Wealth Check: 'I am setting up a gallery but I don't want a large loan'

Hannah Stoney, 22, a fine art graduate from Staffordshire, wants to set up her own business, but is concerned about the initial costs of making such a big investment.

"I am about to set up a gallery space and craft shop in Cheltenham, Gloucestershire, which is where I have lived and studied for three years," she says. "But my main financial goal is to make this happen without having to resort to large business loans."

Hannah works at a restaurant in Cheltenham on weekends. "At this stage in my life I feel more able to take financial risks, as I have no dependants or mortgage and only a small student loan."

Hannah has seen two financial advisers in the past but has had two very different experiences: "The first adviser was quite patronising and made several comments about my age in correspondence ... I felt that this was very unprofessional and didn't help me at all, but the second adviser gave useful investment suggestions."

Case notes

Income: £300 a month
Savings: £8,500 in Isas; £15,000 in premium bonds

Offering advice this week are Alex Pegley of Calculis, Lorreine Kennedy of CareMatters and Danny Cox of Hargreaves Lansdown...

Hannah's enthusiasm will stand her in good stead when it comes to making tough business decisions, says Pegley. "She has managed to accumulate modest savings and is managing her student debt well," he says. "However I would recommend that Hannah leaves the student loan intact for as long as possible because the interest rate on the debt is very low."

He says Hannah is right to seek financial counsel at this stage to plan necessary start-up expenses.

Business planning

"I would urge her to speak with the Prince's Trust and Business Link, says Kennedy. "The Prince's Trust provides a wealth of information and practical help to those under the age of 30, offering advice on business and marketing plans, business training and sometimes even provide start-up grants.

"Business Link offer advice to anyone in business. Once Hannah starts her business it can be tough to find time to access outside help, so making the most of the free workshops offered by Business Link is advisable as these will provide her with practical suggestions to help generate and boost income.

"Hannah needs to put together a business plan," advises Cox. "This doesn't need to be volumes of pages, but it does need to be thought through carefully. Her business is likely to have several strands, ranging from higher volume, lower profit margin sales (art materials), to low volume, high profit sales (paintings)."

A good business plan should contain simple turnover and profit forecasts together with cashflow forecasts and is something which all business owners should become well accustomed to negotiating with care. "The banks can also offer a surprising amount of help and 'start-up' advice," adds Kennedy. "Barclays, for example, offer a free legal and accounting session with an accountant or lawyer and Hannah should take advantage of every bit of free advice."


Hannah's main aim is to set up her business without having to resort to borrowing large sums of cash, though this is not always plausible, and she will need most, if not all of the money available to her to set up her business. "Sometimes borrowing is a necessary evil, as the initial costs of setting up a business are almost always much higher than anticipated," points out Pegley.

All three advisers agree that Hannah should arrange for a good-sized overdraft facility on her business bank account as a "safety net" should she need to locate emergency funds.

Savings and protection

Hannah will need to have sufficient money to take on the lease of a shop and pay the rent. "In most cases the shop will be a bare shell," says Cox. "She will need to pay for fixtures and fittings which could run into several thousand pounds, as well as further expenses such as insurance, a till and staffing."

Should she have access to any spare cash, Pegley suggests that Hannah keeps an emergency fund of £1,500 in cash ISAs, so that that money is easily accessible if needed.

"Finally, all new business owners should be aware that it can take two or three years to achieve profitability," warns Kennedy. "Once the business is up and running, Hannah should become involved with social networking sites such as Ecademy or Linkedin as the online sites will provide an opportunity to voice business queries and converse with like-minded people."

For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email wealthcheck@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
The Etihad Stadium, home of Manchester City
premier leaguePlus all the build-up to Man City vs Chelsea and Everton vs Palace
Polly Borgen at the Tribeca Film Festival in 2012
peopleThe Emmy award-winner starred in Cape Fear, the Sopranos and Desperate House Wives
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam