 2012-2015 • RezEssentials 2013-Present • DesignWorks 2013-Present • InkTank 2016-Present

  11. Current Business - NUTutors • Tutoring business focused in Evanston area • Primarily in-home, high-school students • Also offer prep courses for standardized testing (ACT, SAT) • Direct marketing and word-of-mouth • $53K revenue

  12. Current Business - RezEssentials • Mini-fridge rentals (or sales) to Northwestern students in residence halls • Logistics – delivery, pick-up, cleaning, storage, disposal • Partnership with Northwestern Campus Life • $60K revenue

  13. Current Business – DesignWorks • Graphic design and website development • Independent and Northwestern clientele • Recruitment / retention of designers • $5K revenue

  14. Current Business – InkTank • Apparel needs for Northwestern campus • Outsourced production partnership & Northwestern licensing partnership • Sales team • $28K revenue

  15. “Risky” Business Experiences • Warehouse rental and state regulations • Food safety • Environmental disposal • Student driving and transportation • Sales taxes • Unmet customer expectations • Employment issues

  16. NSH Governance History • Since inception, NSH has been part of the University, not a separate entity • Part student organization, part University unit • Overseen by board of directors consisting of University administrators, alumni and notable advisors

  17. NSH Governance History • Significant reliance on University infrastructure • Employment / payroll • Accounting / finance • Space • Business partnerships • Legal, contracting, insurance, etc. • Varying day-to-day oversight by University offices over the years

  18. NSH Governance Transition • NSH lacking home internally at Northwestern • Board decision to dissolve NSH as a part of Northwestern University • NSH leadership contemplating what comes next • What businesses are sustainable? • What resources are needed? • How do we exist independent of the University?

  19. Risk Manager Takeaways • Importance of structure and institutional oversight if part of University • Engaging appropriate institutional stakeholders • Legal / risk • Tax / accounting • Procurement • Facilities • Student Life / Residence Halls • Academic leadership • Community engagement

  20. Risk Manager Takeaways • Vetting new business ideas • Safety is the top priority • Regulatory or legal issues • Liability concerns (professional or products) • Contractual exposures • Minors, driving, alcohol, etc….. • Are these students or employees? • Employment or Educator’s Legal Exposure? • Workers Compensation or Student Health?

  21. CEO Takeaways • Importance of leadership and effective transitions from year-to-year • How to foster appropriate engagement among students? • Balance desire for entrepreneurial activity with operational basics

  22. CEO Takeaways • What is the right governance structure to foster success? • How important is sustainability? Learning from failures. • Do we have to be profitable? What is the financial model?

  23. Questions and Discussion

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