How much money do you need to start a business?

How much money do you need to start a business?

A typical UK start-up will launch with an investment of £5,000, according to research from The Company Warehouse. However, just how much money you need to start a business in the UK in 2025 will depend on the sort of venture you have in mind.

Can I start a business with no funds?

It is entirely possible to start a new business without any funding at all.

Many sole traders, especially those working in the creative industries, will be able to launch their business with little more than a laptop and a phone at the kitchen table. 

You may also find your start-up costs are minimal if you will be selling a service, rather than a product. This could include anything from freelance copywriting to graphic design or social media marketing.

However, it’s not just for home or tech-oriented businesses. You’ll often be able to set up as a dog walker, cleaner, pet sitter or provide ever-in-demand tutoring services without any serious investment behind you.

If you are going to need business premises, equipment, or machinery and staff, then you’ll need to get some funding first.

Average funds needed to start a business by sector

The sectors with the lowest start-up costs included construction and the creative industries. 

According to The Company Warehouse, construction businesses are typically set up with an investment of less than £5,000, with 50% of the businesses in its research starting off with less than £1,000.

Two-thirds (67%) of creative businesses, including photographers and designers, were also established on shoe-string budgets of less than £1,000.

At the other end of the scale, 75% of recruitment and finance start-ups launched with a budget that was north of £10,000.

The table below gives you an idea of the typical start-up costs for different types of business:

Source: The Company Warehouse

How to calculate how much money you need to start a business

How much money you need to start a business will vary hugely, depending on the type of venture you are starting, your goals and where you are based.

Some or all of the below are costs you might need to consider:

• Business premises: Will you need an office, retail space or a studio?

• Staff costs: Think about how much you’ll be paying in wages and the cost of recruiting.

• Equipment: From your laptop and workstation through to any office supplies, furniture, machinery, stock and transport, you may need.

• Marketing: How will you promote your business and brand? Will you need a website?

• Professional services: Make sure you budget for any accountants, lawyers or other professional advisers you’ll need to consult.

• Insurance: Businesses may require a variety of insurance policies, including public liability insurance, professional indemnity insurance, buildings and contents insurance, as well as car or van insurance.

• Software and licences: Will you need accounting or design software, a customer relationship management (CRM) platform, or to pay for data storage and backup?

It’s usually helpful to divide costs into one-off start-up costs and regular/ongoing expenses.

While some costs will be known, others will need to be estimated at this stage. However, you can do lots of research online and by networking with fellow entrepreneurs and small business owners, to give you an informed idea.

As a guide, it’s best to overestimate your business start-up costs.

Some expenses will, in reality, cost more than your budgeted number, while there will invariably be some surprise bills that you hadn’t factored into your business plan. Having some breathing space in your budget should hopefully mean they don’t knock your business off course.

It’s also important to think about the legal structure of your business, as that will impact your costs and the taxes that you need to pay. For example, will you be a sole trader, form a limited company or enter a partnership or limited liability partnership?

How to get funding for a new business

There are a variety of ways that new businesses can get the funding they need to get started. How you finance yours will depend on the start-up costs involved. 

These can include:

• Using your own savings and ensuring you always have an emergency fund (usually, this is three to six months' worth of expenses).

• Getting a small business loan from a bank.

• Applying for a government start-up loan - available from £500 to £25,000.

• Securing a start-up grant - find out about the schemes available at gov.uk.

• Trading an investment in your company for an equity stake with an angel investor.

• Exploring crowdfunding if you think you can rally support in your local community or network.

If you need to raise finance, it will be particularly important that you also have a solid business plan that tells investors everything they need to know about your business.

Get the right support for your new business

There’s a lot to think about when you’re launching your own enterprise.

From how much money you need to start a business to writing your business plan and raising the funds, it can help to consult an accountant who can guide you through each stage of your journey. 

Even if you are happy to take care of bookkeeping yourself, an accountant can help make sure you are meeting your legal obligations as a business owner and paying the right amount of tax.

Unbiased can quickly connect you with a qualified accountant.