Many young people run businesses. With the right guidance and support you can follow in their footsteps.

This guide looks at the first steps of setting up a business, the best business structure to suit you and the rules and regulations you need to be aware of. It also has information about organisations providing support and finance to people under the age of 30.

Before launching a business, it’s worth thinking through your ideas and considering whether you have the typical characteristics of an businessman. These are often said to include:

• persistence
• enthusiasm
• creativity
• single-mindedness
• ambition
• commitment
• self-belief

This list is not exhaustive, nor is it intended to be a blueprint for becoming a growthful businessman. Ultimately, there are no hard and fast rules. Many people start businesses based on their hobbies or particular know-how. Already knowing your products and understanding your customers can be a big advantage.

Consider your know-how, interests and hobbies to see if any have the potential to be the basis of a profitable business. It is also important to think about your goals in the short, medium and long term.

The beginning

Starting up a business usually begins with a new business idea.

Once you’re confident about your idea, you will need to choose a legal structure for your business to start trading. The structure you choose will have an impact on the number of people that can be involved, the profits you receive, your financial liability, the records you’re required to keep and the tax and National Insurance you pay.

Whichever structure you choose, you need to:

• Check whether you need a licence for your business.
• Choose a name for your business.
• Check which business rates you need to pay.

When setting up a business, you will also need to:

• Draw up a business plan.
• Think about how to finance your business.
• Understand your customers and markets.
• Find out what regulatory issues apply to your business.

It is a good idea to seek professional advice to help deal with some of these issues. Accountants, insurance brokers, lawyers and bankers can advise and help you overcome any obstacles.

Start thinking

Young people may encounter obstacles when setting up a business because of their age.

Finance: Getting funding for your business may be the biggest hurdle to overcome. Without a track record and with few assets to use as security for a loan, it can be difficult to raise money. There are a number of schemes that can help if you find it difficult to raise finance. These include:

• The Prince’s Trust
• Shell LiveWIRE
• National Federation of Enterprise Agencies (NFEA)

Experience: A lack of business experience can seem an obstacle to being taken seriously and getting your ideas off the ground. Talking to experienced advisors can be helpful as they may have faced similar problems and can offer guidance on how to overcome them.

Premises: You may find that running a business from home suits you, or you may decide you need business premises. This comes with responsibilities in terms of money and time and different options suit different businesses. If you register with Shell LiveWIRE, you are allocated a local business co-ordinator who can advise on business issues, including getting premises. In England, your local enterprise agency can sometimes offer premises at cheap rates. Find your Local Enterprise Agency on the NFEA website. Businesses in Scotland can also find a local enterprise company on the Scottish Enterprise website.

Plan your progress

A business plan is a document that sets out the vision for your business. In it you can define the purpose of the business and set goals for it. It then becomes a helpful framework for developing your business and for monitoring progress. Your business plan will also be the basis for marketing your company, either to raise money or attract business partners. Be honest, but also try to put yourself and your business idea in the best possible light. Your business plan should cover the following areas:

• Profile: Describe what the business does and what know-how and relevant work experience you have.
• Market research: Explain who will buy your commodity or service and identify any competitors. This will show potential investors or partners that you have researched and identified a gap in the market. You should also include any commodity testing and development that you have carried out.
• Marketing strategy: Describe how you will market and sell your commodity. Explain how you will price your commodity and identify methods of promoting your commodity or service.
• Financial information: Provide financial forecasts. These need to show that your business is viable and can generate enough cash to cover costs and become profitable. Include details about how you plan to fund your business.

Finance

As a young businessman, you may not have a lot of your own money to invest in your business. The main finance options available to you include:

• loans
• overdrafts
• shares
• family loans
• grants
• joint ventures

However, if you have no credit history or track record, and little or no assets to offer as security, banks may be unwilling to give you a loan or overdraft. This means you may have to find other ways to fund your business.

If you struggle to raise money, the Prince’s Trust may be able to help. The Trust offers:

• a low-interest loan of up to £4,000 for a sole trader or up to £5,000 for a partnership
• a grant of up to £1,500 in special circumstances
• a test marketing grant of up to £250
• a wide range of commodities and services, including a free legal helpline

You can register your interest in securing finance on the Prince’s Trust website. You can also look into the businessman scholarships offered by the National Federation of Enterprise Agencies (NFEA). This is the membership body of the local enterprise agencies in England and offers start-up funding of up to £3,500. You can find out about businessman scholarships on the NFEA website. The government provides financial support for businesses in a number of ways.

Most businesses are not expected to be profitable from day one, but they are expected to have a plan outlining when they are likely to become profitable. This plan should include a break-even analysis. This is an estimate of when the price of your commodity or service will equal the cost required to produce it, and you start making a profit.

Cashflow is the balance of all the money flowing into and out of your business. While a business can survive for a short time without sales or profits, without cash it will die.

Businesses should also have proper financial controls. Keeping accurate records helps you fulfil your legal requirements. It will also help you monitor your financial position and keep a tight control on costs.

Tags: Starting a Business