• Dionne Smith, Director DPS Brand Consultancy Ltd

The Real Cost of Starting & Maintaining Your Business: Part 1 – Starting Up

If you look at most social media adverts from internet marketing experts, it’s not difficult to get caught up in thinking that stating a business is easy and very low cost. Whilst it’s not necessarily untrue that getting your business online can be a minimal outlay, there are many costs that new entrepreneurs don’t consider when they start-up.

In part 1 of this article we are going to look specifically at your potential start-up costs and then in part 2 we will move on to maintenance costs particularly in relation to running your business online.

Start-up costs vary for every business – but they can include:

  • Premises and associated costs such as utilities, phone and internet charges

  • IT, office furniture and other equipment such as laptops or PCs, printer, mobile phone

  • Purchase and storage of stock

  • Branding, marketing and website development

  • Business stationery and office supplies

  • Website development

  • Postage, travel and transport

  • Insurance and other professional fees such as legal and accountancy costs

  • Employee wages and other costs such as National Insurance and pension contributions

  • Professional development and training for yourself and your employees

The biggest of these operating costs are usually premises (rent and rates) and staff (wages, tax and National Insurance), but even if you are running your business on your own, working from home, many of these costs will still apply.

According to a 2016 article in Money Wise, the average cost of starting a business in the UK is £27,520, according to a survey of 850 small and medium-sized businesses.

The research also highlighted which industries need the most cash to start a business, and which need the least, with leisure proving the most expensive and design the cheapest.

Average amount needed to start a business:

  • Leisure £79,137

  • Motoring £64,948

  • Manufacturing £45,325

  • Catering £43,608

  • Legal £37,755

  • Media £36,912

  • Architecture & Building £31,368

  • Fashion and Beauty £30,981

  • IT £28,473

  • Arts & Culture £24,332

  • Engineering £22,406

  • Professional Services £21,049

  • Education £19,479

  • Travel & Transport £18,929

  • Utilities £17,962

  • Telecoms £16,375

  • HR £11,938

  • Healthcare £11,034

  • Finance £7,525

  • Marketing & Communications £6,875

  • Design £4,425

The research also highlighted:

  • Regardless of location, nearly one in three SMEs across the country agreed that funding was the biggest challenge they faced when starting out (30%), with over half saying banks are not business friendly (52%).

  • To raise funds to set up their business, nearly half had to use their own savings (42%), and almost a quarter sought financial help from friends and family (24%).

  • Once up and running, the average amount borrowed in a 12-month period by UK SMEs was £75,408, with the main reasons cited to buy equipment (40%), or for expansion plans (38%).