Ideas? The kids are alright

Ideas? The kids are alright

Converting dreams into a business may have worked for Richard Branson, but, as Peter Baber writes, some youngsters need a little help.

“It wasn’t difficult to get a loan for our business at all. I can appreciate it might be difficult for start-up companies, but not for one with our kind of track record. Probably next year we will go back to NatWest to get a much bigger one as well.” If this sounds like the brash voice of a young entrepreneur, you would be sort of right. Robin Lihou is the owner of Visiosound, a company based in Luddendenfoot that specialises in supplying PA systems and other audio and technical material to recording studios and special events.

It’s been going three years, and in that time has tripled its turnover. We are forever being told about the need to engender young entrepreneurs at school. But in a lot of other magazines, the “young” entrepreneurs we get to hear about are already in their 30s. We rarely hear about people who are really just starting out. People like Lihou, because he is only 20 and he started the business when he was only 17. He must be especially committed, because he gave up a place studying mechanical engineering at Imperial College London to keep the business running.

“The business really fell off,” he says. “I had tried to have someone working for me, but I realised I couldn’t really manage that from London.” So what inspired him to give up a place on a course that is central to an institution that vies with Cambridge for being the top university in the country, just so that he could carry on running a business, with all the uncertainty that brings? The answer, in his case it seems, is that running a business is in his blood. Visiosound, which used to be called LS Audio Tech, was born when he started selling guitar strings and cables when he was in the sixth form at Calder High School. So far, just like any other teenager.

“It was an eBay shop selling guitar strings and cables,” he says. “It progressed from there, part-time while studying for A-levels.” Today he employs two people, and has moved the business into a bigger showroom.

“We still sell a lot of stuff through eBay,” he says, “and through our website, although we are starting to get repeat business. We have a 20,000-strong customer database, and can take orders over the phone.” He is also starting to move in higher circles. This summer Visiosound provided all the PA systems for an event to publicise the new film of Gulliver’s Travels, starring Jack Black, at Blenheim Palace in Oxfordshire. The Hollywood star himself was present – not bad for a little company nestling at the bottom of the Calder Valley which still only has a turnover of £145,000.” He says he enjoys running his own company because of the freedom it gives him – to work when he wants on what he wants. And that’s a common theme among the young entrepreneurs we spoke to. Although sometimes their reasoning might not be what you expect. Mohammed Patel, for example, who currently has responsibility for two businesses, a nursery retailer and an ethnic food supplier, says he likes working for himself because he is hopeless at getting out of bed in the morning.

“I’m a bit of a lazy guy, and I want to wake up late,” he says. But the 19-year-old continues: “It’s all very well getting a guaranteed wage in employment, but you have to be there at 9am. With my job, the beauty is flexibility. The drawback of course is that you have to stay on long after 5pm.” It has to be said that both men have had a helping hand from their parents. Before he got the bank loan from NatWest, Lihou was lent £4,000 by his father, who works for a food wholesaler, to get the business started. As a result his father – who also does all the company’s accounts – now has a 20% stake in the business.

“But my parents don’t have any pension of their own,” says Lihou, “so this was their way of getting one.” Mohammed Patel has been rather more fortunate in that the two companies he works for, Kiddie Kingdom and MB Foods, both based in Dewsbury, have been run for much of the past two decades by his father Hanif. In fact he first came to work for the business when he was 16 on a work placement. He admits that at the time he was too lazy to look for a work placement anywhere else. But he has transformed both businesses since then. With Kiddie Kingdom, he has taken much of the business online, a project he has run mostly single-handedly, and which has added £1m to the shop’s turnover, taking it, Patel says, to be in the top ten independent nursery retailers in the UK.

“My dad had fire when he was young,” he says. “He would make things work. But when I arrived at the shop I thought it looked like Aladdin’s den. I realised we could be better. Within a week I had rearranged the shop.” He says the employees, many of whom are considerably older than him, didn’t like the new arrangement, because it involved doing more work. But when they saw how much it improved the business they began to respect him – and that was crucial for someone who could easily be seen as just the proprietor’ son.

“We were all bricks and mortar three years ago,” he says, “and now we are 90% online. How would we have survived if we hadn’t gone online?” Kiddie Kingdom accounts for around 80% of all the business he does, but he has also devoted some attention to the other business, MB Foods. For 15 years it had done nothing but import one brand of samosa pastry. Patel was quick to realise that if the business was to have any future at all, he would have to broaden the product range, so he went out and sourced a new product – Al Alwani dates.

“People think that dates are dates,” he says, “whether you brand them or not. But traditionally they have always been shrinkwrapped. That doesn’t do justice to dates, which have so many health benefits, which we have listed on new marketing material I have devised. I don’t want to be a one product company.” Even with their parental connections, however, both Lihou and Patel have grand ambitions for their companies.

“In five years I would hope to have a £1m turnover and be making a nice living,” says Lihou. “I could possibly think about selling on the business too.” Patel, who says his father has now handed more control of both businesses to him, says he wants Kiddie Kingdom to be within the top three independent nursery retailers in the UK within a decade – although he has no plans to sell.

“There’s an online business that’s bigger than us called,” he says, “but I think there is nothing special about it. They have done everything we did, it’s just that they started earlier.” In fact, towering ambition is one thing that seems to unite all the young entrepreneurs we spoke to.

Matthew Postlethwaite, aged 19, originally from Cumbria but studying in Huddersfield, is currently engaged in launching a business in the drinks sector. But he also has an interest in running bars, an ambition that has not been diminished by his best friend losing all his money on just such a business.

In fact, Postlethwaite only missed out investing in the business with him because the bank wouldn’t give him a loan. “I have my own target that by 25 I will be running the best bar in this country, and by 35 the best bar in the world,” he says. He likens such an attitude to doing Art A-level.

“I got a U in it, and my teacher said I was rubbish, but I still thought I was really good.” Similarly Josh Donaire, an 18-year-old who has already launched two businesses on eBay that made enough for him to buy his first car and pay the first two years of car insurance, is currently working up a plan to get into discount retailing. Chris and Phil Gentry, owners of Honest Freddie’s a Yorkshire-based discount retailer, have been so impressed with the online work he has done for them that they have given him a third share of any business they make on the internet.

“At the moment there are only five to six lines online,” he says, “but we hope to make it >> up to 50 lines soon.” He says the brothersare not worried about him having wider ambitions. Like Lihou at the start, our entrepreneurs seem to have had little problem with the banks they might approach for funding either. Patel says the banks “love me to bits”.

“They look after me,” he says. Ashleigh Kelly says the same. The 21-year-old has taken a year off from her textile design course to launch, a website making recycled jewellery, clothing and accessories from recycled material and offering a discount for people who send in their discarded jewellery and textiles, with her 23-year-old friend Kelly Aldred. She says they found opening a business account with Santander very easy. All she had to do was present a business plan. But then she says the more sociable parts of running a business, in particular running customer questionnaires, is what has come easy to her.

“Not all business is common sense,” she says. “But the marketing side is common sense, and your personality comes across with it. You have to be sociable, outgoing, and friendly.” Then how do the suppliers and contacts these people deal with react when they find out how young they are? Patel thinks age has played to his advantage.

“There were lots of big manufacturers I took advantage of because they knew I was young and they were more merciful,” he says. The one problem most of our young people say they still haven’t mastered is delegation. Even Lihou, with his two employees, finds it difficult.

“It’s hard getting people to do stuff the way you want,” he says. “And we will be getting another person by September.” It is to help such people solve this and other issues that the University of Huddersfield has introduced its enterprise development course, a two-year course during which students are expected to get a business off the ground. The first students on the course, who include Patel, are due to graduate this summer. The star turn in the curriculum is TV entrepreneur Theo Paphitis. He comes to the university to deliver a masterclass and the students, who also include Donaire and Postlethwaite, have to pitch their ideas to him. Although she is not strictly part of the course, but is instead doing an entrepreneurial version of a sandwich placement, Kelly pitched her idea to Paphitis too.

“It was really nerve-wracking, but he liked it,” she says. John Thompson, professor of entrepreneurship at the university, says the course is just as much about sharing ideas as being taught.

“It has to be small enough so everybody knows and trusts everybody else to share ideas,” he says. You have to wonder, however, why such young people who are so keen to set up in business want to go to university anyway. After all, thanks in part of the track record of people like Richard Branson and Alan Sugar, it has long been held in this country that entrepreneurs and academia don’t mix. Thompson says this is changing. As the number of school leavers going to university rises – 10% when he was a student, 43% now – students feel they are missing out if they don’t go, he says. And if nothing else, the course will teach them to prepare themselves for self-employment ahead. After all, with the ratio of people going to university rising that quickly, it is that much more likely that graduates in general will enter jobs where freelancing and self-employment is the norm.

“The course is very valuable for people who want to be entrepreneurs but are not ready to be so at 18,” he says. Although he admits the course is a distraction, Donaire says: “The course will help me get more ideas than might have been the case if I was just standing on my feet.” Even for those not on the course, academia has again beckoned. Last October Lihou went back to university, doing mechanical engineering again, but this time at Nottingham.

“I might do something with mechanical engineering,” he says. “I have always been into design, so I might combine the two.” At least this time the business is only an hour or so away.