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How to rise to the £12K start-up challenge

New research has shown that the average cost of starting up a business is over £12K. Alternative finance has a key role to play in helping business owners rise to this funding challenge and the financial tests that lie ahead.

The Lloyds study claims that the cost of starting a new business is £12,601, which is a higher-than-expected figure for a third of new business owners. The major expenses are property (25%), transport (20%) and IT (20%), while the costs of pension planning and complying with auto enrolment regulation must also be factored in.

Securing start-up funding and the capital needed to maintain cashflow has long been a challenge for new business owners, not least as traditional lenders have taken a staunchly cautious position towards small business lending. Brexit and the uncertainty that it is causing have put a fresh question mark against big bank business lending. This instability has also further underlined the importance of alternative finance services, such as crowdfunding, peer-to-peer lending and invoice finance.

With regard to IT costs, a new smallbusiness.co.uk article has illustrated the rising demands that cybersecurity is placing on SMEs. Historically, small businesses haven’t been a target for hackers but this picture is changing, and sensitive business data is increasingly under threat. The onus is on SMEs to increase protection and this wellbeing comes at a price. At the same time, legislation on apprenticeships and the working wage is adding to the financial burden for small business owners.

Whether used exclusively or as part of an integrated financial strategy, alternative finance offers new business owners the accessibility, flexibility and affordability that they need to deal with start-up costs and the expenses that must be managed thereafter.

£12K is a big first step for businesses and there are many more sizeable ones to take after that. Alternative finance can help owners keep moving along the path to success.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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