Working for yourself

Bike

Working for yourself and starting your own business can be an exciting option while you are a student or after graduation. Some of the main benefits to working for yourself include:

  • Independence – the freedom to make your own decisions
  • Personal fulfilment – building your own business
  • Flexibility to choose your own hours of work

Building blocks for success

Thousands of new businesses are established in the UK each year, however, success in working for yourself or running your own business is dependent to a large part on the skills, knowledge and personal attributes that you have.

Typical skills that are required include:

  • A strong drive to succeed – self-employment is hard work. The hours can be long and you may be faced with difficult decisions. You will also have to perform many of the functions yourself such as: buying supplies, maintaining equipment, administration etc.
  • Risk taking: choosing to go it alone is less secure than earning a regular salary as an employee
  • Self-reliance, time management and organisation skills: you will survive by your own efforts and need to be able to set and meet your own deadlines
  • Self efficacy: you will need self- confidence and belief in what you are offering
  • Financial awareness: to generate profits by optimising your income and minimising costs
  • Planning ahead: you need to be able to plan the direction of your business in order to maintain a necessary level of income
  • Flexibility and adaptability: you will need to change the focus of your business to keep up with changes in the economy or your market
  • Networking and negotiation skills: it is important to be able to establish networks in order to build up a base of potential clients. You also need to be able to identify, and negotiate effectively with, customers and suppliers
  • Presentation and communication skills: you will need to be able to represent yourself clearly and effectively in all business situations, from applying for a loan to negotiating contracts

Tips on starting a business 

Here are some of the points to consider when setting up on your own. 

Write a business plan

This pulls together your ideas about the product or service you want to sell, your markets and how you will reach them, and how you will finance your business. It will help you focus your business idea, long-term objectives and strategy for how to get there. 

Managing your finances

Discuss your financial situation with a bank – they will be able to provide advice on planning your business and organising your accounts. It is essential your business keeps accurate accounts for taxation purposes. Tax returns can be done using the forms provided by HM Revenue and Customs, though many self-employed people prefer to use an accountant. 

Locating your business

Depending on the nature of your business, it may be possible to operate from your residence. Consider however whether you will be able to effectively divide your time between personal and business matters. There are a large number of business incubation spaces in the Sheffield region which can offer further support for businesses.

Attracting customers

  • Business name: pick a name that fits with your image and tells your customers about what you do. Check that your chosen name is not being used by another company in a similar type of business. You can research this using the internet and the Companies House index of names.
  • Branding: design a suitable logo and have some business cards and letterheads printed, along with promotional material to hand out while networking.
  • Networking: the best way to make people aware of what you have to offer. Opportunities for networking include attending exhibitions, conferences, or events organised by the Sheffield Chamber of Commerce and Industry. Discounted student membership rates are available. 
Deciding on the type of business

The format of your business will largely depend on the type of service or product that you are offering. Types of business include:

  • Sole trader: you are self-employed with no special legal structure. It is easy to set up, though you must notify HM Revenue & Customs. It is also a low-cost option: rates of National Insurance are low, and if your earnings are not high, your tax payments will be lower than those of a limited company. The main downside is that you are personally liable for any business debts. You also have less entitlement to social security benefits, and more limited options for raising money. It can also be harder to sell your business or pass it on. Once you are more established however, you could form a limited company and transfer your business to this company.
  • Limited company: this is a separate legal entity registered with Companies House. You may want to use an accountant or solicitor to help with setting this up. The main advantage is that your personal liability is usually limited to the amount you agree to invest in the company by buying its shares. It is also easier to raise large sums of money or sell part of the business. Downsides are the costs incurred in buying or forming the company, and higher National Insurance payments. Your annual accounts are also more complicated, and it can be more difficult and expensive to wind up a limited company if trading ceases.
  • Partnership: here, two or more people work together and share the profits and losses. It has similar advantages and disadvantages to being a sole trader. It is worth remembering though that each partner is personally liable for all the business debts of the partnership, even if the other partner has caused them. A limited liability partnership can be set up as a separate legal identity and registered at Companies House. This has the flexibility of a partnership and is also taxed as a partnership. It can continue despite the resignation or death of any members.
  • Franchise: buying a franchise allows you to run your own business without the hard work of setting it up from scratch. The business you buy into often provides equipment, raw materials, training and a recognised brand – you pay for these services and operate a branch of the business to make a profit for yourself. The British Franchise Association provides more information.
  • Freelance: freelancers work for other people for a fixed period under a fixed contract. They sell their skills and time to help somebody else complete a project or piece of work, and are typically paid by the day, hour or per project. Freelancing offers freedom and variety, though the uncertainty of work and lack of company benefits are drawbacks.
  • Social enterprise: social enterprise is about using your skills to create a business that makes a difference to the community/ society. Defined as a business with primarily social and/or environmental objectives, its surpluses are principally invested back into the business or community, rather than maximising profit for shareholders/owners. 
Useful resources to get you started

Do your research so that you consider all the options before you start a business. The following resources should help.