Key facts: Company registration costs almost nothing (Companies House incorporation ~£50; sole-trader registration free). The real budget lives in insurance, equipment, premises, marketing and working capital — and the classic failure is funding the launch but not the 3–6 months of running costs before revenue stabilises. Government-backed Start Up Loans and grants fill the gap for eligible founders.
The near-universal baseline
Every business carries a floor: registration (trivial), a business bank account (free tiers exist), basic accounting software, and insurance — where the real first decisions live. Employers' liability is legally required with any staff; public liability is contractually demanded across trades and client work; professional indemnity is standard for advice businesses. Budget a few hundred to a few thousand annually depending on trade — see small business insurance.
What each model really costs
Service/freelance (sub-£1k–£5k): laptop, software, insurance, a website — the leanest launch in the economy. Trades (£5k–£30k): van, tools, stock, certifications, higher insurance. E-commerce (£5k–£50k): stock is the swing item, plus platform and the marketing reality below. Hospitality/retail (£50k–£250k+): premises, fit-out, licensing, staff before day one — the capital-intensive end, where premises finance and asset finance carry the load.
The undercounted lines
Working capital first: businesses rarely die of bad ideas — they die of running out of cash while a good idea gathers pace. Fund 3–6 months of full running costs (rent, stock, wages, your own living costs) beyond launch. Marketing second: "build it and they'll come" budgets of zero meet reality fast; even lean launches need a real acquisition line. Compliance and tax buffers third — VAT thresholds, self-assessment reserves and licensing arrive faster than expected.
Funding the number
Match the source to the cost: Start Up Loans (government-backed, mentoring included) for launch capital; asset finance for equipment (the kit is the security); invoice finance once B2B revenue flows; grants where eligibility aligns. Personal-savings-only launches are common but fragile — a funding line arranged before it's needed is cheaper than one begged for mid-crisis.
Funding your specific plan
A business finance specialist can match your model and stage to the right funding mix. Find a business finance specialist through Nesto — free, no obligation.
Frequently asked questions
What's the minimum cost to start a business?
A sole-trader service business can genuinely launch for under £100 — registration is free, and costs scale with the model, not the paperwork.
How much working capital should I hold?
3–6 months of full running costs including your own living expenses — undercapitalising the runway is the classic avoidable failure.
What insurance does a new business legally need?
Employers' liability if you have staff. Everything else — public liability, professional indemnity — is contractual or prudential, and often demanded by clients.
What funding exists for brand-new businesses?
Government-backed Start Up Loans with mentoring, regional and sector grants, asset finance for equipment, and personal investment — usually blended.