How to Start a Business in the UK With No money? A complete Guide

Ryan Patrick

Sep 21, 2024 • 23 min read

In recent times, there has been a rise in the number of small size businesses in the UK. These companies are owned by both residents and foreigners in the UK, showing how conducive the environment is for businesses to thrive and grow. The UK's economy and government also support businesses by various means, making the country an attractive location for entrepreneurs from all over the world to explore.

However, some entrepreneurs have great business ideas that can make profits, but they lack the necessary financial backup to start and complete their business. A business idea without financial support cannot be implemented, in this case, most entrepreneurs seek means to get funding for their businesses or possibly look for ways they can start their business without spending little to no money due to their low budget and financial support.

The truth is, a lot of businesses that are successful today started with little to nothing and today they have worked so hard and made a lot of profits from their business. This means that as an entrepreneur who has a business idea but does not have the necessary finances to back up your business idea, you can still have a business of your own through some other means.

Incorpuk as a company formation agency that has registered a lot of businesses in the UK for both UK residents and non-residents in this guide educate entrepreneurs on how they can start their business with little to no money in the UK.

Below are the steps necessary for starting a business in the UK with no money.

Decide if you are ready
Keep your job
Get a business idea
Run thorough market research
Write your business plan
Decide your business structure
Choose a business name
Register your business
Network with others
Search for funding sources
Create a sales and marketing strategy
Launch your business
Expand your business

1. Decide If You Are Ready

First thing, you have to decide if you are ready to become an entrepreneur. You can sit down and think through and decide if you are ready to go into the entrepreneurial world. If you are not fully ready, then there is a high risk of business failure if you start, so you have to decide if you want to do it, if you are willing to sacrifice the time and effort to your business.

As an entrepreneur with your own business, you are your boss. Sometimes being your boss can be very difficult, especially if you're starting for the first time. As a business owner and entrepreneur, all your bills and the business bills rely on you for sorting them out, unlike having a boss where all these are their responsibility, not yours. It might take a while to adapt to these terms, but at first, it might be difficult for new entrepreneurs to cope.

One important thing to note is that as a new business owner who is just starting in the entrepreneurial world, you might have to perform the role of many members, especially if you are working with a tight budget. As a new business owner, you have to work as an accountant, financial expert, salesperson, inventory manager, janitor and more. These roles you will be playing might not come with the full wages as when you offer them to someone else.

However, not all businesses go through the typical startup phase as some businesses excel and become successful right from the start, especially those businesses with enough financial support. They can employ accountants, financial advisors, salespersons and other roles that are important for the growth and progress of the company. But as an entrepreneur with no money, you have to consider these factors to limit what you spend on the wages of your employees and put them back into the business for more results.

Apart from the financial support, you must also have enough time to invest in planning and managing your business, starting a business is time-consuming as you need to do a lot of research about the business you are starting and you also have to be there for your business to make important decisions in the business.

Depending on your financial health and support, you might choose to quit your job and focus more time on your business. However, if you have little to no financial support, you can choose to keep your job and create time for your business as well. If you are doing both, then you need to prepare yourself for it as you will need to put in a lot of effort and time to be able to run your business and keep your job altogether.

Also, as an entrepreneur, you need to be ready to take risks. Taking risks is essential for the entrepreneurial journey since you need to try other new things and give it a chance for both success and failure. As an entrepreneur, you should be ready to bear the risk of one of your strategies failing and you should also be ready to try again one more time. However, you have to study your risks and take those with high chances of success since you are just starting.

2. Keep Your Job

As a new entrepreneur who is just starting in the entrepreneurial world, you might be tempted to quit your job and focus on your new business. But that is not a good plan. Quitting your job as a new entrepreneur is risky and you might end up running into debt trying to sort out your expenses and also your business expenses, especially if you have no external income support apart from your job.

You can choose to keep your job and focus on your business during late hours of the day weekends or when you are not at work. By doing this, you will still have a source of income during your time starting up a business to pay your expenses and this will also help you to be financially stable during your early journeys as an entrepreneur. You can also choose to have savings specifically for your business or personal use while still working, and this helps a lot because most entrepreneurs tend to go into debt while trying to start up a business after quitting their jobs.

Once your business is fully able to provide you with financial stability and cover your expenses, you can then decide to quit your job and focus totally on your business. Aside from that, leaving your job for a new business, especially as a new entrepreneur, is not advisable.

3. Get a Business Idea

Most times, business ideas come to entrepreneurs as inspirations and they work with them. However, it is not the same for other entrepreneurs since they have to do thorough market research to decide on the business idea and product or service they want to offer. Any of them might work for you as a new entrepreneur. Starting a business you have experience with helps you to minimise your research during your start.

This is because you already have experience in that field and industry and starting a business in that line will not be difficult. This can also help your business to grow faster since there are some phases your business will skip because an experienced person is handling it.

Also, as a new entrepreneur who wants to start up a business, you have to make sure that your business is profitable, which means you can make money from it. Although not all types of business start paying off immediately, you should make sure your business can be profitable. If as a new entrepreneur, you are managing an unprofitable business, there is a huge chance that the business will fail or you will run into debt.

Your business should also be able to thrive in the environment you want to situate it. The people around the area of your business must have an interest in the product or services you are offering to them or else there is a high chance that your business will fail. Aside from that, if the product or service you are offering is not needed by the population around you, you might end up getting no profit as a businessperson and your business might be heading to failure.

One of the most important factors to consider when you want to start a business as an entrepreneur with little or no money is the cost required to get your business started. Some businesses require little to no upfront investment while others require an investment of both capital, time and effort to make it grow. If you are sure that you can get funding for your business idea that needs a lot of capital, then you can register your business and start preparing for the funding phase. However, if you have a very tight budget and cannot finance with a Hugh startup requirement, then you should go for a business with little to no capital investment.

4. Run Thorough Market Research

Before you proceed with your business idea, it is important that, as a new entrepreneur, you figure out whether your business idea is practical and can succeed in the market. This is where thorough market research comes into play. As an entrepreneur who has performed market research, you can better understand the market, identify your competitors, and see if there's room for your idea. Through this research, you can also get to identify how to make your business stand out from the rest.

Your unique selling point is what will set your business apart from that of your competitors. It could be anything that gives you an advantage, like faster service, more affordable prices, or a new approach to solving problems in your field. It is important to think about what your business can offer that is different or better than what others are already doing. This is what makes your business stand out and attracts customers.

Also, engaging directly with your potential customers can give you insights into what they expect from your business. You can consider organising focus groups or surveys to ask them what they are looking for, what they currently need, or even what they feel is missing in the industry market. This step helps you to understand your audience's behaviour, preferences, and what will motivate them to choose your product or service over others available in the market.

Social media is another good resource that you can use for your market research. You can analyse online discussions, trends and customer reviews of similar businesses, you can gather a lot of useful information. When running your research, pay close attention to both the positive and negative feedback from customers. Online reviews mostly point out areas where existing businesses are succeeding or failing, which can help you adjust your business strategies.

Gathering information from different sources is important. The more data you have concerning your business idea, the better equipped you will be to make good decisions about your business. Market research also helps entrepreneurs to see if the business idea is in demand, what their customers are looking for, and how they can meet the needs of their customers better than their competitors.

With thorough market research, you can get important information that will give you a clearer picture of what direction to take. Whether it means adjusting your pricing, improving your services, or introducing new features that the industry market is yet to see. In summary, market research is a tool to support your decisions about your business idea.

5. Write Your Business Plan

Creating a good business plan is an important part of starting any business, especially if you are doing this business with little or no money. Although it is possible to run a business without having a proper and formal business plan, creating one increases your chances of success. A well-prepared business plan serves as a guide, helping you to plan the steps you will need to take in your business. It provides clarity on what you should focus on and what to do along the way. In most cases, if you stick to your business plan, you increase your chances of succeeding.

As an entrepreneur, if you are not experienced in writing business plans, you can consider hiring a professional to help you out one together. However, it is important to keep in mind that hiring a professional can be expensive. If you are working with a limited budget, there are other options available. If you have the time and you are also willing to put in the effort, you can create a business plan yourself using tools like the Business Plan Builder Tool. This tool helps you to break down the entire business plan process into manageable steps, providing you with expert guidance along the way.

If you plan to seek funding from banks, investors, or even government programs in the UK, your business plan will need to include specific elements. These may vary depending on the source of funding, so always carefully research and include all the necessary components you need for your business plan. This step is very important because different types of investors or funding sources require different information when evaluating a business. It is important to always make sure your business plan meets their expectations.

The most effective business plans are comprehensive. They should explain your business model in detail and define clearly who your target audience is. Your business plan should also contain your growth strategy, your marketing strategy and how much funding you will need to get your business off the ground. Also, you avoid including financial projections, offering a forecast of your expected revenue, expenses, and profit margins over the next several years.

By the time someone finishes reading your business plan, they should be able to get a clear understanding of your business, what it is about, and your plans on how to make it successful. They should also be able to see that you have the potential to overcome the challenges and use opportunities in your market effectively. A good business plan should also provide a blueprint for your business's future and a reassurance to boost the confidence of investors or lenders that you have a clear path to success.

Writing a business plan can be time-consuming and may require research and careful thought. It might feel difficult and tiring, but this is a very important step to take as an entrepreneur for your business to succeed. Even though it may be a challenging step to take, having a detailed business plan is important to guide your business forward and help you stay on track as you grow. Since it contains every information your business needs, your business plan will serve as your guide and if you follow it strictly, you can easily predict your business' success, which is an essential tool for success.

6. Decide Your Business Structure

When starting a business, one important decision you will need to take into consideration is determining the structure of your business. This is an important step because the business structure you choose will influence the operations of your business, your race, and the level of personal liability you assume. Below are the most common business structures explained, with each having its advantages and disadvantages.

Sole Proprietorship

A sole proprietor is the simplest and most common form of business structure. It is typically chosen by individuals who want to start a business on their own without the need for a complex business structure. In this type of business structure, the business and the owner are the same legal entity. This however means that the owner has complete control and ownership over all aspects of the business, ranging from decision making to profit distribution.

The disadvantage of this business structure is that the owner is also personally responsible for all of the business's debts and liabilities. If the business runs into debt or faces legal challenges, the owner's assets, such as their home or savings, could be at risk. This business structure is, however, popular with freelancers, consultants, and small business owners due to its simplicity and ease of setup.

Partnership

A partnership is a business structure in which two or more individuals share ownership of the business. Partnerships can be general or limited. In a general partnership, all partners equally share the responsibility for the business, which includes its profits, losses and liabilities. Each partner can also be held personally liable for the debt of the business. On the other hand, a limited partnership allows some partners to contribute only capital without being involved in the day-to-day operations of the business. These partners have limited liability, meaning they are only responsible for the amount they invested. Partnerships are often chosen when two or more people want to collaborate on a business idea, sharing the workload, risk and capital of the business.

Private Limited Liability Company (LTD)

A limited liability company is a flexible business structure that combines elements of both corporations and partnerships. One of the major advantages of an LTD is that it provides its owners, known as members, with protection from personal liability. This means that if the business faces financial problems or legal issues, the member's assets are generally protected. Additionally, LTD offers flexibility in their mode of taxation. Members can choose to have the Ltd taxed as a corporation or as part of their income. This flexibility, combined with the limited liability protection, makes the LTD a popular choice for small to medium-sized businesses that want to limit personal risk while still maintaining control over their business.

Corporation

A corporation is regarded as a separate legal entity from its owners, which means that the business itself is responsible for its debts and obligations. This business structure provides the strongest form of protection for personal assets because the owners are not personally liable due to the business's debts. Corporations come in two main types. C corporations and S corporations.

The C corporation is run as a separate business entity which means that the business pays its taxes and the members pay taxes on the dividends they receive. An S corporation on the other hand allows income, losses and deductions to pass through the shareholder's tax returns, avoiding the double taxation that may occur with a C corporation. While corporations offer strong liability protection and often favour large businesses, they require more intense paperwork, regulations and formalities to maintain.

Cooperative

A cooperative or co-op is a unique business structure that is owned and operated by a group of people for their mutual benefit. Cooperatives are typically found in industries such as agriculture, finance and retail. In a co-op, the members share in the profiles and have a say in how the business is run. This business structure is democratic, meaning the decisions are made collectively, giving each member an equal right to vote in decision making. Co-ops are designed to serve the needs of their members rather than to generate profit for external shareholders. This structure of business is, however, ideal for businesses with a strong community focus for those looking to create a more equitable, member-driven business organisation.

Non profit Organisation

Non-profit organisations are businesses to serve the public food rather than make a profit. These organisations are eligible for tax-exempt status, meaning they do not have to pay federal income taxes on the money they earn, prices that meet certain criteria. Nonprofit organisations rely on donations, grants and volunteers to fulfil their mission.

They reinvest any profits back into the organisation rather than distributing them to owners or shareholders. These organisations are commonly used for charitable organisations, education institutions and religious entities. At the same time, the process of establishing a non-profit can be complex, if it is a good way to serve the community and make a huge positive impact.

7. Choose a Business Name

Choosing a business name for your business is an important step to take before starting your business. If your business does not have a name, then you cannot register it, so you have to put this into consideration. Choosing a business name might seem like an easy task, but there are some rules and guidance you need to follow to ensure that the name you are choosing for your business is legal and effective. The name you select will represent your business in the public, so it is important to pick a name that reflects your brand and meets legal requirements.

One of the first things to put into consideration when choosing a business name is that your business name needs to be unique. This means that it cannot be the exact or similar name of an existing business. To make sure your business name is available, you can use the Companies House name checker, which has all the registered companies in the UK. If you input your name in the checker, it will show you if any business that has that name is similar. If your name is too similar to that of an existing company, Companies House will reject your application, leading to delay or the need to rebrand.

The name you choose for your business must also be appropriate and not contain any offensive or sensitive words. There are some words and phrases that are restricted by the UK government and require only special permission to use. Words like 'Royal', British or Association need approval because they imply certain connections or status. Other words that are considered offensive and misleading are also prohibited. Before choosing a business name, it is important to review the list of restricted words and phrases by Companies House to ensure that your business name does not contain any.

Also, your business name should suggest a connection to the government or certain public authorities, except if you are permitted to do so. For instance, words such as the UK, National or Government might give the impression that your business is affiliated with a government body which could mislead your customers. It is important to always avoid any confusion that might arise from your business name because it can lead to legal challenges or fines.

Your business name should be easy to spell, pronounce, and remember. This might seem like a minor issue, but it has a great impact on how your business is perceived and his easy customers can find you. A name that is too complicated or hard to spell might confuse potential customers to make it more difficult for them to recommend your business to others. Also, having a business name that is easy to pronounce and remember can help in building brand recognition and loyalty over time. Always aim for a name that is simple, clear and memorable.

Another important rule to consider is that your business name must include the appropriate legal suffix if you are setting up a limited company. For instance, private limited companies in the UK are mandated to include Limited it Ltd at the end of their business name. This helps the government and other bodies to distinguish your business as a limited company and shows customers or investors that the business is a legal structure. However, if you are setting up a business as a sole trader or partnership, different rules apply and you might not need to include a suffix, but it is important to always follow the correct naming protocol for your business.

Your business name should also reflect the nature of your business. While creative Ames can be fun and memorable, they should also provide some insight into what your business does. A clear name describing your business activities helps your potential clients to understand your business once they come across your business name and this also helps in marketing and promotion.

8. Registering Your Business

When you are ready to make your business official in the UK, you must register your business. This is an important step to take for your business and this helps you to turn your business idea into a legitimate company that is ready to operate in the UK.

There are different types of ways to register your business and each of these reasons has its benefits and demerits and this all depends on your goals, financial projections, and your plan for your taxes. There are different structures of business with each of them having an entirely different registration process. All you have to do is select the business structure that fits your business the most and follow the registration requirements for that registration process to get your business legally off the ground.

If you consider a sole proprietorship, which is a type of business structure in which the owner is not separated from their business, then you have an easier registration with less paperwork and fewer additional obligations for your business. As a sole trader, you do not need to register your business separately for tax since there is no separation and you will pay your business tax whenever you are filing for your annual tax returns.

You can also alternatively choose to register your business as a partnership either as a limited partnership or as a traditional partnership. As a limited partnership, there is more legal paperwork compared to a general partnership and you need to submit all required details of the partners to Companies House. In both partnerships, you need a partnership agreement which plays the role of the guide or constitutional document for the operation of the partnership. The partnership agreement can be changed anytime by the partners once there is a mutual agreement between all the partners.

The private limited company which is the most popular business structure in the UK because of its protection for the owner liability in case the business falls into debt, which means the owner of the company will not be held in case of debt. The Ltd company has much paperwork compared to the above type of business structures. For a Ltd company, the information about the directors must be filed online or in a physical form by post from the Companies House. Aside from directors' information, the following are other required information needed:

company name
business activity
article of association and memorandum of association which serves as the constitutional document in the ltd company
information of the shareholders, which can be one
information of the secretary if available and any other required information.

You can register a company on the Companies House website or request a form and fill it out by post. In this business structure, any change made to the constitutional document, which is the articles of the association, must be reported to the Companies House. This business has full protection for the limited liability of its partners and there is a clear separation between the company and the owner or directors.

9. Network With Others

Starting a business without funding can be very difficult, so you need to make use of an important tool, which is the ability to build connections with others. Networking can be a valuable tool because success isn't just what you know and is most time by who you know. Building relationships with other people who have experience, influence, or other resources in your industry can open up opportunities that might otherwise be out of reach.

You can start your networking journey by reaching out to professionals who are already established in the industry you're entering. These people can help you with practical advice, which will help you to navigate challenges they have already faced in the industry. They can also introduce you to other valuable connections who may become helpful during your career. Some of these connections could be potential customers, investors, or partners. Networking with experienced entrepreneurs in your field and another field can give you insights and strategies that work well and the ones that don't, which can be a huge contribution to your business growth.

Another valuable benefit of networking is the opportunity entrepreneurs have to market their products or services to a wider audience. As an entrepreneur, if you form strong valuable relationships with other business owners or professionals, they might be willing to promote your business to their audience. This can help advertise your business to a wider audience, attracting potential clients without having to spend money on traditional advertising. Also, some people you meet through networking might become interested in your business and decide to become investors, offering financial support for the growth and development of your business.

There are several ways to build your network as an entrepreneur. One of the easiest ways is to connect with people online. There are platforms like LinkedIn, industry forums and even social media can help you reach out to individuals and communities that share your professional interests. These digital platforms can allow you to connect with people around the world, expanding your reach far beyond your local area. There are online groups that are focused on industries, making it easier for interactions between individuals of similar interests.

Aside from online platforms, there are also physical networking events that you could attend as an entrepreneur. There are local business meetups, industry conferences, and trade shows which serve as a medium to meet and network with different people. These networking events usually target entrepreneurs, investors, and industry leaders who are open to discussing new ideas, collaborating on projects, or even mentoring new business owners and entrepreneurs. Face-to-face conversations usually help in building strong relationships that are sometimes hard to get online.

Although networking takes time and a lot of effort, the relationships you can build can provide a long-term benefit. Whether you're attending events in your local community or reaching out to professionals online, the key is to stay consistent in your efforts. By continuing to grow your network, you can increase the number of valuable opportunities that come your way as an entrepreneur. Even if you are starting a business with no financial support, the connections you make through networking can offer you advice, support, and even financial backing to make sure your business is a success.

10. Funding Your Business

Starting a business with no money can be a stressful task, especially when you start to realise how many costs are involved in the process. Everything you do in your business will require some level of financial investment and support, whether it is something as small as paying for stationary or something more substantial like covering your internet and phone bills. Even the most simple operational tasks cost money, and without any financial support, the challenges can quickly add up.

Although it is possible to start your small business with little funds during the early stages of the business, getting funding for your business can greatly improve your progress and growth. Having additional resources available allows you to cover your startup costs more efficiently and focus more on growing your business rather than worrying about how you are going to pay for your necessities. Having a funding source for your business can have a great impact on the growth of your business and can contribute to quickly expanding and developing your business.

There are various sources of funding for your business you can explore. First, you need to consider your immediate network, such as your family and friends, who may be willing to support your business financially. Your immediate network may believe in your vision and offer small loans or investments to help get your business off the ground. Another option you can explore for funding is through the bank. Many banks offer loans, especially those that are designed for startups and this option will be of more advantage, especially if you have a good business plan.

In addition to private funding, there are several funding options available. One of the most valuable options for small businesses in the UK is the UK's Government Funding. The British government offers several programs that provide financial support to startups. These programs come in many forms, such as government grants, loans, or tax credits. Government grants are particularly beneficial because they do not need repayment, making them a good option for new businesses to minimise debt.

Government loans, however, provide more structured financial support for new businesses with favourable interest rates and repayment terms. These government loans are designed to be more accessible to startups than traditional bank loans. Tax breaks and credits are also available and can significantly reduce your financial burden by minimising certain business burdens.

The funding you receive from these sources can be put to use for various business needs, such as purchasing equipment, funding marketing campaigns, paying employee wages, and covering the cost associated with hiring. Additionally, some grants are specifically targeted at certain industries or types of businesses, so it is worth researching the program that aligns best with your interest.

If you are looking for a resource to find funding sources, the UK government provides a funding database listing all the available funding programs. This database allows you to search for grants and loans that are suitable for your business type and location. Taking the time to explore these opportunities can help you identify the right funding option for your startup.

As an entrepreneur, before moving forward with your business, you should always take time to research the available funding sources and determine which ones align with your business goals. Securing the right financial support can be one of the important factors that boost the growth and development of a business and also sustain the business in the long run.

11. Creating a Sales and Marketing Strategy

Once you have successfully gotten your business all setup and ready to go, the next step is to create a solid sales and marketing strategy. This is an important phase of launching a business. It helps you to figure out how to attract potential customers and turn them into loyal buyers. It is not enough to have a good product or service, you need a plan in place to let people know about it and encourage them to take action.

Your marketing strategy should outline the different ways you plan to promote your business. For instance, if you want to consider social media platforms to reach your target audience, then you have to research which to use. Social media is a good tool for businesses today if it offers a way to directly engage with potential customers and share your brand's story. In addition to social media, you can also invest in a website. A well-designed website can help you build trust and provide a space for customers to learn more about your products or services

Paid advertising campaigns can also be another option to consider. If your budget can fit it, then you should go for paid advertisement on platforms like Google or Facebook as these platforms can help you target specific demographics and drive traffic to your website or social media pages. These campaigns can be designed to reach your target audience, making them a valuable and effective way to promote your business.

Once you start getting people's interest in your business, it is important to think about how you can convert that interest into sales. A strong sake strategy will help you close deals and turn potential customers into paying clients. You should consider the steps that are involved in the sales process and how you can make it as easy as possible for your customers. This could involve offering discounts for first-time buyers, creating a simple and user-friendly checkout process, or providing good customer service to encourage repeat business.

12. Launch Your Business

The final step to all these is launching your business. At this point, you should feel confident in your idea, have a strong business plan, and have already secured some form of funding for your business. While you may have a clear vision of how you want your business launch to go, it is important to remember that things don't always go exactly as expected. Entrepreneurship is unpredictable, and it is normal to encounter challenges or surprises along the way. The key is to remain flexible and open to adjusting your plans as necessary.

Launching a business is a learning process and you may find that certain aspects of your original plan need to be modified once you start running your business. However, do not let this discourage you. Instead, use these experiences to create strategies to make your business even stronger. Commitment to your goals and being willing to adapt as an entrepreneur will help you handle your business effectively.

Launching your small business is just the beginning of an exciting journey that awaits you and you will require hard work, perseverance and adaptability to pull through.

Incorporate Your Company with Incorpuk Today

If you are wondering how to register your business in the UK, worry no more. At Incorpuk, we help you file accurate information when you register your company through us. We will also help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.

Conclusion

Using the above steps you can start up a business with little to no funding, as an entrepreneur, you should follow your business plan, stay focused on your marketing and sales strategies and be ready to change strategies if one is not going the right way. Over time, as you gain more experience, you will continue to improve your business. You just need to focus on how to get your business better and always to be positive about your business. Kindly contact one of our experts here if you have questions on how to start a business with no money in the UK.