More freelancers choosing to fund their own business, research shows

More freelancers are choosing to self-fund their business costs instead of seeking external financial support, according to research from FreeAgent.

The research, which surveyed over 500 micro-businesses, found that 44 per cent of businesses do not need any funding to start their business venture, whilst 43 per cent used personal savings to fund their business.

Record

The research also showed that 4 per cent of micro-businesses used a loan from friends or family to get their business started, 2 per cent used a credit card or secured bank loan, and 1 per cent used government assistance.

Some businesses were also found to struggle financially once they set up a business, with 41 per cent not making enough money or only just making enough money to cover the cost of the business.

There has been a record number of new businesses being registered over the past year, with government-funded campaigns such as Start-up Britain providing support for small businesses to enable to them to be set up with little or no external financial support.

Barrier

According to FreeAgent CEO, Ed Molyneux, a major barrier for people planning to set up a business is the costs that are involved.

“They think they’ll need to spend a lot of money from the outset on building the right infrastructure for their business, and the idea of applying for bank loans, grants or other financial assistance is very unappealing,” he said.

He added that in reality, most micro-businesses in the UK don’t require this type of investment and that the majority of them either use the personal savings of the business owner to self-fund or do not have any start-up costs, a trend that he says should give anyone thinking about self-employment confidence.