Business start-up

patman99

Hi,
I am about to be made redundant after 16 years. As a result myself and a good friend intend to set-up a small business.
We intend to speak to BusinessLink, but would like to know whether there is anyone else we may approach in regards to obtaining grants etc.

paulwf

Hi and good luck with your business.

What type of business and what sort of area please?

patman99

It's IT. I have plenty of qualifications in this sector, and have been building & repairing computers for over 20 years. It will be a complete change from working CNC press brakes & machining centres, but I can't see myself spending the next 23 years working in a factory for low pay.

We will be based in North Essex.

Horace

if you are in your twenties or over 50 then you could apply to the Princes Trust (if you're in your 40's then you are stuffed where the Princes Trust are concerned). It is very hard to find grants but businesslink should be able to help with that.

Make sure if you go into business with your friend that you are fully protected - I am not saying that the friend will do a runner but you just never know what will happen in the future (seek legal advice).

motorguy

patman99 wrote: »

It's IT. I have plenty of qualifications in this sector, and have been building & repairing computers for over 20 years. It will be a complete change from working CNC press brakes & machining centres, but I can't see myself spending the next 23 years working in a factory for low pay.

We will be based in North Essex.

This market is way played out, so if you're going to have a crack at it, make sure you're doing so with the abolute minimum of investment.

You hqvent said what area your going into but

Home users = expect 24x7 lifetime support of all faults remotely related to their computer for that single £30 callout fee.

Small Business = Struggle to get support contracts out of them, and everything will be last minute and high priority = lots of stress for that callout fee.

Large Business = hard to crack and not interested in dealing with small time.

paulwf

OP please read this thread, it's a bit long but well worth a read:

http://forums.moneysavingexpert.com/showthread.html?t=701077&highlight=computer+repair+business

If you do decide to go for it work out your start up costs first. They should be minimal so I'm not sure you'll need a grant...grants are hard to come by these days, there are a few loan schemes set up for those that have trouble accessing normal credit though.

patman99

Superb thread.
As we will be taking a unit, it allows us to run several businesses such as ebay selling agent, IT salvage and house clearence. This should produce income whilst we build-up our core business (and if two or more of the other enterprises also takes off, extra cash from selling-on the unwanted bits as an ongoing concern).

Believe you me, I have a mortgage and loan and credit cards to pay so I cannot afford to take this as a fun business.

paulwf

patman99 wrote: »

Superb thread.
As we will be taking a unit, it allows us to run several businesses such as ebay selling agent, IT salvage and house clearence. This should produce income whilst we build-up our core business (and if two or more of the other enterprises also takes off, extra cash from selling-on the unwanted bits as an ongoing concern).

Believe you me, I have a mortgage and loan and credit cards to pay so I cannot afford to take this as a fun business.

I totally understand why you want to set up your own business but think very carefully about relying on it to pay off debts. A lot of businesses fail or take a long time to pay their way. It is one thing walking away and losing money and another thing to not be able to pay off your debts...that leads to bankruptcy.

I also understand having several strings to your bow but I would question your strategy. Your businesses seem mostly unrelated and I think you could lack focus and end up doing all of them badly rather than 1 business well. What has house clearance got to do with IT???

If you want to spread the risk then the fields are usually related, for example selling new PC systems along with doing PC repairs. Are you trying out so many ideas because you don't have confidence in your main idea?

Could I suggest trying to get a regular job (easier said than done I know!) then building up one of the businesses. Or perhaps come up with a long term plan on what you want to do then work out what training you require and work towards it even if it takes several years.

Even if you think I'm being negative and unhelpful PLEASE write out a full business plan for your various businesses and include full costings then seek professional unbiased advice. Friends, relatives and even business link can be overly optimistic...try other business professionals, accountants and bank managers.

Good luck but please be careful.

patman99

The Ebay selling agent does tie-in somewhat with the core business as we will be using ebay to dispose of old kit that we upgrade (excluding Harddiscs for obvious reasons). Thus, if someone needs to use our expertease in the online auction world we won't turn them away.

Both myself and my colleague have run an IT business in the past, mainly selling via trade stands at computer fairs. We originally started having purchased a book called 'The Beaufort Guide to PC sales' or something similar. It cost us £90 but we made £200 in the first 3 days using it's sales techniques to off-load several old (but very useable computers) via one advert in our local paper.
This in turn lead us to try our hand at computer fairs.
We used to be regulars at ICEX's monthly auctions, and we both seem to have a good nose for a cheap bargain with a high sell-on profit. I think our best deal was a pallet of 19" crt monitors (a mix of Dell & Olivetti). We paid a grand total of £14.76 for 12 monitors. only one had any problems so we binned-it, my colleague kept (and still uses) one for himself. We sold 4 via a freead in our local paper at £35 each, the other 6 were sold in 2 hours flat at the next computer fair, again for £35 each.
We also used to buy stock for resale, and our best buy was 3 Microsoft IntelliTrack track balls, cost us £12.50 each, but sold for £29.50 (later found-out PC World sold them for £50). Our supplier had 10 of these trackballs, but we could only afford 3 mores the pity, especcially as they sold-out in less than an hour.

We also had sense to stop doing the fairs before the bottom fell-out of them.
Before anyone asks, we didn't go full time as at the time neither of us had any qualifications in IT (I now have qualies in both the maintanance side and the network side)

One thing we do have in our favour, if we set-up as a limited company, we become employees, and as such, can pay ourselves nmw, and claim wTC to make-up the gap (in fact, I will be no worse-off than I am/was in my current/last employement). This should ease the outgoings whilst we start building-up the client base. As profits increase, then so can our wages.

I looked at 'PCHomehelp', might be worthwhile to help us get a foot in the door of a few customers. Gives us the chance to leave them our contact number and to remind them that 'our charges are '£25 call-out (first hour included), then £12.00 per hour or part thereof. Saves you at least £5.00 just for the first hour, and all by going direct to us instead of through PCHomeHelp'. Sure, the first visit costs us £12.50 for the first hour, then £2.00 p/hr till the job is completed, but we will make money on follow-up calls.

paulwf

Sorry I'm still not following...you made money selling at computer fairs but the bottom fell out of that so what is your plan now? The PC market is now completely different to 10 years ago as much of the equipment is now 1/4 of the price.

I'm not sure if I'm reading your call out rates correctly...does it cost you money to attend the first call? Your hourly rates also look way too low, what professional charges £12 p/h for his time? Remember you are self employed so you don't get holiday pay or sick pay etc and have overheads.

Although the company will be Ltd you can't pay yourself NMW unless you have the money in the bank. On the other hand if you make a large profit presumably you will have to pay that as dividend, surely you can't keep it in the bank and claim WTC? A Ltd isn't a magical entity that can make money appear or disappear at will.

I'm sorry for going off topic on this and sounding so negative...perhaps it is because you are only giving brief details on the forum and your business plan is actually solid. Please consider getting a regular job as a safety net to pay your debts then build your business up part time before going full time...even if you just get a temp job for now it will allow you to pilot the business model without risking too much.

motorguy

paulwf wrote: »

I'm sorry for going off topic on this and sounding so negative...perhaps it is because you are only giving brief details on the forum and your business plan is actually solid. Please consider getting a regular job as a safety net to pay your debts then build your business up part time before going full time...even if you just get a temp job for now it will allow you to pilot the business model without risking too much.

I totally agree with you on this Paul. I followed the O/Ps strategy of small (retail ) unit, local and small business support and then tried to sell off excess stock / spares / etc on ebay, as well as becoming an ebay agent.

I think the O/P's model may have worked say 10 years ago, but the market just isnt like that anymore.

(a) peripherals whereby you could previously make a lot of money on are now being sold even in PC World for just a few £'s. Even TESCOS are in on it - memory sticks, blank CDs, external HDDs, printers, paper, laptops, PC's, monitors, can all be bought with your groceries - and all for less than you'll be able to supply for.

(b) people are now very 'internet savvy'. They know how much hardware costs and will use places like ebuyer etc.

(c) With being an ebay agent, you open up a whole can of worms whereby you spend a disproportionate amount of time listing the item, packaging, posting the item compared to the percentage of the item you are able to claw back in fees (after ebay and paypal charges)

(d) peoples expectations are all wrong RE: pc repairs - they DO expect 24x7 lifetime support for their pc for that one callout fee, and whilst there will be a strong inclination to tell them to !!!! OFF, you cant do that as you have a reputation to uphold. They also dont see PC repairs as a trade, and therefore dont equate it with say, a washing machine repair cost.

(e) People have no loyalty. They will walk past Joe Local whos trying to make a living and offering them support and buy stuff from tescos where their best chance of support is some checkout girl, all to save a pound.

As you say, i would strongly recommend having a full time job and doing this part time in the evenings first and see how it goes.

Being very honest here, i burnt up £25,000 trying to set up something very similar in 18 months, even though i've 20 years IT experience AND had been running a quite successful ebay store prior.

I would use any redundancy money to pay off debts, then get a full time job and do this in the evenings - its a lot lot harder than it sounds.

O/P - read the FULL thread linked to above.