01 June 2012
Low economic growth and youth unemployment are currently major headaches for prime minister David Cameron, but the government recently announced a new scheme which aims to tackle both of these problems head-on.
The StartUp Loans scheme, which will draw on a pot of £82 million, aims to create up to 30,000 new UK start-ups by offering young people aged between 18 and 24 the funds to get their business ventures off the ground. Under the terms of the scheme, successful applicants will be given a grant of typically around £2,500 at a favourable rate of interest, and due to be repaid after five years. Applicants will be asked to submit a business plan and will be able to chat through their ideas with those issuing the loan.
Those taking advantage of this opportunity can expect to avoid much of the red tape typically involved in applying for a loan from a high street bank or other traditional sources. Indeed, most people in the 18-25 age group, because of their lack of experience, would find it incredibly difficulty to secure financing at a reasonable rate of interest, if at all. Participants will also benefit from the tutelage of a mentor from the business world who will offer advice on getting the company off the ground.
James Caan, best known for his role on the judging panel of popular BBC business show Dragon's Den, has been brought in to chair the scheme. The government are no doubt hoping that his strong public profile and passion for entrepreneurship will help it to flourish. "To be an entrepreneur is more than having a job," he says. "It gives you the freedom to make your own mark, in the way in which you choose, and create your own path to success. It can be challenging, and exceptionally hard work, but the rewards are immeasurable."
The scheme will remove some of the major hurdles typically associated with starting your own business, but deciding to do so is still a decision that shouldn’t be taken lightly. So what are the advantages and disadvantages of running your own company compared to pursuing a more traditional graduate career path?
Running your own business means you get to bypass the traditional career ladder, which often means starting near the very bottom of an organisation and working your way up the greasy pole over a number of years. Instead, you get to enter the process right in the thick of things, immediately sampling the meaty areas of building client relationships, product design and planning the overall development of the business. And being the boss or one of the bosses generally means you can work when and where you want, a perk that very few graduate positions offer.
While many university leavers find their first taste of professional life a step down from university in terms of intellectual stimulation, the complexities of starting and maintaining a business should be enough to satisfy even the most demanding of graduate boffins. As most entrepreneurs will tell you, those starting a company will embark on a massive learning curve, with owners having to pick up a whole array of skills, from managing accounts to conducting meetings to pitching for business.
It’s by no means guaranteed, but running your own business is generally considered one of the most likely routes to earning big bucks. Self-employed businesspeople are four times as likely to become millionaires one day than corporate employees.
As the saying goes, it's the taking part that counts. Counterbalancing the relatively high risk of failure involved in running your own business is the certainty that none of the time you spend on it will be time wasted. As you’ll gain an in-depth top to bottom understanding of how a business operates, your experience will immediately bolster your CV by adding a whole host of skills that most graduates can only dream of, and will also stand you in good stead for the rest of your professional life.
Starting a business is not without risk and very rarely does it lead to instant success or significant financial gain. Statistics show that nine out of ten new companies fail in their first year of trading. Many more never even get past the ideas stage. Even businesses which get off the ground with ease can get into difficulties later down the road should the economic or business environments in which they operate change.
Running your own business will mean putting in considerably more hours at the coalface than you would do working in a nine to five job. As they usually have very few other staff members to rely on, certainly in the early days, entrepreneurs often find themselves working early mornings, late nights and weekends in order to get their companies up and running, leaving little time for the social life enjoyed by most 20-somethings. Many self-employed people also start off working from home to keep costs down, meaning you won't have access to the off switch provided by leaving the office behind at the end of the day.
For many people the idea of being their own boss conjures up glamorous images of working on the beach or schmoozing clients over fancy lunches. Unfortunately these visions are often far from the reality of the nitty-gritty of running a company. Most companies have people in place to do menial tasks such as billing, photocopying, arranging IT repair and scheduling meetings. Yours won’t and, until you can afford to hire other employees, you will need to be a jack of all trades.
One of the best things about joining an established graduate scheme is that you’re thrust into a ready-made network of colleagues, all in the same boat as you. In addition, you have several layers of more experienced professionals above you who are able to give advice and lend a hand where it's needed. But, even if you have one or more business partners, being the boss of a start-up means you have to be much more self sufficient and will have to figure a lot of things out for yourself as you go with fewer people to turn to in times of difficulty.
01 June 2012