Five tips for young entrepreneurs starting their first business

FreeAgent’s chief accountant Emily Coltman returns to offer young entrepreneurs eyeing up their first business venture five expert pointers that could help put the company on a path to success.

Researchhas suggested that over half a million UK university studentscurrently run or intend to run their own business while studying almost one in three of the student population.

The surge in young entrepreneurs starting companies saw’student enterprises generate more than 913m for the economy in 2016, with the average venture turning over 13, 213 annually. For budding business leaders, here are five top tips that could prove invaluablewhen launching a new company.

1. Plan your finances

Before you start your business, make a simple plan of how much you think it will earn in sales, what costs it will have, and how much cash it will bring in. This is called a forecast and can be done easily on a set of three spreadsheets.

This information could be crucial. For example, you could find out that your costs are higher than your sales, which means you might have to put your prices up. Or, it might tell you that you need to find some cash to cover your initial costs before the sales start coming in.

Without a financial plan, youll be flying blind which could be catastrophic for your business in the long run.

2. Where’s the money coming from?

Your business may need funds before you make your first sale. For example, if you want to make jewellery, youll need to buy the wire, beads, clasps and other materials to make some samples and that can be long before any money starts coming in from customers.

Look at the specialist sources of finance that are available to you. Check out The Prince’s Trust to see if you might be eligible for a grant or loan, or the StartUp Loans from StartUp Britain.

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Ben Towers convinced Metro Bank to give him a business bank account at 17

Having set up at 11 and now running a business with 30 staff, Ben Towers hopes getting a business bank account from Metro Bank at 17 will make it easier for fellow young entrepreneurs to do the same in the future.

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3. Keep your records

Like any other business you must register with HMRC meaning youhave to pay taxes.

Once your business is up and running, as well as how much cash it’s making, you also need to know how much profit it’s making (that’s its sales less its day-to-day running costs), because profit is the figure you will pay tax on. Always stay on top of your cash flow and know how much you owe.

4. Use your contact network

When you work for yourself everything is down to you; you don’t have a boss to go to for advice. You make the decisions. If you’re serious about running your own business then a mentor can provide invaluable help, support and advice and a wealth of knowledge that can be invaluable. But as well as your mentor, make use of other contacts in your network and your family’s.

These can not only give you that magic business idea like Fraser Doherty of SuperJam, now a global business, whose grandmother taught him to make jam at the age of 14 but also, potentially, they can help you find crucial business experience.

Remember too that your friends and family could well be your first customers. Ask them to help you test your product, ask if they would pay what you are asking for it. And ask them for help in other ways too.

If you know someone who is great with building websites, ask them for help building one for you. Or if you have a family member who is expert with numbers, why not ask them to help you with your forecast?

5. don’t be put off by failure

One of Sir Richard Branson’s early business ideas was to grow Christmas trees for sale.

When rabbits ate the Christmas tree seedlings, he chose to turn imminent business failure into success. He and his friend shot the marauding rabbits and sold them to a local butcher for a shilling each which more than covered the cost of the Christmas tree plants.

The moral of the story is that, if your first business idea doesnt work, don’t give up try something else. If you don’t have a mortgage to pay and children to feed, it’s much easier to be flexible.

Plan your business carefully, seek advice and help from your contacts and keep it clean with HMRC, and you’re well on the way to business success.

Emily Coltman FCA is chief accountant to?FreeAgent, cloud accounting software provider for micro business owners, freelancers and their accountants

For inspiration on starting your first business, take a look at our?ten best startup ideas for under 10, 000