How to start a business at university
This article was provided by Adam Grunwerg, founder of Graduates.co.uk – the website for graduate news.
There’s no secret recipe behind starting a business because each and every business out there is different. There are however five crucial stages that you’ll have to go through at some point when it comes to starting a business at university. These are:
• Deciding to start a business and coming up with an idea: Some people know from an early age that they want to start a business, other people just spontaneously start a business and end up running it for the rest of their days. Before you can start a business you have to want to do so – you also have to have a great idea. Decide whether you want to start a business and find an idea that’s going to be profitable – without the drive to start a business or an idea to exploit, you can’t get the ball rolling.
• Finding the funds to kick things off: In order to get your business started you’ll need some money – this covers the purchasing of stock or equipment, as well as a marketing budget and those other little niggling expenses. Starting a business is not cheap and 99.9% of businesses need an upfront cash injection. As a student the best way to rustle up this cash is to set aside a chunk of your student finance. That being said, I know many people that have started businesses at university on a shoestring budget. The Government’s latest £2,500 start-up loans may also be an option for you.
• Selling your products or services: Once you’ve got an idea in place along with stock to sell, or machinery to provide specific services, you need to actually draw in customers and clients. If you have no customers you’ll have no turnover – and a business with no turnover won’t get very far. Often the hardest part of starting a business is getting word out there that it exists.
• Fulfilling your products and services: Once customers start to flood in you need to keep up with the orders for products and services that you’re offering. You can’t take people’s money and not come up with the goods. Plan systems and processes to ensure that fulfilment is done properly.
• Rinse and repeat: Once everything’s up and running and you’ve got your first few customers it’s a case of rinsing and repeating your marketing strategy and your fulfilment strategy. Businesses tend to start small and snow ball over time.
Starting a business at university is definitely possible – it’s not easy though and it requires a lot of focus. If you’ve not got a part time job to hold down then why not think about starting a business on the side? By the time you’ve finished university your business could be big enough for you to live off comfortably long into the future. Honestly, I’ve written quite a lot about it on my blog Graduates.co.uk, university is one of the best times to start a business. Think about it, you won’t get many opportunities in life where you have the time, resources and advisory services to start a business and promote it to a wide audience easily.
There’s a myth that plagues students – this myth is that students are exempt from paying tax. When you start a business make sure you keep your books in order from day one – catching up on your books at a later point if you fail to capture records is a very, very tough task indeed.
In the UK the taxman goes by the name of HMRC – and he’s extremely unforgiving. Our advice is to make a daily revenue sheet – keep a close record of all money you’ve got coming in, and save all invoices for money that’s going out. You can then keep a track of total turnover very easily – you can also keep a track of total expenditure too.
Once your revenue hits £77,000 in one year (on a rolling basis), you need to register for Value Added Tax (VAT). Once registered with VAT you must charge 20% VAT on all of your prices.
Once you start hitting a high turnover around £50,000 it’s worth looking into hiring an accountant to keep your finances in order for you, and to advise you where necessary about tax. Trading as a sole trader will see you landed with much higher tax bills than if you trade as a Limited company (if you’re taking £30,000 or more typically) – so don’t be shy to seek professional financial and tax advice.
Starting a business might seem easy but it’s not. Once you’ve got an idea you need to work out how to kick your business off – and once your business is kicked off you need to do everything possible to keep financial records in check so that you know exactly where you’re at when it comes to settling up with HMRC for any tax or National Insurance payments that are owed.