Start-up costs for entrepreneurs 'can be significant'

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Start-up costs for entrepreneurs 'can be significant' (image credit: iStock/JohnDWilliams)

Everybody knows that starting a new business can be expensive, but until now the actual costs involved in such an ambitious undertaking have never been truly quantified.

However, all this has now changed, with the publication of new research from Lloyds Bank highlighting the typical costs to entrepreneurs of embarking on a new sole venture.

According to the bank's findings, the costs for one-in-three new business starters will be higher than they originally anticipate, with the average cost of starting a new venture standing at £12,601.

Property was shown to be the single-largest contributor to these expenses, taking up 25 per cent of all start-up capital. Meanwhile, transport and IT requirements were shown to come in at 20 per cent of costs.

However, the research went on to show a divide between the genders in terms of start-up expenditure.

Female respondents were shown to be far more frugal in their approach to launching a new venture, with the costs involved in starting a business for female entrepreneurs impressively over one-third lower than their male counterparts. Men spent on average £13,551 in the launch of a new venture, compared to £8,031 for women.

Moreover, the areas of expense that were prioritised by the sexes were also different, with men tending to pay more on IT and equipment outlay, while women spent more on property and loan repayments.

Overall, three-quarters (76 per cent) of respondents stated they sought the advice of a financial professional before starting their new business.

Offering some helpful recommendations for anyone considering the launch of a new venture, Jo Harris, managing director for 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.

"Think about what is really important. Many of the most successful businesses started at the kitchen table or in the shed at the bottom of the garden so consider whether you really need new premises at the start.

"Advice from friends and family is important but your bank can support you with specialist guidance and tools to help you write a detailed business plan and prepare a budget to get you off on the right footing."