The price of starting a new business has come as a shock to new entrepreneurs in Britain, as a report from Lloyds’ Bank revealed that the average cost of starting a business now sits at £12,601.
According to the study, almost a third of 18-34 year olds who recently founded a new business admitted that outlay in costs was higher than anticipated, while just six per cent expected to take more of a financial hit.
Commenting on the analysis, managing director at Lloyds Bank Retail Business Banking Jo Harris advised new entrepreneurs to “think about what is really important” when starting a new business.
“Spend wisely and keep costs low. The more you spend upfront, the more money you’ll have to generate in the crucial first months of being in business,” she said in a statement.
Gender disparity was also highlighted in the study. A spending difference of almost 59 per cent was revealed between male and female entrepreneurs on startup costs, with total averages of £13,551 and £8,031 respectively.
The spending gap was found to be starkest in IT expenses – female business owners spent just £470 compared to the £3,149 invested on IT equipment by male counterparts.
The latest insight into startup costs indicated that property was the single largest contributor to startup costs, accounting for 25 per cent of total expenditure. Premises were found to be more expensive than transport and IT costs, each representing 20 per cent of the cost share.
Harris advised new entrepreneurs to carefully consider the need for a dedicated property for their business: “Many of the most successful businesses started at the kitchen table or in the shed at the bottom of the garden so consider whether you really need new premises at the start.”
The bottom line from Harris was that, while financial advice from friends and family remained important when beginning a business venture, “your bank can support you with specialist guidance and tools to help you write a detailed business plan and prepare a budget to get you off on the right footing”.
Starting a new business? Find out how to produce a comprehensive and adaptable small business plan.
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