MONEY.

Illustrations produced by
recent graduate Alice Vine
www.alicevine.com

MONEY

Some people think running your own business is all about money.
It isnt really.
Its about freedom and passion and being yourself.
But without money its very difficult to get started.
And if you dont make any money youre not a business.
Youve simply got a hobby.
This booklet talks about the different types of money in your business.
And about raising money and making it.


THE DIFFERENT TYPES OF MONEY

When a business is doing well money flows into it.

And flows back out again.
All of this money needs keeping track of.
This is so you know how well your business is doing.
Turnover is the total amount of money coming in over a year.
This can be an impressive figure.
But its pretty much meaningless.
If the same amount has gone out of the company then youve made no money.
What you need to know is the money left after all of your costs.

Money left after taking away the cost of making the thing you sell is Gross Profit.
After you then take away the cost of running your business youre left with the Net Profit.
But you cant spend all of this yet.
Some of it will be tax, money which the government takes.
As well as your profit you need to watch your cashflow.
This is the amount of money actually in your business.
On paper you could be making loads of profit.
But if that money isnt in your bank account youre in trouble.
Lots of profitable businesses get into trouble because of cashflow.

 Set your payment terms from the outset

and get money upfront for services.
Chasing money is the biggest waste of
time on any business, especially new
businesses.
Leigh Woolard
Optima Semper
Leeds Metropolitan University Graduate

Sabine had the Growth Fund from

Sheffield Enterprise. She used the grant
to get a stall at the UK wedding show. It
was quite scary and very busy. Over 7000
brides through the door in two days. Most
of them with parents, children, mates,
bridesmaids, said Sabine. I think I was
pretty much the only one-woman show
there. Everyone else was bigger. But
overall, I was surprised at, even now in
an economic downturn, how interested
people are in bespoke, handmade pieces
for weddings.
Dr Sabine Little
Now Forevermore
Sheffield University Graduate


GETTING MONEY FOR INVESTMENT

You may have decided you need money to start or grow your business.
There are lots of different ways you can get this investment.
You can borrow it from friends or family.
You can get it from professional investors.
Or you can approach banks and other organisations.
Most investors will want to make money from the money they give you.
In other words, a return on investment.
This could be as simple as you paying back the money with interest.

Or an investor could ask for a stake in your business.

You may also have to put personal assets up as security.
Like your house.
Raising money is a big decision so you have to weigh things up carefully.
People will only offer you money if you can explain how youll use it.
Theyll want to see detailed plans and projections.
So they can trust that theyll get their money back.

 The advice given by the Sheffield

Enterprise staff was incredible.
Janet Grant helped us take the
magazine from just an idea to a
fully working company with over
40 contributing staff. Without
her advice wed still be in the idea
stage of it all!
Managing Director
River Tamoor Baig
Sheffield University Graduate

If you are setting up a service business try to

learn how to price and time manage projects
as quickly as you can - its one of the most
difficult things to get right but its key to
making a profit.
Mark Martin & Tim Ovens
Rabbit Hole Designs,
Leeds Metropolitan University Graduate


HOW TO CHARGE

Working out how much to charge your customers is hard.

Very hard.
Businesses can struggle with this.
This is because setting your price depends on so many factors.
You could work out how much it costs to offer your goods or services.
And then add on an extra amount for profit.
You could look at your competitors and charge a bit less than them.

Or a bit more.
You could even change your prices depending on how much budget someone has.
Theres no right or wrong.
Its worth remembering that most young businesses dont charge as much as they could.
Thats a good thing.
But it might also mean youre underselling yourself.
Its worth reviewing your prices regularly.

 From an informal start in 2010 helping

out friends in Leeds, I learnt about the
nuts and bolts of running a business
after approaching the Spark team at
the Universitys Careers Service in 2011.
They made sure I had the structure right
and I wouldnt be here now without their
advice and guidance.
Tom Griffiths
NBT Music
Leeds University Graduate

Without the Enterprise Team and the

Proof of Concept funding I would not
have been able to start The Lazy Camper
so easily. The initial grant was vital for
bringing in prototypes, logos and market
research to entice investors and prove
the concept. The on-going support from
the Enterprise Team as proven useful
not only for my business but all other
aspects of my life. They are my rock!
Jacob Hill
The Lazy Camper
Huddersfield University Graduate


USING YOUR MONEY

The profit you make can be used in lots of different ways.

Its a good idea to give your business a bit of a buffer.
Look at what it costs to run your business for three months.
Keep that amount in your savings as a reserve.
To tide you over if sales dont go well.
You should also always be thinking about investing in the business.
Look at your plan and work out what you need long term.

It might be new offices, up-to-date equipment or better marketing.

Using your profits to invest in the company is a good thing.
It means youll grow and be better.
And so make more profit.
Finally you should make sure you reward yourself.
Running a business needs a big commitment.
If youre making good money you should enjoy the spoils.


HELPFUL PEOPLE AND PLACES

OUR PARTNERS

There are lots of places where you can get advice about starting your
own business. You can also read and be inspired by other peoples stories.

The Graduate Entrepreneurship Project is a good place to start

www.graduateenterpreneurshipproject.co.uk

Princes Trust
www.princes-trust.org.uk

University of Bradford
www.brad.ac.uk/thinkbusiness/

The Graduate Entrepreneurship Project Youtube

www.youtube.com/user/graduatesupnorth

Shell Livewire offer free business advice, awards funding,

networking and PR for young entrepreneurs aged 16 30.
www.shell-livewire.org

University of Huddersfield
www.hud.ac.uk/enterprise/

Small Business.co.uk offer a huge range of advice for start up

companies. Covers finance, government grants, management
and more.
www.smallbusiness.co.uk

University of Hull
www2.hull.ac.uk/administration/enterprise.aspx

Business Link is a governments online guide for businesses.

www.businesslink.gov.uk
Connect Yorkshire aims to help secure funding for
Yorkshire businesses.
www.connectyorkshire.org
FlyingStart supports graduates (up to 5 years out)
to establish their own businesses.
www.flyingstartonline.com
Growth Accelerator offers tailored advice from the countrys
leading business growth specialists to new businesses.
www.growthaccelerator.com

SIFE offers professional guidance for nurturing

entrepreneurial skills.
www.sifeuk.org
StartUp Britain is a Government campaign
supporting entrepreneurship.
www.startupbritain.org
Young Enterprise offer news and support to new UK businesses.
www.young-enterprise.org.uk

University of Leeds
careerweb.leeds.ac.uk/students/self-employment/index.asp
Leeds Metropolitan University
www.business-start-up.biz/

Leeds Trinity University College

www.leedstrinity.ac.uk/business/business/graduate/Pages/
default.aspx
University of Sheffield
enterprise.shef.ac.uk/
Sheffield Hallam University
www.shu.ac.uk/startup/
University of York
www.york.ac.uk/careers/enterprise
York St John University
w3.yorksj.ac.uk/business.aspx