New business owners surprised by average £12,000 start-up costs
Female business owners spend an average of 59% less than men on starting up and are more likely to prioritise property and loan repayments
New research from Lloyds Bank has shown that the average cost of starting a new business – one that isn't home-based – is £12,601.
32% of new business owners found the financial cost of starting up to be higher than expected, with only 6% claiming it to be lower than their budget. At 42%, business owners between the ages of 18 to 34 were most likely to find costs higher than expected, compared to 30% of those older than 35.
Property accounts for the largest share of start-up costs at 25%, followed by spending on transport and IT (both 20%). Together, the cost of premises (£2,987), vehicles (2,440) and technology (2,426), equate to an average of 60% (£7,853) of start-up costs.
However, female entrepreneurs spend an average of 59% less than their male counterparts when launching a business – at £8,031 for women and £13,551. Men are more likely to prioritise IT equipment in their budget (£3,149 to £470) and websites & marketing (£2,570 to £1,281), while women favour property (£3,777 to £2,694) and loan repayments (£1,703 to £393).
76% of new business owners sought advice before they started their business, but were more likely to use friends and relatives (41%) or former colleagues (30%) than an accountant (19%) or bank (11%).
Jo Harris, managing director of Lloyds Bank Retail Business Banking, said: “When you’re starting up a new business, don’t rush into rash expenditure that you may later regret.
“Planning and research is essential, so 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.”