30% of aspiring business owners put off by cost of launching a business

Two new surveys, one of 500 business owners and senior decision-makers to gauge their confidence in their business’s future and the other of 1000 members of the British public to measure the appetite for starting a business, have been published.

In the first, business owners were asked what factors had recently caused them to worry about the future of their business. The top three factors were:

  1. The Covid-19 pandemic: 56%
  2. The cost of living crisis: 52%
  3. The fuel crisis: 39%

Demographically, 72% of those worried about the cost of living crisis were female, other factors worrying business owners included the increase in energy costs (30%) and a decline in consumer spending (25%).

The survey, by Moneypenny, also revealed the ways businesses are adapting to the financial crisis, 53% have already increased their prices whilst 31% stated they have left or sold their physical office, moving completely remote to avoid renting costs. Regionally, 66% of Londoners have increased prices and half of those surveyed in the North East have resorted to taking out a business loan to cover the increase in costs.

When asked about their confidence in their business’s future, 82% answered that they were confident, 32% were very confident and 50% were somewhat confident. The survey also revealed that 3% were not optimistic about their business’s future with 2% saying they don’t believe their business will survive the next three years.

One question included in the survey was whether businesses had been forced to downsize as a result of financial strain. The results showed a clear trend with a higher amount of businesses letting people go throughout the years of the pandemic. Some 23% of businesses downsized two years ago, at the height of Covid, compared to 5% of businesses who downsized four years ago.

The second survey looked into whether the appetite for launching a business remains despite the financial problems posed. This survey revealed that, despite all the potential risks currently worrying business owners, 37% of the general public had thought about starting their own business, with 67% of 16 to 18-year-olds considering getting on the entrepreneurial ladder early.

SME Publications/ SME XPO 2024

For the 37% who responded that they had previously considered beginning their own business, they were quizzed on the factors that have delayed or prevented this from taking place. The top three factors were:

  1. The cost of starting a business: 30%
  2. Confidence in their own ability: 30%
  3. Running a business seems too difficult: 27%

It was revealed that potential business owners lacked the confidence to start, while the cost of living crisis proved problematic to these aspiring business owners.

Examining city-specific data, 44% of those from Edinburgh struggle with confidence while 34% of Londoners stated the cost of launching a business was a contributing factor. Other factors include the rise in the cost of living (23%), the aftermath of Covid (18%) and the energy crisis (17%).

Despite these factors posing obstacles to potential business owners, 24% of those surveyed revealed they might start their business in the next 12 months. 11% were unsure but didn’t completely reject the idea of starting in the next year.

Lastly, the survey explored the most desirable industries for aspiring business owners by asking them to state the sector they would most like to launch their business within.

The top three most desirable industries were:

  1. Retail, Catering & Leisure: 11%
  2. Arts & Culture: 8%
  3. Education: 7%

Looking at city-specific demographics, 18% of the city of Liverpool would prefer to launch their business in the retail, catering and leisure industry.

SME Publications/ SME XPO 2024