19 essential start-up tips for young entrepreneurs
Starting a business is now a serious option for the nation’s youth and a fifth already have a business idea. Read our tips to help young people get started
One in five 18-34 year-olds have a business idea. And with young people nearly three times more likely to be unemployed than the rest of the population – the highest level in 20 years – and the volume of new companies rising each year, starting a business has rarely been more pertinent.
While the stats show youth employment – those aged 16-24 actually fell by 181,000 for the year to January 2015, the number unemployed remains close to 750,000. That’s why the number of self-employed young people has risen dramatically since the start of the economic crisis.
Action point: Need a loan to start a business of your own? See how we can help here and here
Starting a business won’t prove the silver bullet for all, but the support available has certainly never been so good. So, without further ado, here’s our 19-point checklist to guide ambitious and courageous young people through the start-up process.
1. Be inspired and learn from others’ mistakes
Read the start-up stories of others on websites, in books, or at events for people starting a business. Every successful entrepreneur makes tons of mistakes and they’re often prepared to talk about them with the benefit of hindsight.
2. Get some experience
Gain an intimate understanding of the sector you plan to launch a business into. In his early 20s Nicko Williamson, the founder of eco-friendly private car hire business Climate Cars, worked in the call centre of an established private car hire company. He learned how the business operated from the inside and discovered areas where he could make small, but critical, tweaks to differentiate what was on offer.
3. Know your customer
Researching the market that you are thinking of entering is essential and will tell you if you are on the right track. Talk to people within your customer demographic and get an idea of how they would react to your product or service. Very few ideas are entirely original, so you may not need a non-disclosure agreement – and by asking questions about the merits of existing products or services you don’t have to divulge what you plan to do differently anyway.
4. Know your competition
Market research also enables you to get to grips with your competition. What other products and services like yours are out there already? Not all businesses stem from a revolutionary idea and many successful businesses are borne out of an improvement to an old concept. However, you need to offer customers something noticeably better, cheaper, easier than what they are used to if you are going to draw them away from the familiar.
5. Write a business plan
Having a great business idea does not mean you have a great business. Write a business plan to encourage yourself to evaluate your idea in detail. Use it to make realistic targets for your business and consider all the costs of setting up and sustaining your company.
6. Find a mentor
Try the government-backed mentoring service www.mentorsme.co.uk, a free service set up to provide businesses with experienced support via a network of quality-assured mentoring organisations. Failing that, talk to people you know with experience of what you’re planning to do, attend relevant exhibitions and conferences, and speak to friends or family members who have started businesses.
7. Be lean
Buy or download Eric Ries’ seminal book The Lean Startup. Start from home. Grow the business step by step and keep overheads to a minimum. Don’t employ before you have to. Don’t take on premises before you need to. See if there’s a market for your product or service by testing on a smaller-scale. Create a rough and ready website first and build on it. Go to friends and family, or crowdfund, for seed finance. Keep some cash in the business.
8. Don’t over-extend
A common mistake of new companies is to believe revenues equals success. Those companies often find themselves overlooking the need for net profit and working capital. By leaving themselves without cash in the business they can quickly become unstuck, with higher fixed costs such as salaries than they can afford and debts they can no longer afford to service.
9. Research and learn for no cost
Spend time in the British Library’s Business & IP Centre in London, which offers free access to market research reports from all the major analysts, industry guides and journals, company data, grants and intellectual property databases, workshops, resident advisers, and events. It’s an invaluable resource for anyone starting up or in the process of establishing a business and has centres around the UK in through the central libraries in Birmingham, Leeds, Liverpool, Manchester, Newcastle and Sheffield.
10. Contact support organisations
Youth Business International provides access to financial support, mentoring and technical training through a collaborative network of partners, which in the UK includes: Start-Up Direct for talented 18-30 year-olds in Greater London; Virgin StartUp, the not-for-profit organisation to help entrepreneurs access funding, resources and advice; and UnLtd, a provider of support for social entrepreneurs which runs an award scheme to back social enterprises at seed stage.
11. Look for an accelerator
Some major organisations have created private start-up accelerators, which often have a specific focus such as technology, finance, healthcare or eco-friendly start-ups. Many universities also offer space and support for student or local entrepreneurs keen to take advantage of the expertise available. When the time is right accelerators often have access to a network of angel and venture capital investors keen to spot the next big thing.
12. Join an Entrepreneurs’ Society at university
Student enterprise charity NACUE (National Association of College & University Entrepreneurs) was created by members of these societies from a number of prominent universities. It received a further £1.3m in government funding in 2012 to support its initiatives and now works with 260 institutional members and enterprise societies, government and corporate partners. The organisation offers training, provides peer-support, and hosts competitions for start-up entrepreneurs.
13. Apply for the Peter Jones Enterprise Academy
The youth enterprise organisation was set up by Dragons’ Den’s Peter Jones CBE. The academy offers a BTEC in enterprise and entrepreneurship and offers masterclasses and workshops. The academy works with around 30 UK colleges and specifically caters for teenagers and students.
14. Apply to a graduate scheme
Entrepreneur First hosts an intensive six-month graduate programme to encourage university leavers to start a business. Apply to their scheme and receive support all the way from the development of a business idea to product launch. The scheme claims to have created 20 start-ups now worth over $100m, including Emily Brookes who started cycling laserlight product Blaze, and has funded by prominent investors such as Y Combinator, Index Ventures, and Octopus Ventures.
15. Apply for a Start Up Loan
The government-backed Start Up Loans scheme was started to champion young entrepreneurs aged 18-24, but has broadened its remit to anyone over 18 and has a budget of £310m, with start-up loans of up to £25,000 being approved and the average loan size standing at £6,000. David Cameron’s government enterprise advisor Lord Young believed it should be the right of a start-up to secure a loan from the government and by early 2015 around £130m has been lent to 25,000 new businesses with more than half of that figure going to those aged 18-30.
16. Look for grants
If you’re a social enterprise, organisations such as UnLtD provide awards to businesses with social aims and a solid model. The Prince’s Trust provides practical and financial support to 13-30 year-olds who struggled at school, have been in care, have been in trouble with the law, or have been unemployed for long periods.
17. Get a name
Find a business name that’s available and a suitable name by making a list of contenders. Then, draw four columns with headings for ‘Companies House’, ‘Domain name’, ‘Trading as’, and ‘Copyrighted’. Work through your list to find one available in every column. There are common name types, so think laterally about what you can call your business: 1. Something that says what you do (e.g. Shout Media); 2. Your name (e.g. Smith & Jones PR); 3. Something conceptual (e.g. Fizarro.com); 4. A play on words (e.g. A Cut Above). Try different combinations and see which one fits and makes a statement about your business. It is important to choose a name that will be easily remembered by your customers. Once you have the name, it’s time to build your website.
18. Design a business logo
A well-designed, relevant logo can have an instant impact on your customers and leave a lasting impression. It is important to choose a logo that suits the tone and role of your business and to have a clear idea of the message you want to convey before approaching a designer.
19. Promote your company
Hiring an expensive PR company can come later, but for now it is important to self-promote in every way possible. Social media is an essential tool for this, so get to grips with how to use sites such as Facebook and Twitter to maximum effect. Entering competitions can also help to get your company noticed and branding yourself as an award-winning company is a great way to appeal to customers.
Looking for more inspiration? Check out our 15 young entrepreneurs to watch in 2015.