Why most advice about starting a business misses the mark
A lot of advice about starting a business assumes you’re building something substantial from day one.
It assumes premises, staff, meaningful overheads, and early complexity. That assumption shapes how people think about cost, tax, and compliance — and often leads them to conclude that now is a particularly bad time to start.
The problem is that this model doesn’t reflect how most businesses in the UK actually begin.
Before worrying about whether starting a business is “too expensive” or “too complicated”, it’s worth grounding the discussion in reality.
So what does a new business in the UK usually look like?
Most new businesses start small (and stay that way)
According to data published by the Office for National Statistics, more than 95% of UK businesses are classed as micro-businesses, meaning they employ fewer than 10 people. A substantial proportion have no employees at all.
At the point of formation, the pattern is even clearer. The majority of new companies are set up with a single director and shareholder. Many never move beyond that structure, not because they fail, but because they were never designed to grow large.
This matters, because it immediately changes how cost and risk should be evaluated. A single-person business with no staff and no premises behaves very differently to a company with fixed overheads.
For most founders, “starting a business” is not about building an organisation. It’s about formalising work that is already being done by an individual.
New businesses are overwhelmingly service-based
When you look at how new businesses describe themselves at incorporation, a consistent picture emerges.
The most common categories for new UK businesses are professional services, consulting, IT and digital work, marketing, creative services, and personal or trade-based services. These businesses sell expertise, time, or outcomes. They do not typically require inventory, heavy equipment, or significant upfront capital.
Sectors that do require premises or capital - manufacturing, hospitality, physical retail - all exist, but they account for a much smaller share of new registrations.
This distinction is important, because many of the cost pressures that dominate headlines; energy prices, commercial rent, borrowing costs - disproportionately affect businesses with physical footprints. For a service-based solo business, these pressures are often marginal or irrelevant in the early stages.
Many start from home (even if it’s not always labelled that way)
A significant proportion of micro-businesses operate from home, particularly at the start.
Some list a home address as their registered office. Others use a virtual address while still working from home in practice. Many simply don’t record “home-based” formally at all.
What matters is behaviour, not labels.
The typical new business does not sign a commercial lease, commit to long-term premises costs, or take on fixed overheads early. This is one of the reasons starting a business can still be viable even when headline costs rise across the economy.
The assumption that “starting a business now means taking on expensive infrastructure” is, for most founders, simply wrong.
Hiring is the exception, not the rule
Another common misconception is that employment obligations arrive quickly.
ONS data shows that a large proportion of businesses remain owner-managed indefinitely. Many never hire staff. Others wait several years before doing so.
This has practical consequences. Businesses without employees do not need to operate PAYE, manage payroll, or deal with employment compliance. Those obligations only appear if the business changes shape.
Again, this doesn’t mean businesses are avoiding growth. It means many founders define success differently: predictable income, autonomy, and manageable complexity rather than scale.
What this means for early-stage costs
Rising costs are real. But they don’t apply evenly.
For a typical new, service-based, solo business, the costs that dominate early decisions are usually software, insurance, and occasional professional support. These are variable costs that scale with activity, not fixed commitments that exist regardless of revenue.
Energy costs, borrowing rates, and premises expenses become relevant only if the business model demands them.
This is why broad claims like “it’s too expensive to start a business now” often describe a specific type of business, not the average one.
Compliance feels heavier because informality is being removed
Another reason starting a business feels harder is that compliance is more visible than it used to be.
Reforms at Companies House have introduced identity verification, greater emphasis on accurate records, and stricter oversight of company data. These changes are not designed to reduce company formation. They are designed to reduce misuse and improve accountability.
If you look at the requirements themselves, they are clearly documented. Likewise, HMRC is explicit about when tax obligations begin and when they do not.
The friction many founders feel comes less from complexity and more from the end of casual setup. Informality is being phased out. Predictability is replacing it.
For founders who understand this early, compliance becomes something to sequence, not something to fear.
Why perception and reality diverge
Most people don’t compare themselves to actual new businesses.
They compare themselves to companies they read about, founders several years ahead of them, or businesses that already have staff and systems in place. That comparison creates pressure to over-structure, over-commit, and solve problems that don’t yet exist.
Understanding what new businesses really look like removes much of that pressure. It doesn’t make starting easy. But it makes it clearer.
Starting a business in the UK does not usually mean taking on high costs, immediate complexity, or heavy compliance from day one.
For most founders, it means starting small, staying flexible, and adding structure only when it becomes useful.
Once you understand that, the conversation about cost and compliance becomes more grounded and far less intimidating.
