How much does it really cost to start your own business?

Thinking of launching a start-up from your kitchen table? Let's break down the costs

The number of people starting their own business has hit record new levels. So it might be time to finally take the plunge and get cracking on your genius idea for a new app, or opening that boutique, or patenting that design for a kettle that not only makes your cup of tea for you, but brings it to you in bed. But how much does it really cost to start your own business?

Last year, the number of start-ups launched in the UK increased by 4.6% on the previous year, with 608,100 new businesses being created in 2015. With trend-forecasters predicting that we will all be entrepreneurs in the near future, the way we work is changing. True, you can do a lot with just a laptop and a wi-fi connection, but if you’re really hoping to get a business off the ground, you’ll need to break down the costs.

‘Skills, experience, determination and a willingness to learn are all skills required to start a business,’ says Elsa Caleb, financial advisor at the Start Up Loans Company. Here Caleb talks us through how to fund the launch of your start-up:

Start while you’re employed
If you are able to buy items whilst still employed, do so as this will reduce your subsequent start-up costs considerably.

Lease a car
Leasing a car for business purposes instead of buying a car can save you a lot of money in the long term.

Open a bank account
If you are a Sole Trader, consider having a separate bank account from your current account. If you are starting a business as a Sole Trader and you are considering growing your business within the next 2-4 years, consider setting up a limited company under the same name. When you are ready to switch to becoming a limited company it will be a lot easier than having to re-start with a different name because your business name is no longer available. This goes for domain names too.

If you are setting up a limited company, consider setting up a business account in the name of the business.

Top tip: Arrange an overdraft as soon as you open the business account. Where possible, spread your expenditure costs over a 12-month period instead of one-off payments or quarterly, as this helps with cash-flow.

Work from home
1. If you rent your home, you should request permission from your landlord, especially if the type of business that you start is noisy or will increase the number of people visiting the premises
2. Ensure that you have the right type of insurance policies in place
3. Consider dedicating an area or a room (if you have the space) solely for business purposes
4. A portion of your utilities should be assigned to the business, if it is relevant

And now for the figures…

Approximate start-up budget when working from home:

– Personal survival budget (identify your monthly living costs)
£1,000 per month
– Class 2 tax contributions (Class 4 at the end of the first year)
£2.80 per week
– Personal Computer £500
– Mobile phone £20.00 (per month)
– Insurance policies (professional Indemnity, car, home etc.)
£130 per month
– Marketing £250
– Equipment £2,800
– Website £1,500
– Domain names £75
– Professional membership fees (Legal &/or Accountant) £200 – £500
– Professional Body fees £200
– Travel £200 per month

Approximate budget when moving to Business Premises:
– Lease: 9 years (Get-out clause 3 years)
– Deposit: £1,710 (3 months)
– Rent: £6,840 per annum (£570 per month)
– Refurbishments: £6,000
– Equipment: £5,000
– Signage: £2,000
– Marketing: £950
– Stationery: £500

– Hiring staff: National Living Wage adult £7.20 per hour

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