How to start your business on a budget

Starting a business doesn't have to mean taking big financial risks. In fact, many successful entrepreneurs begin with modest resources and a simple goal.

If you're launching a business on a budget, you just need an idea you're confident about and to make the most of the many free or affordable tools, funding options and support networks available to you, which are numerous in London.

Start with a low-cost business idea

What often prompts an entrepreneur to start a business is that they identify a gap in the market that they have the right skills and vision to plug.

But it's not unheard of to have a burning desire to be your own boss and for the idea to come second, especially if you're starting with limited resources.

If that's your case, choose an idea that requires a low initial outlay. Here are some businesses that require a small amount of capital to get started:

• Consulting.

• Online tutoring.

• Selling handmade products.

• Copywriting.

• Coaching.

There's plenty of space to carve out a niche in a well-populated sector, too. You need to conduct thorough market research, and there are plenty of free methods available.

For example, if you want to become a personal trainer, review local competitors online to see what services they offer and how much they charge.

Use free survey tools like Google Forms, social media polls or the free plan of SurveyMonkey to define the fitness goals and preferences of potential customers in your area.

That way, you can check if there is an unmet demand that you can satisfy with your novel approach to personal training.

Raise funds with limited resources

Find ways to fund your low-budget business that don't require you to already have loads of resources or give away equity:

• Bootstrapping: starting a business using personal savings and reinvesting your early takings is perfectly viable. This kind of organic growth can be slow, but it can also teach you to be resourceful and allows you to keep full control over your business.

• Local grants: UK Research and Innovation and the Greater London Authority are great places to start if you're looking for finance that you won't need to pay back.

• Start Up Loans: a Start Up Loan is a government-backed loan of up to £25,000 at a reasonable fixed interest rate of 6% and repayment terms of one to five years.

• Crowdfunding: there are various crowdfunding platforms that allow you to fund your venture by raising finance from an engaged community. Most charge relatively low fees to collect contributions from your supporters.

Access free financial support for your business.

Use free and low-cost tools

There are plenty of free and low-cost tools and resources you can use to get your business off the ground:

• Free business planning templates: every successful business starts with a detailed plan. You can find free templates at Grow London Local and GOV.UK.

• Build a free website: popular website builders like Wix have free versions. They have limited features and you'll need to host Wix ads on your site, but they're a great place to start building your online presence. Make sure to register a .LONDON domain name for your website.

• Build a brand on a budget: it's free to create a profile on most social media sites to start interacting with and promoting your business to potential customers. You can also use free graphic design tools like Canva to create digital assets for your posts. Just remember to be consistent and remain authentic in your communications.

• No-cost productivity: give your fledgling business a free productivity boost by making use of Google Workspace's Starter package, which comes with Email, Drive Chat and Video meeting for collaboration, as well as Docs, Sheets and Slides for creating content. It also has a basic version of the search engine's AI tool, Gemini.

Tap in to local support networks

Even if you're a sole trader, you never have to be alone when you're starting a business in London. Make the most of the capital's local support networks and hubs. Grow London Local is a great place to start.

We have a range of free workshops, mentoring and networking events. For example, our Coffee Fridays take place across the capital every month and allow you to connect with like-minded individuals that you can learn from and even do business with.

Free and low-cost selling and advertising

In many cases, you need a budget to sell and promote your business, but there are ways to do both while keeping costs down.

• Online marketplaces: online marketplaces like Etsy, eBay and Not On The High Street provide a relatively quick, easy and low-cost way for small sellers to reach customers. Compare the fees of each platform to see which one makes the most sense for your business.

• Social media selling: as well as using social media platforms for free promotion, you can create an Instagram Business Account and Facebook Shop account for free. Transaction fees apply when you make a sale, however.

• Local markets and pop-ups: there are dozens of marketplaces in London where you can set up a stall and start selling direct to consumers. Not only is it relatively cheap, but it's a great way to meet your customers and gather valuable insights.

• Search engine optimisation (SEO): this is where you tailor the content of your website to rank on Google, and is a free way to make sure your business gets seen by people searching for relevant terms. It takes some time and dedication to stay competitive, but it's an incredibly valuable channel.

• Traditional marketing methods: if you offer a service in your local area (such as plumbing or catering), you're a prime candidate to benefit from traditional marketing methods like putting up flyers on the street or on public noticeboards, as well as direct mail.

• Business cards: don't forget to print a bunch of cheap business cards that you can hand out at events or when you meet a potential customer.

Keep learning and adapting

When your business takes off, don't take your foot off the pedal. Now's the time to build on your early momentum by continuing to learn and adapt:

• Upskill: whether your business is one or 10 years old, you should never stop upskilling. Make the most of free online courses or exchange knowledge and skills with your peers.

  You can use our free resource to find relevant skills providers, short courses and work-based learning opportunities.

• Gather feedback: your customers' opinions are an incredibly valuable resource that, even if negative, you shouldn't shy away from. Many consumers now leave reviews on Google, but you can proactively seek reviews on your own platforms. Make sure to engage with negative feedback and to see it in a constructive light, not just as criticism.

• Market research: this shouldn't stop at the business planning stage. Your competitors are always developing their offering and adapting to a changing market and so should you. Keep an eye on changing trends and preferences among your target audience.

Common mistakes to avoid

Stay on track for success by avoiding these common pitfalls:

• Overspending: it's easy to get carried away by thinking you need to invest in every piece of software or marketing channel available.

  Make use of free plans and trial periods, and start with a small initial run of products or marketing materials to see if they're effective before making a big investment. Check out our range of small business offers to save in your early days.

• Not validating your idea: if you've done thorough market research, it should be clear to you whether or not your business idea is valid. Don't ignore the warning signs and push on regardless believing the issues will fix themselves.

• Ignoring legal or tax obligations: all businesses have regulations to follow and taxes to pay. Set aside dedicated time to deal with all your unpleasant admin and put funds aside for your taxes or you risk being penalised.

• Trying to do everything alone: you might buy in to the myth of the bold entrepreneur flying solo, but that doesn't mean you shouldn't accept all the free help that's available to you.

  Check out Grow London Local's range of online support or book a consultation with one of our Business Support Managers.

• Ignoring your mental wellbeing: starting a business is stressful and requires long hours and hard work. But don't forget to take some time to check in with your mental health and recharge your batteries – it'll benefit your business in the long run.

Final thoughts

Starting a business with limited funds might seem daunting, but it's more achievable than ever with the right approach and mindset.

By starting with a low-cost idea, tapping in to free resources and avoiding common pitfalls, you can grow a sustainable and successful venture without breaking the bank.

Grow London Local has loads of support available for building a business on a budget, including free resources, workshops and events. Get in touch with our team and get the support you need to thrive in London.

Read more

• Key contacts and organisations for start-ups

• Starting a small business in London: where to get funding

• Free support is available with Grow London Local 

Grow London Local: Support for London's small businesses

No matter where you're based in London, you'll find relevant support and guidance on business planning, sales and marketing and much more, as well as opportunities to connect with like-minded business owners. Visit Grow London Local now