Saturday, 17 November 2012

# 122 Are new business start-ups just holding off the inevitable?

There has recently been another push to get graduates to take on entrepreneurial roles and start their own businesses. But is this just another Government tactic to keep young jobless graduates with little or no work experience off the dole queues just that little bit longer?

Yes, it sounds like an exciting opportunity, starting a business you can call your own. Something you are fully in charge of. You'll be your own boss. But it requires more thought than simply registering with the tax man and setting up an office in your own home with a fancy logo. I should know, I am one of this year's new glut of business owners.

But despite having plenty of work experience, money management skills and having done my research whilst I was at Uni,  if it wasn't for the start up scheme I managed to get enrolled on and the genius idea I had of locking away a chunk of money in a high interest savings account before I became a student, I'd of failed before I'd even started.

'If your company isn't focusing on a real problem for 
consumers, then it's time to move on and build 
something else.'

New shops on the high street are not an unusual sight these days - something which does surprise me. An endless stream of coffee shops, sandwich bars and run of the mill clothing outlets are born and die with alarming speed. Are these the kinds of businesses we really need? For a new business to be a success in an over-saturated economy it needs to be providing a real service to consumers.

Finding that niche is key to business success. But even good ideas are struggling financially right now. We are after all, still very much in recession. 1% growth might seem like a triumph for our Government but to the consumer at ground level it means nothing whatsoever. The cost of living continues to rise, salaries remain stagnant and unemployment remains far too high. For businesses this is made harder by extortionate business rates and a lack of financial and motivational assistance to keep things moving along.

Government cuts last year meant start up schemes there to support new entrepreneurs are now unable to offer their full range of services. Business Link, which once provided free workshops to schemes such as Enterprise Inc, had their funding withdrawn making the range of workshops free to new businesses were greatly reduced.

No longer an unusual image - the plight of business survival (source)

Many schemes can only accommodate very limited numbers and funding available through them is hard to get your hands on, if you can find it to start with. Without funding or your own financial back up the chances of being able to support yourself unless you work full or even part time is unlikely.

The Government has introduced its own schemes such as the 'New Enterprise Allowance' for those signing on. But it comes with some tough rules such as the business has to be able to replace your benefits within 3 - 6 months. And in such austere times this is a big ask. Even in favourable conditions it can take far longer for a business to become successful enough to support itself and a year isn't an unusual timescale to wait for really positive results.

And with the number of 'zombie companies' (those barely able to pay their outgoings) on the rise, do we really need more business start ups? It's a worrying possibility that there may be hundreds of new start up businesses falling at the first hurdle purely because the time is wrong. And encouraging anyone to invest so much at such a difficult time is surely bad advice.

Will I still be trading in a year? I hope so otherwise it's a lifetimes ambition shattered into a million pieces. Thankfully it can evolve and I have designed it that way to ensure it has the best chance of survival. I can work from a studio, converted garage or spare bedroom. And if it comes to it I will find other work to support myself. Remaining flexible is essential because who knows what's in store for us financially over the next 12 months.

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