How much money do you need to start a business?

Last checked and updated on 27 September 2022

Just how much money does it take to start a business?

Every business and brand in the world, from small, local enterprises to global conglomerates, had to start somewhere. However, two things are essential to get a company off the ground – a bright idea and enough financial capital to commence trading.

What is the average cost to start a business?

There is really no such thing as an average cost of starting a business. That’s because there are so many variables at play, depending on your business model. 

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If you wish to start a business flipping houses, for example, you need capital to invest in these homes and all the tools of the trade required to complete the work. On the other hand, if your business involves writing and selling ebooks over the internet, this will cost virtually nothing in outlay and offers pure profit. Other people, would rather start investing in stocks so that they could grow their money and have enough capital to invest for other ventures but of course, they would have to know which stocks to buy from

How costs vary by industry when starting a business

As we have explained, different business models require varying levels of initial investment. Let’s look at some of the biggest success stories in the business world and how much they cost to get started.

  • Airbnb was started with no external support, self-financed by credit card debt. It’s now one of the most successful businesses in the world, but this is not an advisable model to follow – you’re far likelier to complicate your personal finances than make billions 
  • Jeff Bezos started Amazon with $30,000 (£22,000) gifted from his parents. This was in 1994, so that’s more like $63,000 (£46,000) in 2022. All the same, given that Amazon’s estimated worth is now $314,000,000,000, it’s safe to say the investment paid off
  • Instagram received $50,000 (£36,000) in funding to launch as a new social media platform back in 2010, though it eventually attracted investment ten times as high. After attracting 25,000 users in a single day, Facebook paid $1,000,000 for the site. Not a bad turnover

What factors impact the cost of starting a business?

Taking the above into consideration, some of the most significant factors involved in the cost of starting a new business include:

Business startup cost factorGood to know…
Incorporation and licensingIf you wish to start a limited company – which is highly advisable as it offers a legal separation between yourself as an individual and your business affairs – you’ll need to register. You can take a DIY approach to this for as little as £15 ($20), but if you enlist a third party for help it could cost ten times as much. You may also need licenses to run a business from your local council or authority, especially if you plan to trade goods
Business modelIf you are running an ecommerce website that trades in physical goods, you’ll need to purchase stock in advance. Naturally, you’ll aim to sell this for a profit, but you’ll still need to pay for it until then – and, likely, find somewhere to store it. If your business takes place exclusively online, you’ll have fewer overheads – but you’ll need to ensure that your website is never anything less than cutting edge
Tax implications and business insuranceThey’re not the most exciting business elements, but these are critical considerations. What insurance policies will you need to protect your company? Will you charge VAT on your goods and services? 
LocationIf you work from home, you already have a rent or mortgage in place – as well as utilities such as an internet connection. This will not lead to further expenses, though you may violate your agreements with lenders and suppliers by running a business from your property. If you lease a specialist building to run your business from, you’ll accrue additional expenses
Branding and MarketingWe’ll discuss the importance of marketing in more detail shortly but rest assured – your business will not succeed if nobody knows about it. You’re going to need to speculate to accumulate. That means building a brand, and ensuring that it maintains a stellar reputation
SupportYou may not be able to spin every plate by yourself and will need to bring in third-party support. You could use freelancers, but eventually, you’re going to need permanent staff members that work exclusively for you
Where to spend your money when starting a business

Each of these factors will potentially impact the success of your business. It’s pretty simple, really – your company needs to generate more revenue than it spends. That makes strict budgeting essential.

How to get started with organising your budget for a new business

Once your business is established, the first thing you’ll need to do is set yourself a budget for at least the first year of trading. It pays to be conservative here. As the last couple of years has taught us, global events can throw a curveball into even the best-laid plans. Do not assume that everything will progress swimmingly and according to a best-case scenario

Before setting a budget, you should complete in-depth SMART goals for your business. Ideally, conduct a SWOT analysis of your competitors, too. This will give you an idea of where you should be focussing your financial attention. The SMART goals, in particular, will reveal your priorities.

When setting a budget that you have to spend, follow these steps.

  • Immediately deduct any sunk costs from your budget. These will be expenses for business-critical items purchased rather than rented or leased, such as computers, mobile phones, a company car, etc.
  • Work out how your non-negotiable monthly expenses. These will include any business loan repayments, rent and utility bills on a business premises, employee salaries, external professional support services, website hosting, etc
  • Consider variable expenses that will also arise each month. This could include stock that you’ll be trading in (and any associated postage costs) and travel or entertainment costs to attend meetings with clients or suppliers. You may decide to push heavier on a marketing campaign from one month to the next, too, which will also lead to varying costs
  • Work out how much revenue you need to generate to turn a profit after deducting these expenses. Be conservative here – leave enough space for something to go wrong
  • In case you do experience troublesome times, keep aside at least three months of running costs – ideally a year – as an emergency slush fund 

Now, you need to decide where to spend your budget. Let’s assume that your three main goals for your first year of trading are as follows:

Achieve X number of conversions that ensure you turn a profit 
Generate Y number of leads for potential future customers
Bring in Z number of employees to help grow your business heading into year two

If this is the case, once you have reduced the expenses that we just discussed, you’ll need to pay for the marketing required to attract the conversions and leads you seek. When setting a marketing budget, most businesses use the 5% rule – 5% of annual turnover is pumped back into promotion. 

As a new business, you may need a little more than this – but only if you can afford it. Slow, steady growth over several years is better than going supernova in year one, and bankrupt in year two due to unsustainable expenditure.

Setting up a new business – DIY or seek professional help?

So, you have popped to the local bookshop and picked up your copy of Starting a Business for Dummies, and you’ve managed to secure sufficient funding to get started with your business. At this point, you may be tempted to do everything yourself and save money going forward. Hiring third party help can wait until you are generating profits.

While it’s certainly advisable to do as much as you can for yourself at this stage, you will also need to accept your limitations. Starting a business is complicated, and mistakes can be costly. The repercussions of an accountancy error when filing your taxes, for example, could be expensive – in terms of fines and even, heaven forbid, a full audit into your accounts.

As with all matters of business, striking a balance is essential. By all means, take on what you can by yourself. Be prepared to pay for professional aid where appropriate, though. That will likely be the difference between success and failure in the earliest days of your business venture.

What kind of professionals might you need to hire to help you get set up?

As discussed above, it’s advisable to bring in some professional help to run your business. What form this takes depends on the type of business you’re running and your personal skills and expertise. Some examples of third parties that may help include:

  • Web designers to aid in the creation of your business website if you’re unable to do it yourself. There is no fixed rate for these services – it all depends on how elaborate and complex your needs are. For an all-singing, all-dancing ecommerce website, your bill could run well into four figures. Such outlay is rarely necessary for an SME, though
  • Professional marketing services to assist with spreading the word about your new company. Nobody will offer you their patronage if they do not know who you are. This will cost between £40 ($55) and £80 ($110) an hour, depending on whether you opt for a freelancer or agency
  • An accountant to ensure that your financial records are accurate and timely. Most professionals of this ilk will charge a minimum of £150 ($220) per month. The more complex your needs become, the higher this expense will be
  • A legal representative to look over any contracts that you will be signing as part of your new company and ensure that your ideas are legally compliant. The average cost of a solicitor could be anywhere from £100 ($140) to £500 ($690) per hour. It depends upon the firm and experience of the professional in question

These professional fees need to be factored into your thinking when considering how much it will cost to start a business. If you have friends and family members that specialise in these lines of work, it may be a good idea to start asking them if they’ll offer you a preferential rate! 

Can you get funding to start a business?

In theory, a UK-based business venture may be eligible for a start-up grant, which you will not need to repay.  Examples of these grants, all of which have different criteria for acceptance and sums provided, include:

The government website also lists a range of local and national bodies that may be willing to provide your business with financial backing.

If this is not an option, there are other ways to attract financing for a business. A business loan from a bank is the obvious first step, or you could ask family and friends for assistance, potentially in exchange for a percentage of profits. 

The latter may be awkward, but it will keep your financial dealings unofficial and likely help you avoid interest payments. Alternatively, consider seeking finance through pitching investors or turning to online crowdfunding (again, though, you’ll need to incentivise investors here.)

Is starting a business worth the financial risk?

Only you can answer this question. It depends on how determined you are to succeed in 

business, how likely you feel your venture is to turn a profit, and whether you can withstand the pressure of running a company.

Questions to ask yourself before making a final decision include:

  • Can you start a business without placing your personal finances, health or reputation under undue pressure?
  • What will your business idea offer consumers and companies they cannot currently access?
  • How long do you think it will be before your business starts to turn a profit?
  • If you borrow money to start your business, are you confident it can be repaid?
  • Do you plan on expanding and taking on staff to build your business? Will you be able to sustain salaries and benefits for these employees?
  • How will you react if your business fails? We hope it doesn’t, but it’s a tough world out there!

Finally, do not forget, being a business owner is not all about counting money and celebrating success. Even once your company starts to take off, you’ll be responsible for it from top to bottom – if not from a legal sense, then morally. Ensure that you are comfortable with this level of pressure, as you will not have a boss to pass the buck to when the going gets tough.


Do you need money to start a business?

It is always advisable to have an emergency slush fund when starting a business. Things may not go entirely according to plan in the first year, and if you wish to continue trading, a buffer will be helpful. Some business models can be started with little finance, though, provided the turnover is high and the idea is sound.

How much money do you need to start a business?

This depends entirely on your business model. If you’re working from home and have no physical products to trade, you can register a company for as little as £15 ($20) and get started. The more elaborate your business model, though, the higher your initial outlay will be.

How much money do I need to start a small business?

What business model are you looking to run? If you want to start an ecommerce site, you’ll need enough money to spend on stock and build a compelling website. However, if you’re offering skills and services from your home, you can start with virtually nothing and all earnings are pure profit. 

What is a profitable business to start online?

One of the most profitable businesses you can start online is selling expertise. If you’re a master at any subject – like, for example, copywriting or SEO – you can sell your services to clients, write eBooks on the topic, and monetise video lectures and blogs through advertising and subscription models. As you will likely be working from home, using existing hardware, this ensures that any earnings are pure profit.

What is the average cost to start a business?

There is no such thing as an average business cost. That’s like asking, “how much does it cost to buy a house?” – location, condition and size will all influence the asking price. The same applies to starting a company. Some business models can trade with no outlay, but others need substantial third-party expenditure.

How much does it cost to start a business?

Technically, as little as £15 ($20) – that’s the fee for registering a new business with Companies House. Naturally, though, many business models will have many more considerations. Insurances policies alone can run well into four figures.

How much does it cost to start a website business?

Building a website does not come cheap. It could be up to £20,000 ($27,000) to develop a bleeding-edge site with professional help. Alternatively, if you have the skills and confidence, you could create a site yourself for a fraction of this cost. 

How much does it cost to start an Amazon FBA business?

Operating a Fulfilment by Amazon ecommerce model over an independent site is a mixed bag. Amazon offers an Inventory Performance Index tool that helps you understand which items perform for your business and which are not. You’ll still need to invest in stock, though, and this will be at retail cost, so expect to need at least £7,000 ($10,000) to get started. 

How much does it cost to start a photography business?

On paper, you can run a photography business for free online. Use social media to advertise your work, attract a following, and direct fans to a website where they can purchase your photography in digital or print form. The actual expenses come with the hardware required. You’ll need to ensure that you have the greatest possible camera and computer before starting your business, as upgrades will not come cheap.

How much does it cost to start a printing business?

Running a print on demand service is basically free. If you arrange printing of any designs through a third party, you won’t need to pay anything – the costs of the printing will just be removed from your profit margin. You may need to turn over a lot of printing to see substantial revenues in this case, but you will not need any outlay.

How much does it cost to start an ecommerce business?

This depends on how much stock you are looking to sell and the value of the goods you are trading in. Setting up an ecommerce website will likely be no less than £75 ($100) for an account with a reputable payment processor. From there, you’ll need to pay for your initial stock run.

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Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. You should always speak to a qualified professional to get tailored advice about how to operate your business under your specific requirements and circumstances.