The financial crisis has put down many businesses and jobs, with money tight and unemployment reaching almost record levels, especially among the young people. The number of people out of work in the UK has risen to 2,435,000 - its highest level since 1995. It takes the national jobless rate to 7.8%.
Across the UK, claims for unemployment benefits are the highest in 12 years at 1.58 million. (Source: http://news.bbc.co.uk/1/hi/england/8197479.stm.) It would seem that now is not the time to be taking unnecessary risks. Starting a new business is one of the riskiest things you could consider, especially if you are one of the 18-30’s looking for work. I don’t know about you, but in the United Kingdom, the help given to small businesses (I feel) has been inadequate. Banks still remain inflexible and loans have extra conditions and interest attached. Banks have been bailed out and Big Business helped–but, it would appear, at the expense of small business. However, there are opportunities out there to exploit and if you are young, you can take advantage. It appears that a recovery is still a long way off.
In this article, I will put the case forward that there is no time like the present to fulfill your entrepreneurial dreams. There are many young people that are successfully running their own businesses. Having said that, the process is far from easy. Setting up in business as a young person (for the ease of use, the term ‘young person’ will refer to those under the age of 30 - sorry to be so exclusive) can be a real challenge. This is mainly due to the difficulty in turning an idea into a business reality. Nevertheless, I believe that with the right amount of guidance and support, it can be done.
Before taking the plunge and launching your own business, it is worth taking a pause and thinking through your ideas and seeing whether you have what it takes to succeed. There is no denying that there are characteristics that a good entrepreneur should have. This list is not exhaustive so don’t stress (breathe . . .). Furthermore, there are no hard-and-fast rules when it comes to starting a business. There are those who start by turning their hobbies into a business venture; there are those who use their skills as a springboard into business. There is no right and wrong, but do consider carefully if your idea has any long-term viability. Some of the traits of an entrepreneur are:
- Passionate
- Creative
- Ambitious
- Motivated
- Hard-working
- Determined
- Confident
- Focused
If you have some or all of these, then you are well on your way. Some of these can be learned/developed, so go on, I dare you!
Doing the preliminary research - the idea
Every new business starts with an idea. But you need more than that if it is to become a reality. You could do an initial test to see if it will work. When I set up a student quiz night in my last year of university, I made sure I did some preliminary research. I did this by just asking around and getting people’s opinions, and gave a brief pitch of what I was proposing. I knew that there was not anything like that on the campus where we were located, so I knew that I was onto something good. So that is what you will have to do. Talk to people, look on the Internet to see what other businesses are out there - do they offer what you have to offer? Or is yours going to be completely different?
After you have done this, you will need to:
- Start writing a business plan
- Check if you need any premises (and any associated licenses to go with that)
- Check to see if you need to pay any insurances/taxes
- Look at how you will finance your business
- Get a mentor - they are invaluable
You may need some degree of professional help so take advantage of any support - lawyers, accountants, businesspeople, even family and friends (if any of them are qualified). You will be surprised at what you learn!
Difficulties and how you can overcome them
Experience (or lack thereof) - one of the main obstacles that young people face (especially those in their teens and early twenties) is that they do not have much experience. If this is you, do not be put off. There are ways to overcome this:
Try having some work experience with a company that you love that does the thing that you want to do with your business. For example, if you want to start a catering business, then spend time with a catering company or even a restaurant. Not only will it give you useful insight, it will help you to gain useful contacts. If they pay you, then you have some money to get your business off the ground. Banks like initiative as well as cash!
Get a mentor - this may be someone who started their own business from scratch. They have been where you are, and will give you advice on how to overcome/minimalize any problems.
Financing for business - this is the biggie. As a young person, you may not have assets or a track record. You need to think carefully how you want to raise the capital. Some forms of finance may not be available to you especially if you are under 18 (banks will be very reluctant to give business loans and overdrafts to you. This is because you may not be able to offer sufficient security for them.) So what can you do? If you have savings, then that is an option. However, there are alternatives:
- If you have a personal bank account, you could ask them for an extension of your overdraft. But make sure you are able to pay it back
- Ask friends and family, but be careful not to "put them on the spot" or to ask for more than they can afford to risk
- Sell some stuff - have a car boot sale, go on eBay and dispose of things that you have not used for a while. One man’s junk is another man’s jewel is what I say!
- Get a job and save some money while refining your plan,
- Government grants - Prince’s Trust (www.princes-trust.org.uk) and Shell Livewire (www.shell-livewire.org) are just some of the funding that young people can access in the United Kingdom. They also offer mentoring and business support which is so important for the young, budding entrepreneurs. If you cannot access bank finance, then you can consider a Community Development Finance Institutions (CDFIs) which provides loans and support to those who cannot get their hands on ‘normal’ methods of funding.
You need to make sure that you have enough financing to run your business and have a profit. You will need to be extremely disciplined and have tight monetary controls.
Location, location, location - you may find that, in the beginning, running things from home may be the best idea to save on costs. But you may decide to have a premises. Check for any deals and licenses available.
The importance of a business plan
A business plan is crucial when setting up a business. It is a document that helps define your business vision and goals as well as being a monitoring device to help gauge where your business is going. Furthermore, it is an important marketing and investment tool and, as such, should be done to the best possible standards. To see how to write an effective business plan, click here to read Mr Miller’s excellent factoid and to find out what a good business plan contains, read my factoid by clicking on this link http://factoidz.com/how-to-write-a-business-plan-step-by-step-guide-through-each-section/.
To finalise this factoid, I cannot overstress the importance of networking. Some people are put off by it because it is sometimes expensive, can make one feel self-conscious and in the end may be ineffectual–but it offers opportunities. Remember that the people there are pretty much in the same boat as you and have the same goal - to make contacts and gain new business. Go along with someone if it is your first time. You will find it gets easier. I help my mum with the business side of her company while she does her genius thing with her cakes (don’t believe me? Check this out www.thebestdesignercakes.com) and part of my role involved going to networking events and conferences. I hated them to the core of my being. But then as I got into the groove, I was able to relax and talk. I have managed to make some good friends and contacts so they are well worth the sacrifice.
I hope that this helps you budding businessmen out there. Despite the downturn, there are ample opportunities to explore. If you’ve thought of one, then with a little support, hard work and passion, the sky could be your limit.
Take care and God bless readers and all the best in your ventures . . . .
