By Daniel Hunter
Small businesses founded within the past three years needed just £17,095 in working capital in their first year of trading, according to new research today (Tuesday).
What’s more, three in five (60%) believe that if they had their time again they could launch for the same or less, according to a new study published by O2 Business.
The lower costs are revealed as UK small businesses admit they are now choosing to rent rather than buy outright. Almost half of the small businesses surveyed (48%) said they prefer to rent or lease goods because they felt it was the smartest way to reduce their upfront costs.
Over a third (36%) said it allowed them to stay up-to-date with technology, and a further 36% believed renting gives them better control of their cash flow. Other benefits cited were the reduction of maintenance costs (29%), and increased flexibility (27%).
The most popular items to rent or lease, according to the 518 small businesses surveyed were:
· A phone line (62%)
· Office space (40%)
· Photocopiers and franking machines (28%)
· Water-coolers (21%)
· Cars and vans (18%)
· Smartphones or tablets (13%)
· Coffee makers and vending machines (13%)
· IT equipment (11%)
Of those surveyed, 46% of businesses see paying monthly as the future and anticipate that it will increase in the next five years — particularly among firms who don’t want to be ‘left behind’ as technology advances. Smartphones have already come to be viewed as an almost essential tool in the modern workplace, with a quarter of businesses believing firms with the latest models are 'tech savvy' and make a more positive impression with their customers and clients.
“Small businesses still struggle to grow due to a lack of funding, but the good news is that many looking to start up have a number of alternative options open to explore — such as leasing — which can work out far more cost-effective in the long run," Paul Lawton, General Manager of SMB at O2, commented.
“As one example, we’re giving small businesses the access they require to the latest technology so that they can keep up with their more established competitors, without a need for them to front the high costs upfront. Our research showed that 72% stated that they believe keeping up with the latest technology is important to their business, with 23% viewing it as extremely important."
When talking about funding, over half of businesses anticipated that costs would rise in the next five years. 37% believe it has become harder to borrow from banks which could spell trouble for would-be entrepreneurs if they don’t adopt a more paying monthly mentality.
Rachel Bridge, Sunday Telegraph journalist and author of ‘How to Start a Business Without Any Money’, added: “It doesn’t make sense any more for small businesses to burden themselves with high overheads when you can pay as you go. With funding ever harder to come by, every £1 spent needs to work really hard for small businesses and they should only be paying for what they really need.
“What’s fantastic is that there are a number of resources available for lease or rent, be that office space, IT equipment or even smartphones. And, it’s not just about saving money, it’s also about building in flexibility so companies can change and expand as and when they need to.”
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