Starting your own firm costs £17k, study finds

Want to be your own boss? A new study has found that British SMEs need an average pot of £17,095 for working capital...

by Michael Northcott
Last Updated: 19 Aug 2013

One of the biggest hurdles to getting your own firm off the ground has traditionally been cash. But according to a new study, from O2 Business, you’ll need an average of just over £17,000 in your first year to get started. 

The study, which surveyed 518 small businesses, found that almost half (48%) of businesses now rent or lease goods and equipment instead of buying them to reduce upfront costs, and around 46% see paying monthly for essentials as the future.

The most popular things to rent or lease were phone lines, office space, photocopiers and franking machines, water-coolers, cars and vans, smartphones, coffee makers and IT equipment. So basically everything.

Interestingly, and encouragingly for anyone wanting to get started, 24% of thos surveyed said that they had got started with no cash whatsoever. Almost half (49%) said they had launched with as little as £2,500. 

Paul Lawton, general manager of O2’s small to medium businesses division, said: ‘Small businesses still struggle to grow due to a lack of funding, but the good news is that many looking to start up have a number of alternative options open to explore – such as leasing – which can work our far more cost-effective in the long run.’

We’re not sure that in the long term it's always better to rent rather than buy – even if most assets depreciate, some rise in value and can be worth stumping up for. But as a low-cost start-up model, it seems that pay-as-you-go has got a fair bit going for it… 

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