On Campus: Where Profits Flunk

Geoff Boone, a student at Claremont-McKenna College near Los Angeles, was vacationing in Hong Kong when he spotted a striking coat-of-arms design on a golf club's beverage coaster. Thinking that the design might sell well on campus, he had it printed on about 100 t-shirts and brought them back to the United States.

CMC had recently opened a student-run store—an ideal place, Boone thought, to sell the shirts on consignment. But when he checked with the student manager, he found out he needed permission from the administration. And the administration nixed the idea.

"They didn't want to deal with that, with everybody on campus trying to market something through the student store," Boone says. "It might have been fine if the t-shirts had said 'CMC Stags' or something. But it was just my own private little venture."

Boone's experience is hardly unique. On campuses across the country, a surge of student entrepreneurship has confounded administrators—who respond all too often with a borrowed trick or two from government planners.

Some schools, including Notre Dame, Princeton, Kentucky, and Berkeley, control campus enterprise with monopoly franchises, zoning rules, or "social interest" regulation. Others, such as the University of Southern California or the University of California at Irvine, forbid for-profit business altogether. And, regardless of their policies, many administrators actively discourage student interest in entrepreneurship, using terms like greed and flea market to disparage the concept.

Some school officials, on the other hand, think that by closely regulating student businesses, they are helping to "guide" the learning process. Granting students monopoly power is a common expression of this fallacy.

If campus entrepreneurship "is designed to give students business experience and a way to make some extra money…then product lines don't need to be competing," says Bart Franciscone, associate director of student employment at Princeton University, where all student businesses are regulated monopolies.

At the University of Kentucky, administrators teach students about the dog-eat-dog business world by leashing entrepreneurs. Student Agencies Inc., a nonprofit student operation doing about $100,000 in business annually, is the only group allowed to sell on campus.

A student who wanted to market baseball caps, for instance, would have to approach the corporation about starting a new "baseball cap division." The would-be hat hawker would present a business plan to the board of directors, made up of four students and six faculty members or administrators. If someone already sold baseball caps on campus, the board probably wouldn't approve the new division, deeming such competition "wasteful."

In fact, even if the proposed product line would compete with an off-campus vendor, the board might not allow it, says Student Agencies president Micah Anderson. "There's a lot of politics involved in some businesses," he explains. "The taxpayers support institutions like the university. So if we piss off taxpayers, the board will have to deal with that."

And to keep students from bypassing its monopoly system, Kentucky forbids running any moneymaking operation out of dorm rooms. "It's kind of like a zoning law," observes Anderson.

Politics can supplant market choice in other ways, too. When some Kentucky students wanted to open a tanning salon, the board said no, citing possible university liability for any long-term health effects. "But the real reason," says Anderson, "is that [the University of Kentucky] has a large medical facility, and the medical community there was really against it."

At Berkeley, a "business management board" of student senators decides who can rent food stands in the student union. Applicants must meet a "social responsibility" test laid down by the student government. For instance: "The student body is not real keen on having a whole lot of junk food available to students on campus," asserts the program's director, Peggy Perkins (astounding college students and knowing parents everywhere). "We also boycott various vendors, such as Coors Beer, because of their hiring practices."

Rest assured, though. Purely economic criteria also play a role. "The only stipulation with regards to the actual food…is that it cannot be in direct competition with any other existing food service here," Perkins says.

Instead of regulating entrepreneurship, some schools ban it altogether. This straightforward approach operates at UC-Irvine, where profits are passé. "We would allow [students] to sell products if it was part of their club or organization," says Chuck Piper, Irvine's associate chancellor for student affairs. "But they couldn't do it for private profit."

For example, students planning a "Spring Beach Bash" could sell t-shirts advertising the event—with the proceeds, of course, going back into the Bash for beer or other necessities. "But if it were just students wanting to make $10 for designing really lovely t-shirts, then we wouldn't allow that," Piper says.

Many schools apparently squash student entrepreneurship to prevent competition with university operations, but they rarely admit it. "The administration has taken the tack of protecting the students," says Dan Abila, facilities coordinator at the University of Southern California. "We don't want to turn the place into a flea market. If I accepted everything that came across my desk, I'd have three people selling out there every day" (a fate too horrible to contemplate).

Like Irvine, USC allows student organizations—but not individual student entrepreneurs seeking profit—to sell on campus. Furthermore, the university's bookstore manager must approve all vending. Abila says that this supervision is designed to prevent student groups from being used as "fronts" for outside companies.

So how might the bookstore manager decide what to allow? "First of all, if [a student] was going to sell something like sunglasses, the bookstore already sells sunglasses," Abila says, the monopoly monster again rearing its collegiate head. "Now if it was a unique set of sunglasses, then perhaps the bookstore would look at it." But, he adds, the administration expects to raise a certain amount of revenue from bookstore sales. If the manager lets someone else into the sunglasses market, he could hamper his own business—and get in trouble with his university bosses.

The regulated environment facing student entrepreneurs across the country looks a lot like the real business world, with student senators or university officials filling in for government bureaucrats. It might seem difficult, if not impossible, for an enterprising student to navigate around the various obstacles—licensing, protected monopolies, intrusive regulation, or the prospect of obtaining permits from a potential competitor—and actually succeed with a campus business.

But some do. Geoff Boone, undaunted by CMC's refusal to grant his t-shirts shelf space in the student store, simply sold the shirts by word of mouth. He charged $8.00 each, for a profit of about $5.00 a shirt.

"They sold like hotcakes," he says. "It was just one of those neat things that comes along." Since high school, Boone has also "brought along" a car-window-washing business, and he currently operates an SAT prep course with another young entrepreneur.

That's the trouble with entrepreneurs, as college administrators are sure to discover. When faced with a seemingly insurmountable obstacle, they usually find a way around it. Learning how to operate enterprises in the hostile environment of the American college campus may, unfortunately, be just what future entrepreneurs need.

Summer editorial intern John Hood is a student at the University of North Carolina, Chapel Hill, and editor of The Carolina Critic.