New Enterprise Allowance scheme - My story

Andy2013

I agree with the last 2 posts in principle but how long does a business need before it can turn a profit then, surely if its viable then it should happen with the early sales/work and what's to say waiting 3 years is going to make any difference.

A lack of cash flow is a problem for anyone, £1 million would get lovely for any of us but if its not making a profit gradually that money will be spent keeping an unworkable business afloat .

With NEA we have to be realistic, we get given x amount each week and possibly a loan , 6 months to get it going and then we are on our own , the government should not keep funding it any further and if you cant make money then its harsh but it probably is not working.

I made a profit on my very first sale and every item I sell makes money , if it didn't I would go bust , simple as that.

Can anyone on here say that they are NOT making any money on the products or services they sell within there business, if not why not ?????

coffinpilot

Aside from arguing about what constitutes a good business model or if people should be getting benefits after x months or earning x pounds I'd like to try a novelty here .


That's to ask a question about NEA/JSA !!!


Right , flying through my business plan , cashflow etc , have all my investment sorted (fortunately I didn't need a start up loan) expecting to have the rest of my start up material delivered on the 14th June , start trading in early July .


The first few months will be a struggle (as it is for everyone) , but I have just been offered a part time job of 7.5 hours a week with a rival (who knows I'm going it alone) . Would that scupper the start of NEA payments ?

Andy2013

Best to ask the JC directly I know it used to be an issue but I am not sure know, give them a call to be sure .

Stevenb

Hello all been watching this link for sometime so thought I would jump in.

Turning a profit isn't enough to keep a business alive

Without profit, even a small one you can not grow the business and it would not be taken seriously by banks, I ended NEA last month and the bank want 6 more months of books before they will lend me what I need to grow , I make a profit and re-invest it but without more profit they don't want to risk the loan.

We have a thing in the UK for non-profit making companies , they are called charities .

You have to live your business daily, not on a 2-3 year basis it will never work, who knows what we have in store in 3 years and who will say it gets any easier , if your not making money from day one then something somewhere needs changing, either the overheads are to high or your service is to cheap, but eventually one of these will bankrupt you.

Andy2013

I am in a similar situation and was hoping to expand my business later this year but we have been blessed with a new addition to the family due in November so its being delayed until we get a grip of finances with a new baby.

I took the decision back in January 2013 to cancel HB and CTB and go it alone so my business has to be profitable otherwise I cant pay the rent and living expenses and in Oxfordshire that's not cheap but it made me work harder and maybe having stayed on HB would have strangled my business because I just pushed like hell and earned as much as I could, where as I believe some people hold back to avoid going over the threshold and losing HB which is a scary possibility.

TrueBlue1965

Stevenb and Andy2013, have a look into The Start-up Loan Company. I went though The Start-up Loan Company process in November as it was suggested that they where the new providers on the higher NEA loans. I endd up with an offer of £4,500 which is still on the table if I need it. As fare as I am aware. Its on the table for the 1st 12 months of trading for new businesses that are already trading and can be used as a top-up loan for new/existing businesses who are on NEA that need small loans (£10,000) to grow their business.

If you have been on NEA. You are still able to get a Start-up loan. The key stipulation is that you must clear any moneys owed to the NEA loan company but this can be done through part of the Start-up loan. In effect, its a top-up loan for those on NEA

The key stipulation with The Start-up Loan Company is that you must be able to show that your business is making money.

dktreesea

Andy2013 wrote: »

I made a profit on my very first sale and every item I sell makes money , if it didn't I would go bust , simple as that.

Can anyone on here say that they are NOT making any money on the products or services they sell within there business, if not why not ?????

Prices for goods and services are not static. You could have a perfectly viable business, selling your niche products at a reasonable profit and making enough to cover your personal expesnes and then some. But overnight conditions could change. Paypal could up their fees. Or a newcomer to the market, also zeroing in on your niche market, could undercut you by 30%. You might still be making money, but now, instead of making e.g. £400 a week, you could be cut down to £200 a week. Just like that.

If you have sufficient capital you may not care. You could just expand your range to include 2 or 3 more niche products and you're back on track. But there are various other scenarios. For instance, you are now left with a whole lot of stock that you can't move because a newer and better model has just been released by a rival company. Or the bank, seeing your revenue cut in half, get concerned and call in your overdraft.

A lot of businesses are zombie businesses not because they don't make money on every item they sell but because they can no longer make sufficient margins to make a living, just because of so many new entrants into the market.

dktreesea

Andy2013 wrote: »

I am in a similar situation and was hoping to expand my business later this year but we have been blessed with a new addition to the family due in November so its being delayed until we get a grip of finances with a new baby.

I took the decision back in January 2013 to cancel HB and CTB and go it alone so my business has to be profitable otherwise I cant pay the rent and living expenses and in Oxfordshire that's not cheap but it made me work harder and maybe having stayed on HB would have strangled my business because I just pushed like hell and earned as much as I could, where as I believe some people hold back to avoid going over the threshold and losing HB which is a scary possibility.

Congratulations on your soon to be born new family member.

I'm sure you are right about the benefits, i.e. the level of benefits flowing into many self employed families probably does make people work less hard at growing their business. Even worse than that, it may cause a deliberate brake on that growth, just because people don't want their benefits to reduce.

If the growth in housing benefit claims are anything to go by, a significant portion of which is due to claims by the self employed, that suggests to me there are a lot of businesses that could well be profitable, but not at sufficient levels to make a living.

The there's another group of self employed people. People who can't get any benefits at all, probably because of savings in excess of £16k (if they have a family) or because their partner earns too much. People in this position, if they want an income, have no choice but to work hard and push on, because it's the only way they have to get that income.

Everyone who works for someone else full time is in this position, i.e. the only way they can get money from their labour is to work hard and push on. What on earth is so precious about the self employed that the same rules shouldn't apply to them?

I can't wait for UC to come into force. At least then the self employed people we have competing with us will all be on a level playing surface.

TrueBlue1965

The reason for the high number of people claiming Housing Benefit is not because of those becoming self-employed and aimin to only make a small profit. The reason is because of low wages and in particular, zero hour contracts for people who are desperate to work. The reason for such high figures for the Housing Benefit bill to the Government is because of the high level of rent demanded by private landlords.
Remember, Thachers governent gave people the right to buy and 25 years later and less than 20% of those people who managed to buy their own council house still own those houses today. Many being sold for massive profit to the new landlords or passed on to grown up children who then rent off for massive profit! 8%-12% of the value of those houses is the going rate for rent. In other words. 8-12 years and the value of those houses is covered and they still own the house. Much of those rents being paid though Housing Benefit. Another case of those with money getting richer off the backs of the poor and the Tax payer. Those sold off concil houses where aimed at those in need of affordable housing and targeted at the working poor. Build more affordable hosing and house prices will drop. House prices drop and rents drop too. Rents drop and Housing Benefit will drops too.

As for new business making money and should they be allowed to claim Housing Benefit, Tax credits, ect. If your doing 30+ hours and can show your acounts. Then, your doing what is needed to make the claims. You can be asked to prove what hours your doing if it is believed that those hours are not being worked. Then, you can be asked to prove what your doing in your business though your books. Those are the rules. Dont knock the system in a dog eat dog economy. For many, its about surviving but with the dream of making it big one day..

Im not sure there are many people who are aiming to only make a small profit so they dont lose any Housing Benefit. The whole point of the system is that you will always be better off if your working/earning money. In the case of the self-employed. Its about making profit. Yes, you lose a small amount of your profit as your profit goes up. However, your always better off as your profits grow!

Agree with you, dktreesea re sales changing overnight especally on selling sites such as E-bay. I,ve gone from having very good sales between March and the second week of May on E-bay. Then zero sales for the last 3 weeks. Im not the only one reporting this on some of the forums. Its not down to anything i,ve done as I have only positive feedback. Im still selling well through Gumtree. Did a car-boot sale last weekend and made £290. So, there are plenty of customers for my products. Made some interesting contacts too. Which could bring in some very big sales in the future!

Im making money but thats not to say that im making the type of profits that I potentialy could be making. The products that I manufature should be in Garden Centres but breaking in to that market is a difficult and very competitive nut to crack without lots of investment or a big slice of luck.

Andy2013

A similar kind of thing with myself on eBay , may was a little slow but still made some good money and the week ending Sunday I made more than all of may put together, a fabulous week , there is no logic except a lot of people get paid nearer the end of the month hence more sales.

It all depends on your competition with eBay, if your selling mobile phone accessories your one of thousands and the market is saturated.

Type in Leather IPhone case and there are 158.411 results, a needle in a haystack.

I learnt early on you need a quality niche product with a good healthy mark-up and then your on your way.

If fees rise or sales slow then your covered by the remaining sales, if your making 30p on a leather case then you have no where to go.