Business Bills of the Future

We’ve looked at a study from 2016 which estimated that it would cost £12,000 to start your own business.

1. Property – £3,000 average cost when starting a business

Behind other expenses, which has been grouped to account for 35% of the total cost, property costs take the place for the most expensive cost when starting your own business. Whether for an office or storage, the average cost is £3,000 which can take up 25% of the total.

We’ve looked at the average rate of inflation since 2016 and applied that to the £12,000 estimation to work out how much it would cost to start your business in 10 years time.

2027 – £15,118 estimated cost – 12.36% increase

Waiting just five years to start your business could cost you £15,118, more than 12% higher than if you were to do it now. This equates to almost £2,000 more than in 2022, and just over £3,000 more than in 2018.

2032 – £17,189 estimated cost – 23.23% increase

In ten years’ time, it could cost as much as £17,189 to start up your own business. This is £5,189 more than it would have done in 2018, and almost £4,000 more than it would have if you started today. This would mean that if 25% of your start-up costs went on property expenses, you’d spend £4,297.

Setting up your business is one thing, but ensuring that it survives in its first year is another. We’ve looked at a study from 2018 to discover the most common expenditures during a business’s first year so that you are aware of what financial hits you may have to take.

1. Legal costs – £6,259 highest first-year expenditure

Legal costs are the highest expenditure during a business’s first year, at £6,259. Legal costs can be very important for advice, to help you run things smoothly and legally. Legal advice can also be important in preventing a claim against your business, as well as for representation if a claim was to escalate further.

We’ve looked at the average inflation rate since 2018 to find out how much your typical first-year expenditures could cost in 10 years’ time.

2027 – £30,180 estimate first  year expenditure – 13.69% increase

By waiting just five years to start your business, your first year expenditures could increase by over 13%. This equates to almost £8,000 since 2016, and almost £4,000 more than if you were to do it today.

2032 – £34,313 estimated first year expenditure – 29.26% increase

In 2022, inflation has already caused the average first year expenditures to have risen by almost £4,000. By 2032, we’ve estimated that it could cost almost £12,000 more than it did in 2016. This could also see the potential legal costs rise to over £9,400.

We’ve looked at the average cost per square foot for office space in England.

As it’s no surprise that London would have the most expensive office space, we’ve looked at where specifically in London it would be most expensive to rent for your business. We’ve looked at the average rent for Grade A and Grade B properties and taken the average of the two to get our costs.

1. St James’s & Mayfair – £94 average office rent per square foot

The most expensive average office cost is in St James’s & Mayfair at £94 per square foot, £16 more expensive than second place. Rent at a grade A office space could cost as much as £120 per square foot.

2. Soho – £78 average office rent per square foot

Soho takes second place with the average rent for offices sitting at £78 per square foot. Renting a grade A office space could cost as much as £97.50 per square foot, and as little as £60 per square foot for a grade B office space.

3. Knightsbridge/North Oxford Street/City of London – £74 average office rent per square foot

Three areas in London complete our top three, with Knightsbridge, North Oxford Street, and City of London all having an average office rent of £74 per square foot. Knightsbridge has the highest range across grade A and grade B properties, starting at £55 and £95. The smallest range is the City of London which could cost between £67.50 and £82.50 across grade A and grade B properties.

Start-up costs can vary from industry to industry. That’s why we’ve looked at some of the most expensive industries to start a business in.

1. Management of Companies and Enterprises – £373,425.78 average start-up cost

This industry takes the top spot in our list, with a huge startup cost of over £370,000. Management of companies and enterprises can involve a lot of critical decision making and ensuring you’ve got the right people on the job is key. This industry also holds securities in companies and potentially other equity interests.

2. Utilities – £225,099.30 average start-up cost

The utility industry takes second place with a start-up cost of just over £225,000. Utilities are an incredibly important part of people’s households, with utility businesses dealing with gas, electricity, water, and power in people’s homes. There’s a huge demand for it and a large amount of money involved for the business owners.

3. Accommodation and Food Services – £214,116.14 average start-up cost

The accommodation and food services industry completes our top three with an average start-up cost of just over £214.000. Hotels and restaurants can be risky, with a huge amount of competition, but there is a lot of money that could be made if your business was to take off.

Insurance is an important part of your business and having insurance in place can cover you for a number of different problems. We’ve looked at the most expensive low-end insurance costs per year that a small business could encounter.

1. Directors and Officers – £350 insurance cost per year

The highest insurance cost is for directors’ and officers’ liability insurance at £350. D&O insurance could cost over £500 for a more high-end option. This covers compensation claims against directors and key managers for any accusations of wrongdoing.

2. Cyber Crimes – £132 insurance cost per year

Insurance covering cyber crimes takes second place with a cost of £132. Cyber crimes are a great threat to businesses, particularly those that predominantly operate online. Not only can they be a threat to your business, but also a threat to your customers, if they were to enter any personal information into your site when purchasing something, or signing up for an account.

3. Professional Indemnity – £85 insurance cost per year

Professional indemnity insurance completes our top three with a cost of £85. Professional indemnity covers business owners who provide a service to clients if they are unhappy or believe the service was inadequate. This type of insurance could cost over £1,000 for a more high end option

We used Smarter Business to estimate the start up costs for businesses.

We used the Telegraph to estimate the first year expenditures for new businesses.

We then used the Office of National Statistics to discover the average inflation rate from 2016 for Smarter Business, and 2018 for the Telegraph. We used this to calculate the increase each year up to 2032.

We then used Oktra for the average office spaces in London and England.

We used Lending Tree for the estimated start up cost per industry, before converting the figures from USD ($) to GBP (£) on 22.08.2022.

Finally we used Nimble Fins for the estimated small business insurance costs.