Starting your own business

More graduates are considering self-employment after graduation – and why not? If you have ambition and a decent idea, it could be worth a go. You have less to lose, you’re used to working antisocial hours and, it can beat working for someone else.

Starting your own business isn’t easy. However, an increasing number of graduates consider setting up for themselves after graduation – and some start their businesses while studying. Running your own show certainly has merits, but it’s a high risk career option. As well as a good idea, a market and basic business skills, you need commitment, initiative, drive, and hard work to get a venture off the ground.

Don't start without getting advice

There is a lot of free advice offered to those wanting to start small businesses, so take advantage of every scrap. Banks have helpful information packs available and, generally speaking, helpful staff working in this area. You may also find that your own university has an ‘enterprise centre’ that offers support to budding student entrepreneurs, links to local business mentors, business skills workshops and workspace to hatch ideas. You can also get guidance and advice from a number of government funded agencies and charitable trusts in England, Scotland, Wales and Northern Ireland.

The essential elements to consider are:

the customers who will want and can afford your goods or services – your market;
obtaining the financial backing – financial planning;
supplying the goods or services on time and all the other logistical headaches involved in running your own business – business planning.

Why set up a business as a graduate?

There are many reasons why you may want to go down this route. You may have a strong interest or skill in a certain business area; you may want more independence and greater job satisfaction; the idea that any profits made will belong to you may also be a great incentive; you may look forward to feeling a sense of achievement and pride in the venture.

If you’re really serious about starting business, you’ll probably be a positive person, enthusiastic and motivates to work hard and succeed. Also, you’ll probably have fewer domestic commitments, like family or a mortgage, than many older people.

What areas of business do graduates focus on?

Many graduates set up businesses linked to their interests, key skills or qualifications. In some areas of work, for example art and design, self employment is typical, and in the media business freelancing is common practice. It’s also not uncommon for graduate computer scientists or web developers/designers to set up for themselves in contracting roles.

Other jobs where there is potential for self-employment include sports coaching and fitness instruction, life coaching, alternative therapy practice and private tuition. Food businesses also feature high in the minds of graduate dragons, but to be successful in this area your idea needs to be more than a passing food fad.

Potential business pitfalls

Bear in mind that greater independence brings greater responsibility. Any business decisions will be down to you and you’ll also have to cope with any failures or problems faced by the business.

Lack of experience causes the most serious problems, particularly in establishing credibility with both finance providers (for example bank managers) and potential customers. Lack of qualifications, technical skills and business training can also hinder anyone starting a business. Banks especially may feel that a younger person can’t possibly know enough about managing a business. You may have work experience, but this is unlikely to convince potential backers or customers that you know what you’re doing. You’ll need to work much harder to prove yourself.

There are also legal issues to think about. If your planned business involves the use of industrial machinery, there may be an age restriction on its use; at the very least, full training will be required. A young person may be unable to lease or hire equipment. However, it may be possible to set up a hire purchase agreement through a trusted friend or relative, who would act as a guarantor for payments to a given company. Alternatively a ‘contract’ could be established by which to pay them.

Another potential problem is the lack of start-up finance. A few specialised loan funds exist to help people that most lenders won’t assist because of their age, such as the ‘Northern Youth Venture Fund’, which is aimed at the 18–30 year olds.

Schemes to investigate

Shell LiveWIRE, sponsored by Shell UK Ltd, is the only national organisation providing free extensive support and advice to 16–30 year olds from before start-up through to early growth. Every person making an enquiry receives an essential business kit which is tailored to their specific business idea. They are also put in touch with a local LiveWIRE coordinator. The annual Young Business Start Up Awards give firms trading for less than 18 months the chance to compete for the county, regional and national prizes, gaining publicity along the way.

The Prince’s Trust was established by the Prince of Wales in 1976 to help young people realise their full potential. Aimed at those 14–30 (or 14–25 in Scotland), the Trust offers support and financial assistance across a range of core programmes, including business start ups. Since 1983 the Trust has helped over 60,000 businesses, and its business programme currently offers a low-interest loan of up to £5,000, a marketing grant of up to £250, advice lines, seminars and access to a volunteer mentor.

Make plans for success

Making good use of all advice will ensure that your planning is effective. Business Link in England, Small Business Gateway in Scotland, Flexible Support for Business in Wales, the Prince’s Trust, the Princes Scottish Youth Business Trust, Invest Northern Ireland and the Chamber of Commerce, are providers of invaluable information and advice for those starting out in business. Trade associations may offer advice specific to a chosen business area.

Spend the time before you take the plunge gaining relevant skills, experience or finance. This could be through part-time paid employment or a placement. Where possible, your work placements should be with small businesses so that you get a feel for the issues you might face.

Gaining further qualifications may be essential to the success of some businesses. Having professional qualifications can gain credibility for your business. Any courses taken should be geared towards following a business career. Aim to combine specific subject knowledge with basic business skills, for example combining photography with business National Vocational Qualifications or marketing training. If there isn’t a specific course available for the business idea, continue developing your business skills as a hobby, while undertaking more conventional business training.

While getting practical work experience, draw up a comprehensive business plan, seek advice and research the market for your idea. Consider the costs of setting up and think about the premises, equipment and labour requirements. Develop as complete a picture as possible of the way your business should be running in the future.

The moral support and advice of parents, relatives and friends can be crucial in the early stages of business. You may need to rely on their financial assistance too, not only directly for the business, but also in terms of living expenses. Parental support can also be useful when establishing contacts and so on.

Four business start up mistakes

Not being fully committed. Only people who are entirely committed to the idea should attempt to set up in business. It’s a long hard slog for anyone, whatever their age, so don’t think that exuberance and enthusiasm will get you through. They’ll certainly help a lot, but there are other things to bear in mind and you’ll almost certainly have to sacrifice some other areas of your life for a short time along the way.
Not being fully prepared. Plan your business approach as comprehensively as possible before you start up. A clear plan will be considered more positively by banks, sponsors and relatives and it will also be very useful to refer to when you start your mange your business once you’re up and running. Make sure you’re aware of legal and financial constraints that may affect you. You will need to think creatively to make your ideas a reality.
Not getting the right advice and support. The nearest Business Link, Small Business Gateway, Flexible Support for Business or enterprise agency office may be able to provide details of training schemes, loans and grants available in a particular area. The Prince’s Trust may be able to help with grants towards training or equipment.
Not thinking things through. Do think long and hard about whether you want to start a business now. There are many advantages in getting some work experience before taking the plunge. That’s not to say for a moment that you should abandon your plans completely just that you should think about the timing very carefully.

Start thinking and planning

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