How much money do you think it needs to kickstart a business? A couple of thousands? Maybe go straight into five figures? Wrong. According to a new report by cloud accounting software provider FreeAgent, you probably don't need any money.
The company surveyed micro-business owners and freelancers in the UK, and according to the results – 44 per cent of business starters required no funds at all. Almost the exact same percentage (43 per cent) used their personal savings, and that was enough. Four per cent borrowed money from friends or family, two per cent used either credit card or bank loan, while just one per cent used Government assistance.
But starting the business is not the problem – surviving is. More than four in ten (41 per cent) said they didn't make enough money to cover the costs, or had 'only just' made enough to cover them. Starting a business is also tough on free time – 44 per cent weren't able to take a week off in the last six months. “A major barrier for people thinking about starting a business can be the costs involved.
They think they’ll need to spend a lot of money from the outset on building the right infrastructure for their business, and the idea of applying for bank loans, grants or other financial assistance is very unappealing,” said Ed Molyneux, CEO and co-founder of FreeAgent.
“But the reality is that the majority of UK micro-businesses don’t actually require this kind of investment from the outset. We’ve found that most of them are either self-funded through the business owner’s personal savings or simply don’t have any start-up costs - and that’s a trend that should give confidence to anyone contemplating self-employment.
“However, it’s important to bear in mind that actually running your own business can still be a tough reality. Many people are only just making enough to cover their costs - or not covering them at all - and don’t even have the confidence to go on holiday.
“It’s in those areas in particular where we believe micro-business owners need help and support. By understanding their finances more clearly, we believe they will be better placed to spot new opportunities to improve their cash flow and gain enough confidence to take a well-deserved break from their business.”
Image source: Shutterstock/Chinnapong