I read a post at http://www.moneyhospital.co.uk/blog/post/could-you-actually-live-off-60-a-week-20183 regarding living off Job Seekers Allowance (the DOLE) which is apparently £60.50 a week now.
The user comments brought back memories and made me think some people would be better off starting their own business (self employed) rather than being registered as unemployed and claiming job seekers allowance (JSA) or income support (you claim income support if you haven’t paid enough national insurance contributions).
When I started my first business selling adult lingerie and sex toys I’d been out of University for about three years after leaving on medical grounds (chronic back pain, had a back operation earlier this year to fuse discs). I’d been unable to finish my degree in genetics or work due to disability and had been claiming income support on medical grounds (I wasn’t classed as unemployed, I was too disabled to work).
When I decided to start a business I believed you had to register a LTD company or something (I even got the forms from Companies House and everything) and jump through major hoops to start a business (quite funny in hindsight). I couldn’t have been more wrong, I registered as self employed (sent a form in if I recall correctly) and that was pretty much it, I was in business!
At first I thought to be able to survive while running a business I’d HAVE to make a profit, a case of if I didn’t make X £s a week, we wouldn’t eat (had a wife and three sons to support). I was so wrong, in my first tax year (~6 months trading) I lost about £500 (I did accounts from April to April to make accounting simple), that first 6 months was pretty much setting up the business (learning/building a website), but because I was working full time we could claim working tax credits and child tax credits. I forget exactly how much it was, but I’m reasonably sure it was at least as much as income support (I think it was more) and we could still claim housing benefit, council tax benefit etc…
Claiming working tax credits is pretty much a helping hand back into work, you can start on a low wage (no wage) and still get help from the government, over time the idea is you make more money and so need less help (that’s how it worked for us anyway).
I didn’t start a business to claim working tax credits, I hated being disabled and unable to work and the ONLY way for me to provide for my family was to run a business from home/online (I couldn’t sit in a chair for more than 15 minutes). I also hated having to go for incapacity benefit medical assessments to be able to claim income support on medical grounds, (basically incapacity benefits when you haven’t paid enough NI contributions) I used to go in a T-shirt and jeans (big mistake**) and one of the medical assessment doctors said I could work! It took 18 months to go through the appeals procedure and get full income support on medical grounds reinstated, (we had to live off reduced income support) they owed us almost £5,000 in unpaid income support by then!
** If you go to see one of the assessment doctors (any doctor for that matter), PLEASE wear a shirt if you are a man. My wife persuaded me to wear a shirt (plain dark blue shirt with black jeans and soft boots, nothing special) to the appeals medical assessment, I thought she was nuts thinking it would matter (as always I was wrong). I entered the room, the doctor asked me to touch my toes, as always I could barely get passed me knees (I have super tight ham strings). He pulled up the back of my shirt, pushed a few times on the soft muscle tissue of my back (which had never been the issue) and told me I could go! Normally I’d have stripped to my boxer shorts and socks for that type of medical examination and been examined and questioned thoroughly. I was once again disabled according to the DSS doctors!!!! When I’d go to a GP after this I’d wear a shirt and it would be so much easier to get stronger pain medications, I was on 360mgs of di-hydrocodeine a day before my back operation (maximum recommended dose is 240mgs a day).
My First Online Business
I started selling adult lingerie and adult toys because of the markup (amazing markup), I considered selling pellet guns/bb guns before that (less markup). Year 2 (next April to April) I’d sold over £80,000 worth of stock, (I personally took £25K from the business) had to register for VAT and have never looked back. I no longer sell products, I learnt search engine optimization (SEO) and it interested me (not as much as genetics, but I need something that interests me, not just work for money).
I switched my focus from selling products to offering SEO services and have been doing well ever since. To keep sharp I also do affiliate marketing (kind of a money making hobby) and make over $3,500 (~£2,000) a month that way pure profits (£24K a year in my spare time having fun with websites like the one you are reading now :)). I make a $1,000 a month from the AdSense ads you see on this page (ads on multiple sites, not just this one).
Anyway, point is I went into business, self employed and lost money in my first financial year, but because I was working full time I could claim working tax credits and child tax credits. It’s not difficult to setup a business online without having much money, when I sold adult products my biggest expense was a computer (£500), I pretty much broke even on the products I sold first 6 months (I was using AdWords and Overture for traffic in the couple of months I actually had a working site that first 6 months, so didn’t really make much). Year two, which I consider the first year really I’d learnt SEO and was seeing up to 8,000 unique visitors a day for free from search engines (Google loved my site until it banned it for link spamming, yes I made mistakes).
Setup a Business and Can Claim Working Tax Credits and Child Tax Credits
A person could in theory setup a business to make money from affiliate marketing and ad revenue (AdSense) from articles they write.
This article you are reading now will make me a little bit of money each month. People read the article and a small percentage will click the AdSense ads and I get a share of the revenue from Google AdSense (using Google AdSense is free).
This website was very easy and cheap to setup.
A domain can be registered for under $10 a year (Godaddy is good for non .co.uk domains, I use Fasthosts for .co.uk).
I use two dedicated server for my sites (have about 100 domains), costs about $160 a month, but you could pay for cheap hosting ($50 a year or less per domain, not checked prices for ages).
This website uses a CMS (content management system) called WordPress which is free and aimed at bloggers, minor changes (basically remove the monthly archives) and you have a general CMS rather than a blogging platform.
If you want AdSense ads (signup for AdSense, it’s free) like you see on this site I sell them for £10 each at Google AdSense Templates , I also have one Free AdSense ready theme and plan to add more free ones, so if you want to keep it super cheap, you can.
Total cost under $100 a year per domain (you only need one domain). You can in theory start for free by using a free WordPress blog at wordpress.org or Blogspot blog at blogger.com (both completely free, so no expenses at all to start).
Then you write your ass off and learn about search engine optimization (see some of my other sites below) so you can get free traffic to your site (takes a long time with a new site).
Don’t expect to make a lot of money quickly doing this, the idea is to have a business so you don’t have to claim job seekers allowance/income support and can then build up the money you make long term (or eventually find a suitable job). It’s got to look better on a CV to have a period of self employment than a period of unemployment.
Websites not your thing, try something else. Window cleaning, car washing, gardening, dog walking….. the list is endless, choose something cheap to setup and if it picks up consider investing then. Since you don’t need to make a profit to be self employed and be able to claim working tax credits and child tax credits it doesn’t matter if you make a lot of money, all that matters is you work full time.
And you never know you might find a great niche like I did and make a great living out of it. We bought a house 3 1/2 years ago, at the rate we are going it will be paid off in full in another 2 years: would be less, but we’ve been renovating which requires cash.
I’ll try to find the time to research some money details for this article, exact amounts people get on income support, working tax credits etc… under various scenarios so it makes sense: currently an idea at this stage, not a full plan for those struggling to survive on unemployment benefits.
Would love to hear others thoughts on this.