Student Loan Paradox for Entrepreneurs: A Case Study on Effectual Reasoning

Student Loan Paradox for Entrepreneurs: A Case Study on Effectual Reasoning

Twenty (20) months without triple student loan payments. Several thousand dollars per month adds up quickly. This has been a hiatus after one hundred and eighty (180) months - fifteen (15) years of making consistent payments - never missed. After having built two homes, and having two kids, the break was like catching a semblance of breath after completing a triathlon. Continuing with the analogy, a Tri comprises three similar feats in that they are all physically demanding; yet all very different in terms of training and the technical expertise required. The same can be said about the three businesses we’ve owned or built during the pandemic these past two years. All three businesses, all very different. If starting two businesses during the pandemic sounds crazy, let me tell you it probably wouldn’t have been possible had Covid 19 not come to pass. Certainly the investment money would have taken much longer to scrounge; the patents would have taken longer to write, defend, and publish; and our location expansions would have most certainly been slower to bloom.

In terms of starting your own business, experts would have you believe the choice is binary. First, they say, you have to ask yourself, do I want to sell things to people, or would I rather provide services? What if the answer is neither.


“I don't want to sell anything, buy anything, or process anything as a career. I don't want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed. You know, as a career, I don't want to do that.”

                                                                                             - Lloyd Dobler


Our journey involves three businesses, two business sectors (construction/industrials and retail/consumer discretionary), representing three different industries (crane services, residential waste management, and sporting goods). An area of pride for our team, yes. Informative for other aspiring, serial Entrepreneurs, we hope so. The reality is the Entrepreneur has far more ‘bosses’ than anyone working in public or private arenas. The Entrepreneur not only ‘works for’ their employees and their employee’s families, the Entrepreneur works for every one of their clients as well. At the end of the day, even the aspiring amateur kickboxer and hopeful romantic, Lloyd Dobler from the 1989 cinematic hit, Say Anything, knew that you’re going to work for someone/s. It’s just that you get a choice whether that’s going to be work done with and around Products or whether it’s going to be work done with and around Services. 

For Ford Motor, Apple, Valero Energy, and PepsiCo, it’s primarily products. For Alphabet (Google), Cigna, Comcast, and Chase, it’s primarily services. And for the likes of CVS, FedEx, Costco, and Home Depot, it’s both products and services. ‘I’m big on experiences,’ is a terrific philosophy, as is the experience economy. The bottom line is someone is probably offering those experiences as part of their service as a tour guide, travel writer, social media sensation, or similar. It’s true that even performers are in the service industry. The entertainment is the service they provide as the host. Now the confession. We have ignored something important up to this point. A smaller, and oftentimes overlooked, alternative venue does exist outside of the world of products and services. No, we’re not talking about earning a living the old fashion way by inheriting it either. Instead we’re alluding to something far more grand and fulfilling. Licensing.

In the realm of passive, residual income, licensing is where it’s at. Admittedly, we’re aspiring to get to the ‘licensing stage’ of owning a business. It’s true that you can license a product. It’s also true that you can license a service. Some have even argued that Licensing itself is the ‘service.’ For our purposes we’re in favor of splitting the proverbial hair and drawing the line at intangibles such Intellectual Property (IP). Ideas are the stuff intellectual property is made of. Creative sparks of the imagination, when properly protected, can prove to be lucrative endeavors. It’s commonplace to consider Patents, Trademarks, and Copyrights chief among what constitutes intellectual property. This is true. What’s also true is that NFTs (Non-fungible tokens) are already more democratized and thereby more accessible than more traditional IP rights have ever been. NFTs are what we would also refer to as Licensable, non-services, non-products. To the greater point here, licensing can be finite, or licensing can be indefinite, and/or licensing can allow X number of uses or widgets to be produced. The bottom line is ideas are valuable, and great ideas produce the most return on your investment.

Now that we own several patents, have a respectable number of trademarks, and several dozen copyrights it’s great. Pursuing licensing agreements now that we have proven out our manufacturing processes and franchise expansions may be laudable as well. The fact is, that’s not where we started. Far from it.

Fresh out of college with a mountain of student loan debt is where we began our Entrepreneur-minded journey. By Michael’s third year in Grad school he was able to land an Assistantship through the University. This role, albeit ‘unpaid,’ would cover his tuition costs during his final year. At this point he was already working full-time and attending night classes. Noteworthy to our story, by this time he had also already been awarded, cashed in on, and understood the value of an academic scholarship during undergraduate studies as well. We still had books to buy, and room and board to pay for, and meals to figure out, and and and, but, he was able to pay for these responsibilities by picking up construction jobs during breaks and throughout the summers.

Our truth is this: although we didn’t ‘need’ any loan money that final year to cover tuition, rent, books, etc, Michael still took those Graduate loans (a fraction of his overall loans). And, instead of using it to cover living expenses, which we were paying out-of-pocket, we used the funds to put a down payment on a construction loan to build our first house.

So that’s what we did. We built our first home, as in ‘with our own hands.’ Yes, we hired subcontractors when it made sense to. Yes, it was an arduous undertaking with a steep learning curve. Yes, we leaped into the project at twenty two (22) years old with a voracious and unquenchable thirst to learn with very little of what you might call ‘planning ahead.’ Had we known then, what we know now, we may never have attempted it. That beautiful, sprawling, ranch may have never been built. But it was built. And it was done so in part, with seed money that would have otherwise been tuition payments.

You won’t be surprised to also learn that we sold that home in 2015, having built in 2008, and parlayed the proceeds into a.) new vacant lot where we would build our next home upon, and b.) into the purchase of an existing crane services company and the good will that came with buying an already established business.

Although we never officially incorporated or filed with the state, our real estate/real estate development/interior design adventure was our first business. Those interests persist to this day. We’ve built several homes now. We’ve purchased, remodeled, and flipped others. The important thing is this: We got our start not because we had it all figured out, and not by starting with a predictable end goal of franchising and leasing intellectual property rights. No. We got our start rather, by focusing on what we already had in terms of knowledge and skill sets, as well as what we had access to, in terms of capital and skilled acquaintances.

The idea that what successful Entrepreneurs all have in common is their superior ‘causal reasoning;’ the idea that we solve an existing problem, map out a plan far in advance, and then execute that well designed plan, is simply not true for many Entrepreneurs. Certainly not the successful business owners we know. The reality is, plans change and even successful business owners have had even their most well thought-out plans fail. To put it plainly, that’s simply not the reality many of us have experienced. This careful planning myth has unfortunately been perpetuated for a long, long time.

Finally, a brilliant researcher has viewed the phenomenon that is Entrepreneurship through a wide-angle lens and discovered a truth. The truth that being a successful Entrepreneur is much more accessible than most writers on the subject would have you believe. Important to note, we don’t assume malintent here. In fact we assume writers and journalists on the topic have good intent. Part of the problem though is that when you interview success stories only and you do so with the benefit of revisionist’s hindsight being 20-20, then everything looks like the result of great planning and execution. This concept is as wrong as it is self-serving. Our truth is we go with the flow and adapt to current environments far more frequently than we could ever ‘predict’ the future. Large, billion dollar, multinational corporations with their bloated budgets and teams of experts ‘get it wrong.’ You need look no further than two quintessential flops, the McDonald's 'Arch Deluxe' sandwich, and GM's electric Hummer. What do those cautionary tales tell us.

In a mature capitalistic economy even the grandfather of economics, Adam Smith, would have been hard-pressed to predict such an uneven playing field as exists in a system whose premise assumes an ‘even playing field.’ Yes, that’s right. Adam Smith’s elegant, if not utopian, modeling assumes new ideas pay obedience to the same shot-gun starting line. When corporations as entities are paired against debt-free, diploma-cladded privileged youth, they themselves paired against under-privileged student-loan strapped, single moms, the start seems a bit staggered doesn’t it. Let’s acknowledge our reality for what it is. Equal opportunity, maybe. Unequal footing, certainly. Similarly, this idea of the Entrepreneurial blueprint of ‘great ideas’ and business plans, and venture capitalism has likewise been thoroughly debunked in research by University of Virginia professor Saras Sarasvathy, and further extolled in a December 16th, 2021 article by Jeff Haden titled Research Reveals the Best Way to Find a Startup Idea. Instead it’s the Entrepreneur’s ‘effectual reasoning,’ aptitude for leveraging what’s close at hand, and acute appetite for moving into action without elaborate planning, that rules the day. 


“If you're struggling to come up with an idea for a business, stop starting at the end. Stop trying to determine, in fine detail, what product or service you will provide. Instead, start at the beginning. Start with who you are, what you know, and whom you know.”

                                                                                      - Jeff Haden


The complete paradox of all of this is this: We have repaid student loans early by starting a business that we couldn’t have afforded to start had we still been repaying on student loans consistently. As the pandemic turns endemic and the student loan payment hiatus window closes, we’ll have already seen respectable returns on our new enterprises. What’s more, we’re opening a fourth (a charter boat tour company in 2022) and fifth (we’re building a rental property in 2023) business post-haste. The complete irony being, once you get past the fatigue of starting your first business, you have all the time in the world to plan your next one.

Where spreadsheets and articulated earning projections and market analysis to whitey ford in white shirts and blue suits can seem far far away, action seems close, is close, is doable and attainable. In that motion, that momentum, that incorruptible thirst. That’s where Entrepreneurship lives, and thrives. It’s there where it survives, and is revived. And it's there where Entrepreneurship is incorruptible and accessible.


Article written by Serial Entrepreneurs,

Michael and Jennifer Hiller

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