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This month in Lincolnshire business, we introduce a young entrepreneur — keen to help his enterprise flourish — to a group of business advisors. Joseph Hayat is just 17 years old, but has already run two businesses with his current enterprise, his own airline, really taking off! What advice can the county’s top business advisors offer?
Jets, limousines, top businesspeople, celebrities and, of course, making money. It’s a lifestyle to which many young people casually aspire, but for determined 17-year old Joseph Hayat, a life spent running a successful business may come sooner than most. The headline feature here is that despite not being old enough to marry, drive or vote, Joseph has already begun operating his own business and not just any business, his own airline.
Joseph was born in Peterborough in 1993, when the rest of us were watching Jurassic Park at the cinema, when Ford was unveiling its Sierra replacement, the Mondeo, and when Prime Minister John Major launched his Back to Basics campaign to promote numeracy and literacy in schools. Moving to Sleaford in 1998, Joseph established his computer consultancy business, Zeal Wave, in February 2009, moving into dedicated offices in Wellingore in December 2009.
Having been elected to Youth Parliament in March 2010 — one of just 600 in the country — representing West Lindsey and North Kesteven, Joseph decided to sell his shares in Zeal Wave, which is still trading under the directorship of his then business partner.
With a long-standing interest in aviation and having taken flying lessons at Humberside International Airport, Joseph then turned his interest to the aviation industry, and set up HIAir, his international airline, which began trading in August 2010.
Lincolshire Business: The Company
Launching an airline seems a huge and perilous undertaking, but Joseph has a lean business model in the sense that he uses external air operators and thus doesn’t need to run any aircraft himself — Joseph uses freelance workers instead of employing staff and has access to executive vehicles via his chauffeur partner Style-Arrival
As such, the entrepreneur has just £100 overheads per month — remaining in the Zeal
Wave offices for the duration of his tenancy — and no cash flow issues. Beginning his company with just £200 of capital, and with the average charter of £3,000, Joseph needs just over two flights a month to meet the VAT threshold of £70,000 and three flights a month to turn over £100,000 a year.
Joseph can provide surprisingly cost-effective air travel, for business meetings to London, travel to major European Cities, and for corporate hospitality, with groups of up to five passengers most common.
Joseph can provide, for example, flights to Rick Stein’s Seafood Restaurant in Newquay, flights to Turnbury in Ayrshire for golfing breaks, shooting trips to Scotland, and business trips — one major UK retailer, for instance, recently enquired about a flight for a one day whistlestop visit to each of its Scottish branches. Charters tend to range from £2,500 to £6,000 and can include executive car transfers and even private security.
The entrepreneur also plans to launch his own ‘Jet Club,’ which addresses the shortcomings of similar schemes offering flights with 24 hours notice and guaranteed 25 hours of flying time using a network of aircraft for an initial outlay of around £100,000.
Joseph’s Aza Club scheme will instead create a pay-as-you-go air travel for members in order to provide a 2.5% discount on all charters and take advantage of an industry-wide ‘empty legs’ scheme —aircraft are never empty and are therefore funded by both inbound and the subsequent outbound flight — which reduces the cost of a charter by around half.
Lincolnshire Business Advice Courtesy of Lincolnshire Pride’s Experts
Joseph’s business has been trading for just one month at time of writing, and quickly needs to establish customers who will use the company for regular charters.
To really kick-start his business, we selected some of Lincolnshire’s key businesspeople to provide Joseph with some advice in the style of TV’s Dragon’s Den. Along with Dragons Simon Beardsley of the Lincolnshire Chamber, James Sewell of Wright Vigar, Caroline Cropley of Chattertons Solicitors and Rachel Martin of Purple Angel Capital, we met at one of Joseph’s hubs with a JetProp aircraft and Mercedes E-Class vehicle provided by Ben King of Style Arrival to grill the young entrepreneur on his business plans...
Creating Business Plans and Seeking Investment… Advice from Rachel Martin, Purple Angel Capital
It’s hard to put into words my initial thoughts when I was asked by Lincolnshire Pride to join a ‘Dragon’s Den’ style line-up to meet with a seventeen year old entrepreneur with his own airline… I seem to remember that my first reaction was that he was going to be some sort of precocious, spotty little ‘erbert with grandiose ideas and no commercial awareness… how wrong can you be!
After spending only a matter of minutes talking to Joseph Hayat I realised that all the stereotypes regarding 17-year old boys and business would have to be thrown out... Joseph really does re-write the book.
He is knowledgeable without being pretentious, commercially aware in more spheres than just his own and shows a knowledge of the world and life-skills far beyond his years.
From a business point of view it certainly helps that Joseph doesn’t look seventeen; well-dressed, well-groomed, you’d more likely place him in his early twenties — and his conversation certainly doesn’t give away his relative youth and inexperience. Having had the chance to chat to Joseph there are a few questions we covered which I would like to respond to now.
Q. Do I need to have a business plan?
A. Yes! Everyone with an idea that they would like to take forward needs a business plan, but you need one more than others; your youth and the novelty of your knowledge and ability at such a young age will only take you so far. Serious businesspeople will only take your plans seriously if you can demonstrate what you intend to do with solid, hard facts.
You will need to show that you can not only clearly articulate what you want but have the business acumen to create the paperwork that will get you in front of decision makers and be received favourably.
Q. Could I get Business Angel funding?
A. I see no reason why one of our Angels wouldn’t be willing to invest in you but I would ask why you wanted any funding in the first place. At the moment you are a pretty self-contained business with no need for any additional input that I can think of but I know that you really want to ask if you could buy your own aeroplanes... my answer would be a resounding ‘no.’ At this stage you’re better off buying in the services you need and letting the owners take responsibility for maintenance, depreciation of assets and capital tie-up.
Angels have money but they are a shrewd lot and won’t fund such large capital purchases without a very good reason. When you have succeeded and built your own airline network and you have the money burning a hole in your back pocket, then you can go and buy as many aeroplanes as you like!
Q. They say its lonely at the top… what do I do if I need help?
A. Just ask! There are plenty of us out here willing to take your questions and help you through. You are certainly not alone and if we don’t know the answer we can usually find someone who can help you. When we met up you were surrounded by some pretty good ‘Dragons’ so I’m sure between us we will be able to come up with what you need.
Commercial Liability and International Law… Advice from Caroline Cropley, Chattertons Solicitors
When I heard about this feature I was instantly intrigued and wanted to find out more. Joseph’s profile sounds more like the plot of a Hollywood movie, than the profile of an average 17 year old. When I met Joseph however, I was instantly struck by how grounded, confidently assured and professional he was, attributes that are essential to any successful businessperson.
As a corporate commercial solicitor, I am always interested to hear real-life stories of businesses; What makes them work? What drives the people behind the business? What are the stresses and strains of the business?
Knowledge of this kind is crucial to enable me to give my clients the best advice possible. With this in mind, I am delighted to advise Joseph.
Q. Am I liable for different legislation in different countries?
A. As your aircrafts will be landing in many a varied country, it’s vital that the terms and conditions clearly state that the contract is to be governed by the law of England and Wales.
By doing this, you’ll ensure that any court action, arising from your contract with either your customers or your suppliers, will be dealt with in the English Courts and will be subject to English legislation. This will help to save a great deal of legal costs and management time, should there ever be a dispute.
It’s important to note that the aviation laws applicable to the destination airport must be adhered to upon arrival, customers must be made fully aware of this.
Q. As I’m chartering the flights, rather than owning the aircraft, am I liable for work carried out by — or problems arising from — the supplier of the aircraft?
A. Currently, you are without a set of written terms and conditions as the business has just started. This does not mean, however, that no contract exists. In a case where there is no written contract, a verbal contract may exist. I would always advise clients, before they start trading, to ensure that they have a good set of terms and conditions drawn-up.
In Joseph’s case, two sets of terms and conditions are required. One which will govern the relationship between his business and the customers, and one which will govern his relationship between his business and the suppliers of the aircraft. The primary purpose of the terms and conditions should be to ensure that Joseph limits his liability, so far as is permitted by law and, where it is not possible to limit his liability, that this liability is transferred to the suppliers, so far as is possible.
As a more general point, I would emphasise the importance of the creation of a ‘brand.’ In a business such as this, quality and image are vitally important. You need to bolster this by creating a strong brand through the use, for example, of a distinctive colour and a carefully thought-out logo.
Over time, with the continued provision of high standards of service and customer care, customers will grow to associate the brand with quality, which will give Joseph’s business a strong position in the marketplace.
Of course, it will become commercially imperative to ensure that any such brand is properly and legally protected.
Networking for Success and Targeting Your Market… Top Lincolnshire Business Advice from Simon Beardsley, Lincolnshire Chamber
Some may say these are challenging times to start a new business, but following the old adage, ‘opportunity often comes from adversity.’
I was delighted to witness the clear drive, passion and enthusiasm shown by this young entrepreneur. Joseph is looking to move into a marketplace that will still be very challenging as potential business clients are generally cautious about expenditure, and the level of income generated by businesses clients may not allow for some of the more extravagant rewards that have been given to staff in the past.
He has, though, focused on the part of the market where he has seen a niche, and where he can be integral in the development of the end product. Joseph will undoubtedly come up against a wide range of challenges which will be brandnew and of varying magnitude. How he copes with these will be key, and whilst drive and dynamism will help to overcome some issues, access to experience can also be invaluable to support, challenge and potentially to avoid costly mistakes.
Q. What’s the most effective way of reaching my intended customers and gaining support?
A. Active networking and participation in network partnerships can help you meet people and build mutually beneficial business relationships. For a start-up business, using the mass media to spread a message can often be untargeted and costly, therefore networking can provide a lifeline for support as well as new business generation.
Networking has a range of benefits to all sorts of businesses and that will continue to develop over time. They include raising your business profile by ‘getting your face — and the brand — known’ and being an active networking partner, generating business contacts such as customers, suppliers and partners, establishing overseas partnerships, comparing and discussing issues of common interest; for example legal and regulatory developments.
Q. Should I consider a mentor…?
A. A mentor can also provide that ‘wise head’ to turn to. They are people you turn to when you need a sounding board or are unsure about the direction to take and often include friends, family, solicitors and accountants; people you know and trust. However, sometimes it’s good to get a fresh perspective on your business related issues and there are professionals who can help with this.
Mentoring will help you to focus on the longer term needs for you and your business and give you the opportunity to evaluate and address your development needs. It can provide an opportunity to unlock creativity to solve problems and explore options to improve performance and grow your business.
Taxation and Accounting… Advice from James Sewell, Wright Vigar
Joseph comes across exceptionally well and his entrepreneurial spirit and enthusiasm will mean that he has potential to be very successful in business. He has chosen a difficult industry to enter — just ask Richard Branson — and the types of market that Joseph is trying to reach will make it a challenge for any successful entrepreneur, never mind a 17-year old A-Level student.
Firstly, there are various accounting and taxation considerations that you should be aware of to give your venture every chance of success. It’s really important to consider the most appropriate trading vehicle for the business — the relevant two in these circumstances are sole trader or limited company — there are various subtle differences between the two from a taxation and commercial viewpoint, and I’d suggest this venture and your circumstances lend themselves to trading via a limited company.
It’s important to explore the VAT treatment of the supplies that the business is making too. VAT was introduced as a ‘simple tax’, but it has evolved into a very complicated one, and you need to be aware of how VAT interacts with the supplies — sales — your business is making. The VAT treatment depends on how the business supplies are organised; destination of flights, number of passengers etc. This is something that needs addressing immediately, as VAT registration can be done voluntarily or compulsory based on turnover thresholds of VAT-able supplies.
Q. What business records should I keep as I begin trading?
A. Keeping neat and up-to-date records is vital for all businesses. Having accurate management information will allow you to make informed business decisions on the information available. It will also assist you in completing your year end accounts and tax returns quickly to give you the most possible time to be aware of liabilities as they fall due. It also has the advantages of assisting with credit ratings, which can be important for new businesses seeking finance — banks have more confidence in businesses with accurate bookkeeping — and avoiding late filing penalties.
Q. How and when will cash flow and profitability issues affect me?
A. Business planning is important here; your business model is attractive for cash flow because customers pay up front, but it’s important, when budgeting, to factor in all costs; professional fees, insurance, sales commissions, wages etc.
Your age means that your living expenses are minimal, but you should prepare a plan that looks to support a living as soon as possible. Market research will assist in reaching sales forecasts, and help with pricing and the overhead cost may be forecast with a greater degree of certainty. The business plan should also be a working document, it should be regularly referred to in order to review progress and evaluate performance.
For the latest on business in Lincolnshire, pick up the newest edition of Lincolnshire Pride Magazine!
Simon Beardsley, Lincolnshire Chamber of Commerce
The Chief Executive of Lincolnshire Chamber of Commerce since July 2004, Simon heads up a team responsible for supporting businesses across Lincolnshire with general advice, representing their interests and networking opportunities.
James Sewell, Wright Vigar
Pan-Lincolnshire business advisors and accountants, Wright Vigar can assist with everything from writing a business plan to thorny tax issues and bookkeeping. James Sewell is a qualified Chartered Accountant and Tax Adviser and has been with Wright Vigar since 2007. Since joining his dedication to clients and his hard working ethos has allowed him to quickly progress from Business Services Manager to Office Director and his latest appointment as a full Board Director.
Caroline Cropley, Chattertons Solicitors
One of Lincolnshire’s largest law firms, established over 200 years, Caroline Cropley is one of Chattertons’ Business Services Team, which deals with startup companies, and specialises in offering advice relating to contract law, terms & conditions and commercial disputes, as well as employment law.
Rachel Martin, Purple Angel Capital
As Lincolnshire’s only ‘Dragon’ per se — pairing good investment ideas with her huge pool of investors — Business Angel Rachel can develop products and business ideas and help to fund their development, gaining significant returns for her investors.
Chattertons Solicitors — Offering a complete legal service and independent financial advice for you and your business. Telephone: 01522 814 600. Web: www.chattertons.com.
Purple Angel Capital — Business Development and Investment
Consultancy. Telephone: 07761 276615. Email: firstname.lastname@example.org.
Lincolnshire Chamber of Commerce — Independent business support, networking & representation organisation. Telephone: 01522 523333. Web: www.lincs-chamber.co.uk.
Wright Vigar — Chartered Accountants and Business Advisors. Telephone: 01522 531341. Web: www.wrightvigar.co.uk.