Launching a small business in the UK typically requires a surprisingly modest initial investment, with new research revealing the average start-up cost is less than £6,000. A study commissioned by Santander, which surveyed 500 small business owners, sheds light on the financial realities and personal sacrifices behind Britain's entrepreneurial spirit.
The Financial Tightrope for New Businesses
The journey to business ownership is often a precarious one. The research found that a significant 80 per cent of founders admitted they were walking a tightrope with their budgets during the early stages. For many, turning a profit was a distant goal, with 37 per cent failing to break even until at least three years after launching. A common pitfall was underestimating the capital required, a mistake made by 45 per cent of those surveyed.
To get their ventures off the ground, entrepreneurs had to be resourceful. Many tapped into personal savings (27 per cent), took out loans (14 per cent), or even relied on family for financial support. A daring 26 per cent left stable jobs to pursue the high-risk, high-reward path of running their own company.
More Than Money: The Personal Cost of Entrepreneurship
The price of starting a business wasn't solely financial. The study highlighted the profound personal sacrifices made by founders. A striking 45 per cent sacrificed their social lives, while 40 per cent gave up holidays in their business's infancy. Further cutbacks included forgoing new clothes (27 per cent) and, for 13 per cent, even skipping birthday presents for family members to ensure every penny was invested in their company.
This financial pressure was compounded by a lack of confidence, with 19 per cent admitting to feeling unsure about financial planning in the early days. Overall, more than half (55 per cent) stated they could not have started their business without financial help from others.
Supporting the Next Generation of Businesses
In response to these challenges, 85 per cent of business owners are calling for more funding and support for entrepreneurs. This sentiment is echoed by Santander UK, which commissioned the research to celebrate its X Awards for small businesses. Since 2010, the programme has awarded over £1.1 million in funding and support to thousands of UK businesses.
This year's winners, celebrated at a final judged by businesswoman Deborah Meaden, include innovative companies like Aeropod by Muju Earth, Boost Innovations Ltd, and Amparo Prosthetics Ltd. Mike Regnier, CEO at Santander UK, emphasised the vital role start-ups play in stimulating growth and innovation, attracting investment, and creating jobs in the UK.
For those considering the leap, seasoned entrepreneurs advise starting small and scaling gradually (45 per cent), not expecting profit straight away (43 per cent), and, crucially, 22 per cent recommend having a financial cushion before beginning.
