Young entrepreneurship - starting a business while at university

The graduate jobs market is tougher than ever. Many students are wondering whether or not their degree will help them find employment at all. It is therefore perhaps unsurprising that there is a growing sense amongst those in their early- and mid-20s that, in order to secure the best future for themselves, they need to take matters into their own hands.

New research from Simply Business suggests that the proportion of small business owned by individuals aged between 18 and 25 has increase by some 4 per cent in the past three years. We may well be witnessing the birth of a new generation of young entrepreneurs who, put off by the state of the jobs market, are instead choosing to start their own ventures.

Many of these individuals are starting businesses while at university – often using their student loan as a source of finance. If you are considering this course of action, you need to think carefully about the potential implications, not just for your career but also for your degree.

Starting up

Starting a business is an expensive prospect. Securing funding to get your venture off the ground is a difficult task, particularly in the current economic climate. It is unsurprising, therefore, that many young entrepreneurs are tempted to use their student loan as a source of finance.

There is a lot to be said for this course of action. Your student loan is about as cheap a loan as you are likely to get. Even better, you don’t have to start paying it back until you are out of education and earning money.

There are, however, a few important considerations that you should bear in mind before spending your loan starting a business. To begin with, you should remember that the purpose of your student loan is to help get you through university. How will you afford to finish your course? Many people simply bank on profits from their business paying their way through the next three years – but, bearing in mind that the average business takes some two years to break even, this might not be the most sensible financial plan.

You should also remember that your student loan is just that – a loan. It is not ‘free money’, no matter how much it might seem like it when it arrives. You will eventually have to pay it back, with interest, so it is important that you do something worthwhile with it.

Time constraints

As well as the obvious financial constraints with which you will contend, you will also rapidly realise that your time is at a premium. Running a business is a full-time occupation, and you will need to think carefully about how you juggle this with your university commitments.

Many courses only require eight or ten ‘contact hours’ a week. But this is not necessarily an accurate measure of the amount of work you will be required to put in. When you are not in lectures or seminars, you will almost certainly be expected to do your own reading and research. It will take excellent organisational skills to juggle your university work and your business obligations.

Tax concerns

There is a common misconception that students are not required to pay tax. This is not the case. Students pay tax just like everyone else; if your earnings exceed the personal allowance, you will have to pay.

As a business owner you will almost certainly have to complete and return an annual Self Assessment tax return. You will then probably have to pay any tax you owe directly to HM Revenue and Customs. Click here for more information on completing your Self Assessment or visit

Remember the basics

Throughout the process, you should remember that setting up a business while at university is, fundamentally, no different to setting up a business at any other stage of your life. You will assume a range of important and often onerous responsibilities, and these cannot be avoided. Taking on work that you do not have the time or resources to complete is absolutely the worst possible course of action; it will leave you with dissatisfied customers, it will cause you untold stress, and it will damage your degree.

It is therefore vital that you think carefully about whether or not you have the time, money, and expertise that you need before you begin the process.

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