Andrew Dark, Director and Co-Owner of Custom Planet, started his own business at university. Here, he shares what he learned along the way to inspire you to start your own venture after graduation.
This year, 15% students in the UK are planning to start their own businesses after leaving university. Research by Direct Line for Business found that there were a few different reasons for this interest in entrepreneurship: many had a desire to be their own boss (45%), some desired to earn more money than working for a company (25%), and some were drawn to it as an alternative to poor job prospects (19%). What’s more, the number of graduate entrepreneurs in the UK has increased, with 3,920 graduate start-ups in 2019/20, compared to 3,837 2018/19, according to data from the Higher Education Statistics Agency.
Whatever is encouraging you to dive into starting your own venture, there is plenty to look forward to. But there are also lots of tips that can help you to get the best start in your business. So, what do you need to know when you are starting out?
Write your business plan
This is the big moment — writing your business plan to get everything on paper, and to make something that you can show to investors should you decide to use individual investments as a funding source for your start-up costs. The business plan is an important document, whether your business is big or small, so take your time. If you’re not sure where to start, the Princes Trust has business plan templates for you to work from.
Your plan should include your goals, finances, any potential problems, and market research. It should also include your budget, which will show how you are going to spend any funding that you raise, as well as any staff you’ll have to pay, and any money that you’ve saved up to invest yourself in the venture. You should also include additional costs like buying equipment, renting business premises, and travelling to events if you are running a pop-up. All these should be accounted for, so that you can project how much profit you are going to be making when you start out.
Initial start-up costs and securing finances
One of the first things you’ll be wondering about when beginning your business journey, is how to raise your start-up funds so that you can get going. There are a number of ways that you can get the funds together that you need. One way is to apply for the UK government’s start-up loan scheme, which offers loans of £500 to £25,000 to start or expand a small business. You can go to the government’s webpage for the loans to read about them and apply. You can also research your local borough’s schemes and grants for businesses, as many areas fund new projects.
One of the other most popular ways to raise money is by crowdfunding. This is a great way to not only raise cash, but to also generate publicity for your business idea, and to gauge the level of interest in a product throughout development. If your start-up is product-centric, you can use platforms like Kickstarter and Indiegogo, which both give you an option to ensure a number of guaranteed sales while you raise money.
Choose your business structure
There are a few different business structures that you should be aware of, so that you can decide which one will best suit your project. Deciding this at the outset will allow you to set everything up correctly from the beginning.
These are the legal business set-ups that you need to choose between:
The simplest business structure, meaning there is no distinction between you and your business. A sole trader is essentially a self-employed person who is the sole owner of their business. It’s very easy to set up as a sole trader, just go to the government website and register your business.
A limited company set-up means that you and your business have separate legal identities. As an owner, you are a shareholder, and the managers of the company are the directors — you might be both of course, but the business is separate to you as an individual. This is the case even if the business is owned and run by one person.
If you are setting up a business with someone else, a partnership can be ideal. These set-ups suit people who have small teams, are happy having everyone on an even footing, and want a simple legal set-up. You will share ownership, responsibility, and profits of the business, but both pay tax separately via your self-assessment tax forms.
Choose a company name
Now comes the fun, creative part — choosing a name for your brand. Research other businesses and choose a name that makes you stand out from other brands. You should also choose a name that communicates to customers what your business does, so that it’s easy to remember.
Then, you should also consider how to protect your intellectual property. Ideas don’t count under intellectual property law, but the results of your ideas do — so your brand name, your products, your inventions and even how your products look, can all be protected. You will get some intellectual property protections automatically, but you might need to register for other protections. So, do what’s called an intellectual property audit, where you go through your business and decide what you’ll need to register for. This will prepare you when your business gains more attention.
Create a system for record keeping
One of the things that people learn later on in their entrepreneur journey, is that keeping accurate records is vital. When you begin trading, you might feel that just keeping things thrown together in a desk draw is good enough, because you don’t have enough documents or information to warrant a more comprehensive system. However, later on, you’ll find that having a proper recording-keeping system is extremely important, and it will be very useful for you.
So, decide how you are going to organise everything — you’ll need to keep your budgets, profit and expenses records, tax documentation and any documentation of your staff, all organised. You’ll need all of this information when you come to calculate your self-assessment tax return, so it will save you lots of time when you get to the end of the tax year. Rather than paper records, you might find it easier to choose a business management software to keep track of everything.
You should also remember to keep your personal and business finances separate. This is because tax-deductible expenses can only be for businesses, not individuals. It’s much easier to keep money separate when using two different bank accounts, and this will ensure that you can claim the relevant expenses for things like travel and equipment.
Starting a new business can feel like a big task, but by keeping these key tips in mind and following advice from people who have been here before, you can prepare yourself for any obstacles that you might face. If you decide on your business structure, keep organised records, and choose an effective way to raise your start-up costs, you could be onto a real winner.