Average Cost of Setting Up Virtual Shop in the UK Revealed

Business Insights
25/04/2018

New research from QuoteMyEnergy into how much it costs to be a tech entrepreneur, shows that many new businesses overlook some of the costs they may face.


When setting up a new business, the research found some of the costs that are frequently overlooked, and thus not budgeted for, commonly include costs such as web development, pensions per employee and liability insurance.


There was an 8.5% increase in the number of start-ups established in the UK from 2015 to 2017, but only 50% of the companies formed in London in 2013 lasted for 3 years or more.


A huge factor in why start-ups so often fail is a lack of accurate forward financial planning or being hit by unforeseen costs.


The Cost Laid Bare maintains:


  • Tech Startups can expect to spend around £380k over the first year
  • 'Solopreneurs' can expect to splash around £30,000 over their first year on setting up digital companies.

Here are some average prices for different aspects of starting and managing a company that may help to prepare you for entrepreneurship.


Registration, Filing and Insurance Costs

  • Trademark Search: You may have thought of the perfect name for your business, but the first port of call is to check if it is available by conducting a Trademark Search, costing £96 on average. Requests can be made through the National Business Register.
  • Incorporating a Limited Company: Forming a Limited Company protects the owners of a company through 'limited liability', which means they are only responsible for business debts up to the value of their investments, or whatever they guarantee to the company, and costs about £12.
  • Public Liability Insurance: Public liability insurance, costing around £120 on average, is valuable if your work brings you into contact with members of the public.


Business Premises

  • Office Rental Costs: the average rent of a small office space (based on 10 work stations) is £23,692 per year. In terms of planning growth, the current average for a 250-strong office space is £592,300.
  • Retail Space Rental: the average UK cost of renting retail space is £35,000. If you are able to consider purchasing retail space, the recommended amount to budget for is £275,000.
  • Other Costs: Budgeting for a start-up involves so many accumulative costs, that it can be easy to forget quite substantial bills, such as gas and electricity for your retail space. On average, heating and lighting your dream business costs £4,500 each year.


Equipment

  • Computer: Particularly for a digital start-up, each employee will, at the very least, need a computer, which costs an average of £200 each – a figure that can easily snowball alongside computer mice, keyboards and even additional laptops.
  • Office Furniture: on average furniture costs £550 per person.


Employees

  • Salary: Bearing in mind the average UK salary is £27,195, but considerably more for those skilled in the technology sector, planning for employees’ wages is key when considering the yearly costs of a start-up.
  • National Insurance Contribution: Works out as £1,929.79 per employee, based on the average UK salary.
  • Employee Pensions: All companies have to offer a workplace pension scheme to employees, regardless of size, costing £905, per employee based on the average UK salary.


Digital

  • Web Domain: It’s hard to imagine setting up a company now purely in the physical world without any online presence. Registering for the web domain of your choice (that has to be unique) costs £50.
  • Web Design: Unless you’re a graphic designer, hiring one to design your site will cost approximately £900.
  • PR/Advertising: the price for promoting your fantastic new company is very flexible and depends on what you want – or need – to achieve, but the average cost across SMEs in the UK is £24,000.


When starting a new business, striking the right balance between creative energy and financial knowledge is imperative. Whether digital, tech or retail, these costs are a good place to start working out just how much you need to initiate, and then maintain, your dream business.


The research for this is sourced from QuoteMyEnergy, who created a business calculator for totalling up the costs that entrepreneurs might never have even considered before.