£27,520: the cost of starting a business in 2016

16 August 2016

The average amount needed to start a business in the UK today is £27,520, according to a survey of 850 small and medium-sized businesses.

The report, which was conducted by LDF, which provides finance to small and medium-sized businesses (SMEs), shows Manchester is the most expensive place to start up, with average start-up costs of £44,733.

Newcastle was the most cost-effective, with owners there borrowing £17,008 to get off the ground.

Regardless of location, nearly one in three SMEs across the country were in agreement that funding was the biggest challenge they faced when starting out (30%), with over half saying banks are not business friendly (52%). Read Moneywise’s features on how to start up a business in the evenings and how to turn your hobby into a business.

In order to raise funds to set up their business, nearly half had to use their own savings (42%), and almost a quarter sought financial help from friends and family (24%).

Once up and running, the average amount borrowed in a 12-month period by UK SMEs was £75,408, with the main reasons cited to buy equipment (40%), or for expansion plans (38%).


The research also highlighted which industries need the most cash to start a business, and which need the least, with leisure proving the most expensive and design the cheapest.

Average amount needed to start a business:

  • Leisure £79,137
  • Motoring £64,948
  • Manufacturing £45,325
  • Catering £43,608
  • Legal £37,755
  • Media £36,912
  • Architecture & Building £31,368
  • Fashion and Beauty £30,981
  • IT £28,473
  • Arts & Culture £24,332
  • Engineering £22,406
  • Professional Services £21,049
  • Education £19,479
  • Travel & Transport £18,929
  • Utilities £17,962
  • Telecoms £16,375
  • HR £11,938
  • Healthcare £11,034
  • Finance £7,525
  • Marketing & Communications £6,875
  • Design £4,425



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