Four in ten small firms start on £500 or less

Most successful small businesses don't need a big injection of cash to get off the ground, according to new research.

A survey of 1,500 UK small business owners by Yell Business has found that 40% were founded on less than £500. Almost a third (32%) were started on £250 or less.

The majority of those polled were found to be doing well, with 93% of business owners saying they recorded a profit last year and 85% reporting that their business was "very successful" or "quite successful".

The findings are in contrast to other research by Yell that revealed that budding entrepreneurs cited a lack of money as the biggest barrier to starting their own business.

A Yell poll of 1,500 consumers found that the biggest problems associated with starting a business were:

  • lack of money (cited by 40%);
  • risk of failure (25%);
  • not knowing where to start (23%).

Just over half of the UK population (51%) have thought about setting up a business; an additional 31% admitted that they are not happy in their current employment.

However, many new ventures don't start until would-be entrepreneurs come into money, including inheriting funds and being made redundant, according to the research.

Mark Clisby, marketing director of Yell Business, said: "As our research found, the current catalysts for taking the leap and starting a business include inheriting funds (24%) and being made redundant (15%). However hopefully, the positive revelations around low start-up cost and high success, will give the inspiration needed to budding entrepreneurs, so that they don't wait for scenarios like this to happen to them.

"For anyone in the process of starting up, my advice would be to thoroughly research your market before making the leap - and to prioritise digital. From a website, social media to reviews, this is essential for any business in 2017."

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