While thousands across the country struggle to find work post-recession, more people than ever before are working for themselves to avoid long-term unemployment. SALLY NICHOLLS talks to two women about the profits – and perils – behind setting up a business.
A customer examines a necklace display when the shop clerk approaches her.
“Those ones are beautiful, handmade from Israel. And it is genuine silver.”
Persuaded, the lady nods and Jackie slips out a necklace and a pair of studs from the glass cabinet. She lays it on the counter to begin the purchase.
The customer pulls out a wad of notes from her purse and hands it over, receiving a blue velvet box in return. She drops it into a plain plastic bag and leaves the shop with a wide grin.
“My best customers are older ladies,” says Jackie, who runs Marla Jones Jewellery in Durham Market, County Durham.
“They’ll come and think of nothing but spending £300 or £400 on quite a few different pieces of jewellery.”
It has been almost a year since Jacqueline Lamb, 52, was made redundant from her job at a nearby jeweller.
“I worked in a beautiful shop called Chapmans for seven years until it closed. It wasn’t just because of the recession because it was always busy, but the rent was extortionate and the lady I worked for didn’t want to do jewellery anymore.
“People came from all over the country to that shop, so when that closed we had all those customers who were really disappointed.”
However, far from anticipating a long wait in the dole queue, Jackie of Grindon, Sunderland, had other ideas. Inspired by her former employer’s beginnings as a simple kiosk, she decided to setup her own.
“Within a few weeks, as soon as I knew I didn’t have a job, I went down to the market and asked if they had any little shops or units available. And I knew, because I know what people like, I knew I could sell jewellery for a lot cheaper.”
Over the next five weeks, Jackie contacted the suppliers and designers she became familiar with while working at Chapmans and bought the jewellery she needed. Within six weeks she was able to rent out a market stall and sell her wares.
Marla Jones Jewellery, named after Jackie’s late grandmother, has since built up a loyal customer base and gone into profit. But Jackie had help.
A £120 weekly stipend, courtesy of the North East Business and Innovation Centre (BIC) Incentive which provides support services for businesses, proved vital in keeping her and her husband Martyn going as the business grew.
“That was basically just to live on. It paid for our shopping, our bills, which was a really good help, and everything we made after that we put into the business.”
Meanwhile, over 40,000 welfare claimants have reaped the benefits of another regional enterprise programme to launch their business ideas – the government’s New Enterprise Allowance scheme (NEA). It allows people living on certain benefits to access start-up funding for their new business, and it’s had a sweeping effect on job figures.
The Department of Work and Pensions announced in April that the number of jobless fell by 77,000 in the three months through February thanks to a surge in the number of people becoming self-employed.
The latest figures show that the number of people classed as self-employed rose by 146,000 to 4.5million in the last quarter – 61 per cent of the total recorded increase in employment – its highest figure since records began in 1992.
But the scheme has not worked for everyone.
Web designer and developer Colette Rouhier, 53, of Sydenham, London, applied for NEA funding in 2010 after she and her media lecturer husband lost their jobs at a local college within six months of each other.
“He was just trying to find work, I was trying to work and then I just thought, I’m going to use my redundancy money to put in starting up a new business.
“I already had a computer and I had all the software which I bought while I was employed, so I had the equipment I needed.”
And promises of work were already coming her way.
“I had a lot of people within the college saying ‘if you go self-employed we’d definitely give you work’, and I felt at the time it would be better because my daughter was in primary school.
“Given I was in my early fifties, I thought this was probably the best way to go.”
After consulting with a creative agency and job centre advisor to help get her web development business off the ground, she did not get the support she hoped for.
“I had a portfolio of work, I had a website and I had business cards, that’s it. I wanted to go to the NEA to help me develop a business plan, but they said no.”
Colette’s portfolio was rejected and she was denied funding because she had not been directly claiming Jobseekers Allowance for six months. Instead, she jointly claimed the benefit with her husband, thereby making her ineligible for any support.*
“It was really annoyingly petty,” says Colette. “So I just went off and walked the streets and tried to look for clients. I did freebies for people, and friends and family came to me with various recommendations.”
Colette and her husband supported themselves with odd jobs and loans from relatives until she launched her graphic design business, Coldesign, the following year. But being self-employed has brought up unexpected challenges.
“I’ve come to realise now that I’m not very good in business at all,” she says. “I’m okay with the creative side but when it comes to asking for money and quoting the right amounts I fail there quite dramatically.
“I would feel embarrassed about asking for more than £500 for a website.
“Then it transpires that for £500 you’re putting in almost a month’s work and I’m starting to realise that I actually can’t afford to be charging the prices I am charging. However, I don’t feel confident to be asking for any more.
“I’m just tired of the financial anxiety, the lack of a steady income, and my husband feels the same. And it’s the parenting, the running of the house – it all gets huge.”
While self-employment is not for everyone, it could still be the best way to escape long-term unemployment or a dependency on benefits. And it might not be as difficult as you think to get going.
“If you love something and you’ve got a good knowledge of what you want to sell, and you’re a people person, you’ve just got to put the hours in,” suggests Jackie.
“It didn’t take anything hard like a business plan. I wrote everything I needed to get the unit, the jewellery supplies, bags, boxes, receipts, price stickers, all of that. That was all just common sense.”
And even some of the most underprivileged have succeeded in bringing their business ideas to life. Managing Director Katharine Sutton of the Aspire Foundation, which provides business development support and advice for people who are vulnerable or in poverty, says there is a “tremendous amount of talent in this pool of people who are disadvantaged, even homeless.”
“I’d say running your own business in the UK is one of the hardest things you can do,” says Katharine. “It’s a lot of hard work, it needs a lot of commitment, people don’t pay you, and nine-out-of-ten businesses fail. But we’ve had eight people, all of whom have lived on the streets, who have produced business plans within two weeks which they can go on and pitch and hopefully tap into some grant money.
“It’s absolutely fantastic and that’s not thanks to us, that’s not thanks to Aspire, it’s thanks to their skills, their commitment and their desire to do something. And there are a hell of a lot of people out there in this terrible labour market who are capable of going it alone.”
*As of October 2012, JSA claimants may access NEA funding from the first day of making a claim, providing they meet other conditions.
Are you eligible for NEA?
You must be aged 18 or over, have a business idea and get one of the following benefits:
- Jobseeker’s Allowance
- Income Support as a lone parent
- Employment and Support Allowance, if you’re in the work-related activity group
A Jobcentre Plus adviser can refer you to the scheme as soon as you get a qualifying benefit. You don’t qualify if you’re part of the Work Programme, but you can still get help setting up a business elsewhere.
For more information, visit https://www.gov.uk/new-enterprise-allowance.
Source: Department for Work & Pensions
How to setup your start-up
Top tips from Katherine Sutton, Managing Director of the Aspire Foundation:
- Have an idea What is your service, what are you going to sell?
- Do some research Is there a customer base for your idea? A successful business needs a market to tap into. You have to be able to sell.
- Does it add up? This is important. Look at your costs and the prices you will charge – can you afford it? Can you make a living?
- Create a business plan Explain your product or service. How will it succeed? Why?
- Get funding Most businesses fail in the first year of trading. Look for grants and start-up loans, including the NEA. It could provide much needed cover when business is slow.
- Educate yourself (optional) It may be that before you go into self-employment you need more education or more experience of a particular sector. So you want to set-up a jewellery shop, okay, go and work in a jewellery shop. You want to set up a social enterprise? Okay, go and volunteer for a similar organisation. This could also be good for getting contacts.