So you’re thinking of starting out on your own? Great. Independent businesses are on the rise, and there couldn’t be a better time to start your journey. But at some point, you’ll need to sit down and figure out exactly how your finances are going to work. And while your exact start-up costs will vary depending on the nature of your business, this handy guide should give you some idea of what to expect.
One of the first things you’ll need to consider, of course, is your ongoing running costs. This is key to weighing up whether or not your idea can work as a viable business. And while this will obviously fluctuate depending on your individual circumstances, we can tell you that the average cost for running a small business in the UK is around £12,000.
So how does this break down? According to research by Lloyds Bank, some 25% of this is typically spent on property, while another 20% is usually allocated to transport costs. After that, 20% goes to IT services, and 35% to other expenses. By looking at this breakdown, you can see ways in which to reduce running costs. For example, a home business that requires no travel could be run for less than the average amount, although other factors, such as postage costs, might push that total back up.
Similarly, many people choose to run their small online businesses from home, reducing the amount that needs to be spent on rent. But if you do this, you’ll need to consider that your household bills, such as telephone and electricity charges, will likely go up, and you’ll need to budget accordingly.
It’s also important to consider how much it will cost to launch, as well as maintain, your business. Typically, successful ventures are the ones that have time and money to spend on marketing and promotion, so you’ll need to consider the cost of everything from branding to social media, advertising and more. In the UK, the average launch budget for a start-up is somewhere in the region of £5,000, so make sure to add this to your running costs.
With that in mind, it’s worth remembering that your first year of trading probably won’t be your most profitable one, as you will have higher costs to recoup. But with a comprehensive business plan and a solid marketing strategy behind you, there are no limits to how much you can grow.
