Many people ask “how much does it cost to start a business”. New research suggests it may be less than you thought
Starting up a new business may be more affordable than many entrepreneurs realise, according to new figures. A recent survey conducted by PeoplePerHour has revealed that the average cost of starting a business in the UK is just £312 – less than the average weekly wage of £442.
Similarly, just over three-quarters (76 per cent) of small businesses launched with less than £2,000 of start-up funds. Although the initial set-ups may be humble, as 86 per cent of respondents saying they initially ran their business from a spare room, many grew into successful enterprises.
These figures contradict the misconceptions of many Britons, that launching a business is a costly, risky endeavour. Rather, the research shows that “starting a business is now most definitely open to anyone. You don’t have to be from a wealthy family, have a background in finance or have started on your entrepreneurial journey while in your teens”, said Xenios Thrasyvoulou, chief executive officer of PeoplePerHour.
He added: “The belief that it takes thousands of pounds of start-up capital to launch a business is simply not the case any more. A large number of micro-businesses are launched from home offices with very limited funds.”
Founders of micro-businesses can keep costs down by utilising freelance staff and using a spare room as an office, at least in the early stages. Additionally, many entrepreneurs minimise risk by launching a business while employed. Further business start up advice suggests that entrepreneurs should save up the money to launch a business (which should take less than a week’s time), rather than taking out loans from family and friends.
Most adhere to this rule – 76 per cent of respondents used personal savings to finance their business venture, while only 20 per cent received support from relatives and loved ones. A further 13 per cent put their redundancy money to good use, utilising it to start a new enterprise. A small percentage funded their endeavour with a bank loan, grant or outside investment.
Mr Thrasyvoulou claims there has never been a better time to start a business. He said: “For most businesses, the first year is generally the make or break year, and many companies fail because they have cash flow issues. But now big expenditures … can be controlled … Starting a business from scratch is no longer the daunting prospect it once was. The internet has given everyone access to a global marketplace of opportunities and expertise – and that should encourage a lot more people to give it a go.”