Starting up your own business – is it for you? You’ll need to start with a great business idea. You’ll need to think about the pros and cons of what it means to be your own boss. You’ll need to think about budgeting, marketing, training, equipment and transport and even franchising. You’ll need to think about who can help (from angel investors to Jobcentre Plus). Then, when you’re really ready to go, you’ll need to sort out any insurance you might need and register as self-employed!
It’s a lot to think about, and it’s just the tip of the iceberg… so let’s break it down into easy chunks.
The pros and cons of becoming self-employed
Is self-employment for you? Before you take a step further, consider what it will actually be like:
- You get to be your own boss
- You can be flexible about life and work (you can even work from home)
- Work hours that suit you (possibly)
- Sometimes you’ll get low start-up costs and extra tax benefits
- Enjoy using your skills and experience
- You get all the credit for your success
- You might earn more money with a good idea, because you create your own income and profits
- The best bit: You do something you enjoy
- It’s hard work
- You can’t always predict how much you’ll earn
- You have to deal with any customer complaints yourself
- There’s no-one to take over if you’re ill
- You might have to take out insurance
- You have to deal with your own tax
- You’ll need to be responsible for health and safety issues
- You’ll have to pay for a venue, equipment and transport up-front – unless you find clever ways around it, like 14 year old Carla Evans who set up her own florist business in her family home’s garage
Are you going to need qualifications?
The short answer is no - you don’t need qualifications to become self-employed. You need to be self-motivated, determined to succeed and prepared to work long hours or at weekends to make the magic happen – but you already knew that!
Courses and qualifications can definitely be helpful, though. Not to impress other people, but just to teach you the basics of setting up a business, especially the money and tax side. They can give you a really good idea of how to make your business idea as strong as possible.
Options for training and getting qualifications (if you want to)
- The Prince’s Trust has lots of good courses, training opportunities and taster sessions for anyone planning to become a young entrepreneur. They have a good Enterprise programme just for starting up your own business, too.
- If you want to take a degree, visit the UCAS website for degrees relevant to setting up your own business.
- You would probably get a lot of benefit from a basic-level NVQ covering accountancy or book-keeping or tax, just so you know you’re doing the money things the right way.
- The GOV.UK and Start up Britain websites have lots of really useful information on the things you need to think about when starting up your own business.
Getting started – make a business plan
To get started in any business you need to have a business plan.
What is a business plan?
A business plan says how your business idea actually works. It clearly shows how much money you’d spend to start it up and keep it running, taking into account sneaky little details like staff, travel and premises costs. It also shows a realistic view of what kind of profit you’d make.
If you don’t have a business plan, then banks and funding initiatives won’t want to lend or give you money – but a business plan isn’t just about impressing other people. You need it for yourself. You need it so you have a clear picture about how to turn your business idea into something real that works.
Things you need to think about in your business plan:
- How will you find customers straight away to get your business going (door to door canvassing, leaflet drops, ads in local papers or shops, Facebook competitions for your online store…)?
- How will you form long-term relationships with your customers to keep your business going?
- How much are you are going to charge for your product or service?
- Where will you get supplies from?
- How can you commit to making sure your customers get what they want when they need it, or when you’ve promised to them?
- Do you need training to do the job? Check out trade associations and local colleges to see what they can offer.
- Will the business need equipment and transport? Think about what you really need to start with – don’t buy everything at the beginning just the essentials – you can always get more.
- Will you need to buy into a franchise? This is a right granted to an individual or group to market a company’s goods or services within a certain location. If you are interested, search online for ‘franchising’.
This may sound complicated but there is a lot of help and support on GOV.UK to guide you through what you need think about when starting out.
Getting support and funding
You’ve planned your idea. You’ve made your business plan. Where can you get support and funding to help your seed of an idea grow into something big and strong?
First, read our 9 big funding ideas for young entrepreneurs to get the lowdown on organisations most likely to give you help, time and cash to start your own business.
If you’re unemployed, Jobcentre Plus can help you get your business off the ground in several different ways. Click here to see how Jobcentre Plus can help in more detail. It basically offers these three options:
- The New Enterprise Allowance (NEA) helps people who want to start their own business.
- Enterprise Clubs are locally run and give unemployed people who are interested in self-employment a place to meet and exchange skills and support.
- Mentorsme.co.uk is a new national mentoring network which will put you in touch with mentoring organisations across the UK to help you find a mentor that’s right for you.
Making it official – registering your business and sorting insurance
It may seem hard to believe now, but there will come a time when you’re ready to register your brand-new business. These are some of the things you’ll need to do:
- Register as self-employed with HM Revenue and Customs
- Get any permits from your local authority
- Get in touch with your local authority to see if you need to pay business rates
- Set up a financial record-keeping system (this is where an NVQ, school education or mentor might come in handy)
- If you decide to get liability insurance (you don’t need to, just if you want to) it will help if you ever end up with legal costs for things like personal injury or damage against property
- If you hire staff then you really, really need to get employer liability insurance. It’s the legal thing to do!
- If you’re ready to register and need more help with any of these things, visit GOV.UK.
Useful self-employment links
If you ever get stuck or want to learn more about self-employment, these people can help:
The Government’s new online resource for business. The ‘Starting up a business’ section has detailed information for anyone thinking of starting their own business.
‘Business in You’ is a partnership between private enterprise and Government to highlight support for start-ups and growing businesses and encourage entrepreneurial spirit in 2012.
This campaign aims to encourage people to start a business, employ more staff or start exporting. Whether you’re looking to test your ideas, or develop your financial and planning skills, Business in You gives you support and inspiration, using successful, real-life examples.
Supports unemployed young people aged 18-30 to work out if their business ideas are viable and whether self-employment is right for them.
A website developed by a group of entrepreneurs to pull together information and sources of help for people wanting to starting up a business.
If you are looking for support, mentorsme.co.uk, the mentoring gateway, can put you in touch with mentoring organisations across the UK who can help you find the kind of mentor that suits you, including those offering specialist financial support.
Taking on a franchise is a useful option if you want to run a business but don’t have a specific business idea.
Franchising is when the owner of a business grants a licence to another person or business to use their business idea - often in a specific location. Check out:
A membership organisation and an advocacy body that supports the growth of business ownership, enterprise culture and the development of enterprise skills. Members provide independent and impartial advice, training and mentoring to new and emerging businesses.
Self-employment – the start of something new
This is all just the tip of the iceberg, but making a solid business plan and going through the step-by-step process of registering your business means you’re officially your own boss!