Want to start your own business but don’t know where to begin? Thank goodness we’re here to help! This guide will take you through all the financial, taxation and business planning principles you’ll need to keep in mind…
Iona Bain and Emily Coltman
“Make a job, don’t take a job!” That’s the motto of Emma Jones MBE, who founded Enterprise Nation in 2002 as an online community for those starting their own businesses and is now one of the country’s leading business heroines.
She is just one of many successful entrepreneurs who believes the 21st century is a golden time for young people to act on their bright ideas and make them a reality. And here at the Young Money Blog, we have long believed that the future belongs to those who are prepared to go it alone, follow their gut instincts and become their own boss.
Iona has moved in and out of employment since entering the world of work at 21. But her current stint as a self-employed entrepreneur is the longest yet (3 years) and she wouldn’t have it any other way. Her decision to concentrate on the Young Money Blog, and the opportunities that it might bring, have paid off: Iona was named Money Blogger of the Year at a respected media awards in November 2016. She has also written a book (Spare Change), become a regular public speaker and now works with a variety of companies and social enterprises seeking to engage young people – all before the age of 30. The success of the blog prompted Iona to set up her own corporate journalism agency, the Young Money Agency, earlier this year. She says:
“My decision to set up the Young Money Blog (the only blog of its kind) six years ago has been one of the best I’ve ever made. It means I don’t have to completely rely on traditional media to earn a living. I can create my my own brand and my own opportunities – and hopefully do some good in the process.”
But if you’re under 30 and you want to start your first business, what should you keep in mind? Iona has teamed up with Emily Coltman, chief accountant at FreeAgent, to offer some gems of wisdom on how to get your company off the ground.
Plan your finances
Before you start your business, make a simple plan of how much you think it will earn in sales, what costs it will have, and how much cash it will bring in. This is called a forecast and can be done easily on a set of three spreadsheets.
This information could be crucial. For example, you could find out that your costs are higher than your sales, which means you might have to put your prices up. Or it might tell you that you need to find some cash to cover your initial costs before the sales start coming in.
Where’s the money coming from?
Your business may need funds before you make your first sale. For example, if you want to make jewellery, you’ll need to buy the wire, beads, clasps and other materials to make some samples, before money starts coming in from customers.
Look at the specialist sources of finance that are available to you. Check out The Prince’s Trust to see if you might be eligible for a grant or loan, or StartUp Loans from StartUp Britain. For instance, Liz Jackson of Great Guns Marketing, now a multimillion-pound-turnover business, started her business before she was 25, financed by a grant and loan from The Prince’s Trust. The star of Channel 4’s hit show Secret Millionaires said in 2007:
“I went to the Princes’ Trust which gave me a £1,000 grant and a £4,000 loan. This meant I had the capital I needed to buy some second hand bits and bobs to start the business in the lounge in my rented flat.”
The Prince’s Trust provided Liz with the support of a mentor as well as with financing. She said:
“Two heads are much better than one and together we could develop my ideas and find solutions to my problems.”
Keep your records
Like any other business you must register with HMRC and pay taxes! Once your business is up and running, as well as how much cash it’s making, you also need to know how much profit it’s making (that’s its sales less its day-to-day running costs), because profit is the figure you will pay tax on. Don’t be like Ben and Jerry of ice-cream fame, who in their early days of business didn’t realise they were selling more than $1 million worth of ice-cream a year!
Use your contact network
Liz Jackson said:
“Everything was down to me; I didn’t have a boss to go to for advice. Everything was my responsibility.”
If you’re serious about running your own business then a mentor can provide invaluable help, support and advice. As well as your mentor, make use of other contacts in your network and your family’s.
These can not only give you that magic business idea, like Fraser Doherty of SuperJam, now a global business, whose grandmother taught him to make jam at the age of 14. A mentor can also potentially help you gain crucial business experience. They have been around the track already, know the pitfalls and might be able to help you avoid them.
“My first step on the road to accountancy came thanks to my mother. A friend of hers managed the local Barclays branch and gave me a summer job there before I went to university. 14 years later I had my own accountancy business.”
Remember too that your friends and family could well be your first customers. Ask them to help you test your product, ask if they would pay what you are asking for it. And ask them for help in other ways too. Is your boyfriend a wizard at designing websites? Could he build one for you? If your sister is a numbers queen, why not ask her to help you with your forecast?
Don’t be put off by failure
One of Sir Richard Branson’s early business ideas was to grow Christmas trees for sale.When rabbits ate the Christmas tree seedlings, he chose to turn imminent business failure into success. He and his friend shot the marauding rabbits and sold them to a local butcher for a shilling each – which more than covered the cost of the Christmas tree plants!
If your first business idea doesn’t work, don’t give up – try something else! If you don’t have a mortgage to pay and children to feed, it’s much easier to be flexible.
Plan your business carefully, seek advice and help from your contacts and keep it clean with HMRC. Follow all these steps and you’ll be WELL on the way to business success.
This guide was first published in 2012 but has been fully updated for 2017. If you have any suggestions or feedback, tweet @ionayoungmoney or leave a comment below…