Who needs money – or government help? New research claims that the majority of UK freelancers and micro-business owners are self-funding their start-up costs rather than relying on external financial support.
A survey of more than 500 micro-businesses by online accountancy firm FreeAgent found that almost half (44 per cent) of respondents didn’t require any funding to get their business venture started, while 43 per cent had only used personal savings to do so.
With a record number of new business registrations in the past year, government funded enterprise campaigns such as StartupBritain are helping small businesses to get up and running with little or no external investment.
The research showed that just 4 per cent of micro-businesses said they had used a loan from a friend or family member to get their business idea off the ground, while as little as 2 per cent used their credit card or secured a bank loan – and only 1 per cent used Government assistance.
Whilst getting started does not seem to be the problem, the research did find that life can be more of a struggle once those businesses actually get off the ground – with 41 per cent of micro-businesses saying they did not make enough money to cover their costs, or “only just” made enough to cover them.
Many micro-business owners are also focussing their attention on their business at the expense of taking time off – nearly half of respondents (44 per cent) said that they had not felt in a position to be able to take a week or more of holiday during the last six months.
Says Ed Molyneux, CEO and co-founder of FreeAgent, “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.
“But the reality is that the majority of UK micro-businesses don’t actually require this kind of investment from the outset.
“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.”
FreeAgent provides the UK’s market-leading online accounting system specifically-designed to meet the needs of contractors, freelancers, micro businesses and the accountants they work with.