Can I set up a business with no savings and bad credit? BANK ON DAVE replies


I want to set up a limited industrial roofing and cladding company at some point in my life. 

I read your article about the window cleaner who wants to set up a limited scaffolding company and I’m looking for advice.

I’m also a self employed sole trader, but not in the same sense as the window cleaner – I’m a labourer on the CIS scheme.

I have four years experience in my trade and I’m starting to seriously think about setting up my own business in the next five years.

I would probably start off as a self employed sole trader anyway. My problem is I don’t have savings and have a terrible credit score that I’m rebuilding slowly but surely.

I’ve seen plenty of my peers, my age and younger, getting bank loans and starting up businesses in the construction trade. 

I feel this isn’t going to be an option to me and I’d love a bit of advice on how to go about getting the ball rolling.

Are there any Government grants available or business loan options for bad credit?

I want to start my own business but I have a terrible credit score and no savings – what are my options? Dave Fishwick replies

Dave Fishwick, This Is Money’s business doctor replies: Firstly, I like the idea that you want to become your own boss and start your own business.

It is, beyond doubt, the very best decision that I have ever made. Back in the late eighties, I was seventeen years old and a builder’s labourer and I decided to set up my first business selling vehicles.

I have since built many companies in many different industries over the last 30 years and I’ve never looked back.

The first year is often the most challenging time in a new business as you’re usually starting up without the benefit of regular customers and with all the initial start-up costs to cover.

Equipment purchases, marketing costs, rents, deposits and much more make profitability hard to achieve in the early days, so you will need some funds to see you through to profitability.

To keep this to a minimum, I would try to start with as few overheads as possible. Maybe hire equipment rather than buy it initially or buy used equipment. Start with the smallest premises you can, if any. Maybe work out of a garage in the early days.

The advice I give to anyone who wants to start a business is, firstly, get a job (perhaps part-time) in the industry that you are interested in.

For example, if you wanted to own a pub/restaurant, I would say apply for a job in your busiest local pub, and carefully watch which beers sell best, what food is on the menu and what’s most popular.

What nights are the busiest and why? What entertainment works best – quiz nights, karaoke, or live music? What are the best opening times? Take pictures of the decor and all the fixtures and fittings. An expensive and experienced architect has probably designed the interior and exterior. You can benefit from their knowledge and experience.

Dave Fishwick

Do not try and reinvent the wheel yourself, as it already goes around brilliantly. Just borrow the best ideas from the best businesses and use them yourself. I promise you, it will save you a fortune in time and money!

You already have some experience in the industry that you are planning to start a business in, which is a significant benefit and a huge plus point. You can hit the ground running with the contacts and potential customers.

Starting as self-employed is usually the best way to begin. Keeping things simple at the beginning is often the best way forward.

Bear in mind limited companies are relatively cheap to set up and can offer you some increased liability protection and some potential tax and cash flow benefits. But always chat with a qualified accountant before you make any significant decisions.

You’re doing the right thing by rebuilding your credit score, as this could help you not only with getting loans but with leasing equipment and premises and getting payment processing facilities.

Although the less debt you have, especially in the early days, the better.

Many small grants and business loans are available online and a quick search will reveal pages of potential opportunities. They will, however, come with lots of rules and caveats.

You mentioned you might want to start your new business in the next few years, and I would use that time to gain as much knowledge as possible about your chosen industry. Create a fantastic business plan and rebuild your credit rating. 

You can do this by reviewing your credit report. Your credit score is affected by lots of factors, so knowing what’s on your credit report will help you figure out exactly where you stand.

Spend your spare time building a fantastic business plan, website and a significant social media presence. Whatever you can do now, while you still have a regular income, will help enormously later

Paying all your bills on time is incredibly important. Try and catch up on overdue bills if possible. Taking a small loan out and paying it back as quickly as possible, with all payments made in full and on time, will help you build your credit score again.

You can then approach some online lenders with a renewed credit report. Initially, you will most likely be accepted for a loan secured against an asset.

I also really like crowdfunding as a potential option for raising funds.

Perhaps you could secure some seed money from family and friends. Spend your spare time building a fantastic business plan, website and a significant social media presence. Whatever you can do now, while you still have a regular income, will help enormously later.

If you can put aside some money each month over the next few years before you start your business, it will help you a great deal to get through the period where you’re spending more than you’re earning.

The industrial roofing and cladding business sounds like work which couldn’t be done alone, so you’ll likely have to employ staff, or alternatively, it might be worth considering a partnership with one or more other tradespeople, who may be able to help share the burden of set up costs as well as share the workload.

Various organisations offer grants and mentoring to small businesses through resources linked to the gov.uk website and also your local authority website. It’s well worth exploring these to see if you qualify.

You must be ready to adapt, adjust and overcome all the problems that will come your way in the early days, and most importantly: never give up, never ever give up! 

Good luck.

Ask Dave Fishwick a business or career advice question

Self-made millionaire and entrepreneur Dave Fishwick is our new columnist responding to your questions about business and careers.

Dave has a hugely successful minibus and vehicle business based in Lancashire and rose to fame with his BAFTA-winning television series, Bank of Dave, which saw him battle the big banks.

He is ready to answer your questions, whether you own a business, thinking about starting one or have general career questions. 

In his spare time, he likes to give talks to inspire people to be the best they can. 

A Netflix movie about Bank of Dave is set to air at the end of the year/start of 2023 and he has been a friend to This is Money for the last decade. He now wants to impart some of his wisdom and advice to our readers.

If you would like to ask Dave a question, please email him at bankondave@thisismoney.co.uk 

Dave will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

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