It may be assumed that lots of cash is needed to start a business nowadays, but many successful entrepreneurs are starting their ventures on a shoestring budget, a new survey indicates.
In a recent poll more than a quarter said they spent less than £1,000 in the first year of launching their business. Another 24 per cent spent less than £5,000, while just 6.7 per cent spent more than £100,000.
The research, which was conducted by start-up community Shell LiveWire, also indicated the overwhelming majority of founders finance their start-up from savings.
Almost three-quarters said they had dipped into their savings account, while 30 per cent also borrowed from friends and family. Just 10 per cent said they took out a bank loan, and less than 5 per cent raised money from either crowdfunding or through re-mortgaging their home.
Over half surveyed started their business alone, while 20 per cent of respondents said they started with friends. Only 7 per cent said that they are now working with business partners not previously known to them.
However, the majority recommended not going it alone and starting with a business partner, to increase the level of support available and to have access to a wider skill set.
A third of the first-time business owners who started a company last year had a household income of less than £25,000 a year, a report by Experian showed, up from less than a quarter in 2009.
Around 7.7 per cent of these new business owners live in social housing, more than double the 2009 figure, suggesting that the modern entrepreneur is less likely to rely on assets such as their homes to raise start-up capital.
The UK government has long championed entrepreneurs as crucial for economic growth, at a time when public sector cuts continue to bite and productivity remains low.
There are an estimated 5.2m businesses in the UK, and small businesses account for 99.3pc of all private sector firms.
