Lecture 6 Notes
- Why? Competitive job market & its never been easier to set up your own business
- Creative industries now made up of small businesses/freelancers
- Business means to become a freelance designer; be a practising artist; or start a collective with other creatives.
- Johnny Cupcakes example (interview with bongo boy youtube):
be passionate about your subject; its a great time to start a business; collaborate - don't underestimate yourself, try the big names disney etc; 4p's - product is teeshirts, his price is regular and edition, he promoted it with a USA tour and has a fantasy baker as his place; he creates longevity by having limited edition stock and a brand name people recognise; talked about copyright issues as some designs have been ripped off; took a risk, didn't have qualifications, learnt from mistakes; talked about taking his business overseas as there is a demand for his product
- Jeff Bezos started amazon - took a risk
- The most experience business people would say you may your own luck by being driven and focused, people will trust you and send opportunities your way
- growingbusiness.co.uk - Do what you love; start your business while you are still a student or still employed; don't do it alone, get all the advice you can; write a business plan; do the research; get professional help; get legal and tax issues right first time
- startyourbusiness - choose a winning name; register your business name; find small business financing
- bytestart & betterbusiness - why are you starting a business?; think about the skills you need not just the skills that you have got; collaborate with other freelancers; look at the competition; understand your customers and competitors combined (marketplace); might have to find staff; employ people who are cleverer than you; find out what are the biggest causes of business failure
- A business plan is a statement of what you are trying to achieve and how:
1. mission and values - driving force behind business, what problems are you going to solve, how are you going to make a difference
2. what resources and equipment you need and how much it will cost you to run business - overheads
3. marketing - how you are going to promote business with advertising, public relations, exhibitions (marketing communication mix)
4. money - how much marketing will cost; budgets; how much you will earn
- Questions you will be asked when building a business:
What are you going to do?
What is the value proposition?
What resources do you need?
How much will it cost to get it started?
How will you pay it back?
Who are your target customers?
- Need a business plan to focus your thinking, make a detailed business plan, understand what you are trying to do; set some clear objectives, plot when you will do things; can look back over it a year later to see how well you are doing, measure it against this; need a plan to get investors; attract collaborators
- freelanceuk.com
- Find a business plan in a bank, the arts council (community based), business balls.com, business link.gov.uk
- Where are you going to find funding? Things have changed in the last three years. Banks aren't lending money to small businesses anymore. People need more flexible ways of finding money: by helping others to get grants and then they can pay you to do the work; crowd funding where you invite people to invest in you; we did this is a crowd funding website;
- How do you get organised? Need a balance of people to cover different team roles. Usually each one person will be fulfilling at least two of these roles.
Action People
1. Shaper - tells people to get on with it
2. Implementer - someone who gets on with job
3. Completer - motivates people to get on
Social People
1. Co-ordinator
2. Team-worker - has good communication skills
3. Resource Investigator - research and deals with people outside organisation
Thinking
1. Monitor - cautious, makes you think about things
2. Plant - ideas person
3. Specialist - highly technical skills
- Power culture - small business with one boss who you answer to, who wants to be in charge of everything, may be family business
- Role culture - large organisation such hospital, large department store, or as LCA, there is the principal, but also deans and heads to form senior management, there are different departments which are self contained with their own leaders
- Task culture - temporary structure, a group of freelance people who come together to organise a project, no hierarchy
- Person culture - key people in a business and people who support them, such as a dental practice, they need people to help them to keep the place running; same as a design practice
- What skills do you need? Will you work alone? Will you be more productive if you work as a team?
- Income streams: private commissions; free lance design work; workshops and part time teaching; royalties from book sales and professional seminars
- Legal status determines how much tax you pay, choose what to do with your profits and that will determine your legal status
:: Sole trader
:: Partnership
:: Limited Company
:: Limited Liability Partnership
:: Public Limited Company
:: Social Enterprise
- If you choose the wrong legal status people might not trust you. Being a sole trader seems very informal, might stop you from borrowing money. Might be more reassured if you are a limited company as they can see what is going on.
- Look at business link, companies house (register of limited companies), social enterprise coalition, co-operative
- Personal taxation rates 2012 - can earn £7,475 before you pay tax
If you earn, you will pay:
£0 - £35,000 - 20%
£35,001 - £150,000 40%
Over £150,000 50%
- Also have to pay national insurance contributions
self-employed £2.50 a week, if you have profits you will be 9%, if it is over £42,475 you pay just 2%
- Also have to pay employment benefit to government - 3.7%
- As a sole trader, need to keep records of what you are spending your money on, responsible for debts
- In a partnership, you share the profit, responsible for debts
- If you have a limited company, it has shares which reflect how much of the company people own. Need to have AGM meetings, need to register with companies house, you need at least two employees (you can own 99% and someone own 1%), need to pay NIC, corporation tax and VAT (extra 20% on all goods and services), you need to pay corporation tax which is 21% of your profits. Work your different ventures out as different businesses.
- VAT: zero rated things can be changed, where it would take an act of parliament to put vat on things that are exempt, some things are 5% rather than 20%
- The only advantage of registering for VAT is that you are able to claim it back on everything you buy, so if you don't buy a lot then its not worth it
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