Faced with debts running into tens of thousands of pounds, most students
either panic and take a low-paid job or bury their heads in the sand and
pretend that nothing is wrong. But there is a third way. If you are
resourceful, you can use your loan to set yourself up in business. Why rush
between lectures to work 40 hours a week flipping burgers if you can come up
with a great idea, sit back and watch the money roll in?
Many students have taken advantage of cheap loans and interest-free overdrafts
to make a mint. Among the most successful is Alex Tew, who was about to
start a business-management course at Nottingham University when he had an
idea for a website, the Million Dollar Homepage. By selling pixels on a page
for $1 each, he cleared a cool million bucks.
Even if you don’t have a big idea, you can still make enough to find yourself
on Easy Street. Ben Eyre worked his first two summer holidays in an ice
cream van in Skipton, Yorkshire. When his boss bought a new van, Eyre asked
if he could have the old one. He spent a month manning it, making a profit
of £800. Then he sold it for £400.
Eyre, 21, who has just graduated from Oxford with a degree in English, says he
picked up basic business ideas by chatting with his former boss while at
work. “There are various administrative things you need to run an ice cream
van, like having public- liability insurance and a street vendor’s licence,”
he says. “I realised that an ice cream van really makes money only in the
middle of the day, so I worked from 11am to 5pm. And I kept the van in one
place, so I didn’t waste time driving around.”
Many successful entrepreneurs say the long gaps between lectures and tutorials
provide ample time to run a business. Neil Flanigan, 21, opened an internet
café in Belfast two years ago. Now about to start his third year studying
economics at Queen’s University Belfast, he has a second café and expects a
turnover this year of £100,000.
“It was difficult persuading investors to back my idea, but once it was up and
running I had plenty of time to run the business. I have only 10 hours of
lectures and classes a week, and most students I know don’t study for 30
hours. I think of this as a part-time job. The difference is I’m working for
myself.” He advises students to create a business that effectively runs
itself, rather than one that needs constant attention.
“It’s about coming up with an idea and putting in the right people. The right
business will print money for you,” he says. “Starting a business when
you’re a student is great, because you don’t have a mortgage or kids to
support. Universities are useful environments because you have highly
intelligent people willing to work for cheap rates. So your fellow students
can be a great resource.”
Simon Lloyd-Lavery, 20, set up and runs Exvisio, a web-design service in
Lisburn, Northern Ireland. He is studying interactive media design at the
University of Ulster and is top of his class, despite rarely attending
lectures. “I’ve made my degree irrelevant.
It’s purely a safety net,” he says. “I got into graphic design and set up my
company when I was 18. The business is completely hands-on. When you work
for someone else it’s nine to five, but when you work for yourself it’s 24
hours a day.
“Most people say you should start with a company, work for five or 10 years,
then start your own. Nonsense. If you’re good enough, work hard enough, push
for work and are prepared to keep your prices low, at least initially, you
can make a success of it.”
Brent Hoberman, who studied French and German at New College, Oxford, before
setting up the travel website Lastminute.com with his business partner,
Martha Lane Fox, believes university is an ideal environment for budding
tycoons.
“For me, university increased an already latent desire to be an entrepreneur,
to run things myself, to try out new ideas, to experiment. Marketing to
other students is a great discipline and a great way of learning.”
Budding tycoons still need to find spark and motivation. Duncan Bannatyne, a
successful serial entrepreneur and a panellist on BBC2’s Dragons’ Den, says
setting up a business when you’re young is relatively easy: “It’s a matter
of wanting to do it.”
Bannatyne, who began with £450 and now runs a business empire worth millions,
advises you to start online. “An internet business is clearly easy to set up
and to run. Young people can do it from their bedrooms, but they have to
decide whether they want to study hard or make money.”
Alex Tew, who made a great deal of money with his web idea and has been
undecided about whether to return to university, advises students who want
to start businesses to think about big ideas rather than smaller financial
ventures.
“I don’t see the point in anything other than big ideas. If a student has a
really good idea that they believe in, they should go for it. But they have
to be willing to lose everything they put in if it doesn’t work.”
A more cautious, though equally canny, approach is to treat student loans and
free overdrafts as investment capital. Some students hand their loan cheques
directly to their parents so that they can invest the money on the stock
market. In exchange, mum and dad give them an allowance.
Andrea Coll, 22, a final-year business-maths student at Liverpool John Moores
University, gives her student-loan money to her father at the beginning of
each term. He then pays her a monthly allowance of £350. “We arranged it
that way so I could learn the value of budgeting. I knew if I asked for more
money I wouldn’t get it. My rent was £3,100 in the first year and my loan
£2,700, so dad made up the shortfall and I got extra money in the end.”
The only potential problem is that some parents may see it as a way of
controlling their children’s disposable income. “It’s much better to arrange
it so your parents pay your accommodation and fees, and you are responsible
for buying clothes and going out,” Coll says. “You need some control.”
If your parents run their own business, they could put you on the payroll,
which gives you a regular wage and may allow them to pay less tax,
particularly if they are in the higher tax bracket. But be careful: if the
Inland Revenue is not convinced that you are doing work commensurate with
your earnings it may turn nasty.
SELL SHARES IN YOURSELF
Stuart Watson, the editor of The Motley Fool (fool.co.uk), a
financial-comparison website, suggests that students finance their degrees
by selling “shares” in themselves to family, friends and even local
businesses. To plug an annual shortfall for £5,000, you could offer 50
shares at £100 each. In return, you could pledge to do charity work.
Watson says that students on courses that lead to lucrative careers, such as
law and accounting, could offer to pay back the money in the future: “If
you’re going to make serious money, you can promise a return on the
investment.”
Kitty Hill, from Cambridge, raised £2,500 by writing to everyone on her
parents’ Christmas- card list, asking them to sponsor her gap year before
studying medicine at Newcastle. She charged £30 a day, and in return sent
out progress reports on each of the dates sponsored.
For business ideas for students, visit
www.starttalkingideas.org/enterpriseweek
