REVEALED: The biggest concerns when setting up a new engineering business #Engineering #NewEngineeringBusiness

• Survey reveals the biggest fears and concerns of prospective business owners
• Equipment and supplies revealed as the biggest costs when setting up a business 
• Experts advise why second-hand equipment is the future of business

New research by online asset disposal specialists reveals the biggest fears, concerns and costs when setting up a business.

With consumer price inflation rising sharply in recent months and the 12-month growth rate reaching 7.9%¹, BPI Auctions surveyed UK business owners to determine the biggest concerns before setting up a business and the highest costs when starting out².

Surprisingly, nearly half (49%) of business owners claimed they were almost put off from starting their business because they feared they would not attract customers, and over three in ten (36%) business owners admitted to thinking about failure before even starting.

The top ten biggest fears and concerns are:

1. Not attracting customers (49%)
2. Finances (39%)
3. “What if everything goes wrong?” (36%)
4. Not earning enough to recover an investment (32%)
5. Not knowing where to start  (17%)
6. Failing the family (14%)
7. Not being an expert (14%)
8. Not being believed in (11%)
9. Being considered “crazy” (5%)
10. Being incapable of handling success (4%)

Opening a new business can be a terrifying prospect because there’s always a lot of uncertainty. Almost two out of five (39%) business owners said they were concerned about managing finances, and nearly a third (32%) of business owners were worried about not earning enough to recover from initial business investment.

According to recent research, the average cost for starting a business in the UK is £22,756³ (in the first year), which doesn’t even include the manufacturing of new products or purchasing stock. 

However, when asked what the highest initial costs were when setting up their business, more than a quarter (27%) of business owners advised that equipment and supplies were the most expensive asset, followed by stock and sales and marketing services (23%).

The top ten biggest costs when setting up a business are:

1. Equipment and supplies (27%)
2. Stock (23%)
3. Sales and marketing (23%)
4. Finance (22%)
5. Insurance costs (22%)
6. Premises (22%)
7. Professional fees (e.g. hiring a solicitor or lawyer) (17%)
8. Technology costs (12%)
9. Staffing and employment (8%)
10. Large-scale machinery (8%)

Whilst equipment and supplies are expected to be a major expense when setting up an engineering business, business owners could cut these costs dramatically by purchasing second-hand machinery instead of brand-new equipment. For example, a new Hydrovane 504 Screw Compressor can sell for upwards of £1,500. Whereas in one of BPI’s live lots, the bid currently stands at £200 with no reserve.

Second-hand Equipment Case Study – Hawthorn International

Founded eight years ago by Rob Williams and his business partner, having been a clothing start-up brand before, Hawthorn International has used second-hand equipment to grow rapidly. The company now manufactures and delivers fully customisable clothing to start-ups, SMEs and established fashion brands.

Rob outlines how second-hand equipment has been crucial to the growth and expansion of his business: “As clothing manufacturers, we require a lot of machinery for our factory; everything from equipment required for the actual production of clothing like knitting and dyeing machines, to ancillaries like tailoring shears and tape measures. 

“When starting out, we originally looked at renting the larger factory equipment we needed, such as the garment dyeing and washing machines, since they have a high upfront cost. However, we found that purchasing pre-owned was actually a great way to save on our set-up costs when we were able to purchase high-quality clothing manufacturing equipment at a fraction of the cost it would have been if it were new from a clothing factory that was downsizing. As a company that tries to be as sustainable as possible, purchasing pre-owned also ties into this ethos as we avoid items which are otherwise in great usable condition going to landfills. 

We have also recently set up an in-house clothing design team, and as a part of that, we needed to procure computers which could handle the fashion design software we use. Purchasing refurbished computers has saved us a great deal over the RRPs, but we still have a warranty if needed. Our experience has been very positive, and we would recommend buying pre-owned items to anyone starting a new business.” 

Henry Spencer, Sales Director at BPI Auctions, summarises, “It was interesting to see that equipment, supplies and stock were the highest expenses for many business owners over the cost of premises, professional fees and insurance costs.

“Purchasing items such as CNC, Lathes and milling machines second-hand can come at a fraction of purchasing items brand new. Due to challenging and uncertain times over the last two years, both new and existing companies have been forced to reassess budgets and cut down costs. This is why a move towards the use of second-hand products is inevitable.

“Purchasing previously owned machinery and equipment is also a more sustainable way of working. Designing and manufacturing heavy machinery requires a lot of energy and resources, adversely impacting the environment. So, when you invest in previously owned machinery, you immediately cut down production requirements and reduce your carbon footprint.

“However, choosing where to buy your second-hand items is an especially important consideration. You can avoid faulty or inferior items if you use trusted and reputable asset disposal specialists— especially those with credentials and knowledge of the engineering industry.”

To sell surplus equipment or machinery, visit the BPI Auctions website to find out how selling through auction can get you the maximum return for the items you no longer need.

If you’re looking to set up an engineering business and need to acquire second-hand equipment or dispose of surplus assets and machinery, find out more: https://news.bpiauctions.com/bpi-auctions-study-reveals-the-biggest-concerns-when-setting-up-a-new-business