With the days of a ‘job for life’ long gone, and the ranks of the self-employed growing stronger by the day, should graduates consider starting up a business as a worthy alternative to the traditional corporate career path?
The changing face of graduate employment
When I was studying economics at university in the early 1990s, almost all of my contemporaries attended ‘milk round’ days, where big name corporate employers would display their wares, and encourage you to apply for various graduate training programmes in the year prior to graduation. Providing you achieved a good degree, you had a fair chance of joining a bank or FTSE company, with a good salary to match.
Over the subsequent 20 years since I graduated, not only have the number of places offered on graduate training schemes shrunk, but average graduate salaries have not fared too well either. According to the Complete University Guide, average salaries for graduates working in professional roles dropped by 11% between 2007-12 to £21,702.
Of course, graduates can expect to earn more than non-graduates over their lifetimes – £250,000 more for female, and £165,000 for male students, according to the Government, but financial rewards are not everything, especially when there are so many alternative career paths available aside from the corporate route.
So, why not consider starting up your own business after you graduate?
Graduate start-ups – some things to consider
I’ve met hundreds of entrepreneurs over the years – including many in their early 20s (I set up my first when I was 25), and I’d say that being young isn’t an impediment to starting up. In fact, in many cases, being young may actually help – you’re less likely to have responsibilities and heavy financial outgoings to be concerned about when you’re 21/22, less likely to be risk averse, and more likely to have the amount of inner energy and ambition needed to succeed.
It is your own nature and ambition which will determine how likely you are to succeed on your own, alongside your ability to fund your venture and access the support you may need along the way.
I asked Alexander Jackman, Head of Policy at the Forum of Private Business, to provide his advice for would-be graduate entrepreneurs:
“Starting a business requires many things, not least a positive can-do attitude from the entrepreneur. Aside from that inner belief there are a number of means of support to help get ideas off and running, not least the very successful Enterprise Loans offering both finance and a mentor for pre-start ups.
“For those at university, a national network of entrepreneur societies (NACUE) has been established to help bounce ideas around and with graduates still facing a tough job market in some respects, starting a business is an increasingly popular option. Even for those that don’t make a success of it, the process of trying to get an idea of the ground shows the sort of spirit that many employers look for and can give them a valuable edge in the competitive job market.
“Seek advice from mentors who have been through it – much of which is available for free – and look not just at cheap loans through government schemes but also the growing market of peer to peer financing, where individuals will invest in an idea not to seek financial return but perhaps just a first version of the product or access to the service once the idea is running.”
Are you cut out to start up a business?
The first thing to consider is whether or not starting a business is something you want to do. There are a number of questions you should ask yourself, including:
Do you have a unique idea? Is there a market for your product or service? Do you have sufficient funding for your idea?
Try our tips for starting a business in 2014 for further questions and inspiration.
There are also many things to look out for when running a small business. Often the best way to approach this is to look at some of the most common mistakes people make when starting up on their own.
What start-up resources are available to graduates?
The NACUE supports over 200 entrepreneurial societies across the UK’s universities and colleges, and is partially funded by the Government.
If you need funding to get your idea of the ground, the Government-backed Start Up Loans scheme may be for you. You can apply if you’re over 18 and have a viable business idea. The typical loan size is around £6,000, and loans must be repaid between 1 and 5 years, according to your individual situation. One of the main benefits of taking out one of these loans is that you’ll also be provided with a mentor for your business.
Other useful links include:
Shell LiveWIRE – UK’s biggest community for young entrepreneurs. Programmes offer free advice to start-ups, and cash loans of up to £10,000.
The New Entrepreneurs Foundations (NEF) – picks 30 would-be entrepreneurs each year to complete a 12-month programme, including paid work experience, training, mentoring and networking events, an executive coach and business mentor.
NCEE (National Centre for Entrepreneurship in Education) – useful advice and materials aimed at people who teach entrepreneurial skills (but also handy for graduates considering taking the leap).
If you would like to recommend any useful resources for graduates, please send us an email.
Written by James Leckie, founder of Company Bug.