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How Much Money Do You Need To Start A Business?

America’s 30.7 million small businesses employ 59.9 million people. Small startup businesses are a crucial part of America’s economy. The American Dream’s backed by entrepreneurs and their inspiration’s contagious.

If you’re among the masses who have that entrepreneurial spirit, your dreams are calling. You might be wondering, how much money do you need to start a business? It’s hard to start one without asking that question.

There are two answers. The knee-jerk response is a lot. The second and more accurate response is that it depends on many factors.

Read on to find out how to start a business financially to get your dream underway.

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How Much Money Do You Need to Start a Business?

The startup game wouldn’t be fair or possible if money-bought success. Shark Tank’s known for highlighting multi-billion-dollar companies that started with nothing. The most important thing’s not to lose sight of your dream.

Depending on the source, some will say it costs no money to start a business—the right idea can launch itself. Others will say it costs many thousands of dollarsShark Tank shows the spectrum—some don’t use any of their own money, while others invest their entire life’s savings.

Both are possible. Here’s what to know.

1- Have a Clear Vision

If you’ve been googling how much money you need to start a business? only your business can say. Each small business is unique in its demands and costs. Before you can know the cost to start a business, ask yourself the following questions.

Do I need:

  • Supplies?
  • An office or warehouse space?
  • Staff?
  • Marketing materials?
  • A license or permit?
  • A patent?
  • Technology?

Anticipating your business’s needs can help you estimate its costs.

2- Expect to Use Some Savings

When it comes to how to start a new business venture, two things are needed—time and money.

Knowing that it’s common to have to invest some of your own money. It’s good to have six months’ worth of cash to help you develop your brand, a team, and a plan.

3- Fundraising Should Never Stop

If you don’t have that financial cushion, raising funds can help you lay a foundation. There are many ways to raise money.

  • Asking family and friends
  • Using crowdfunding or Kickstarter platforms
  • Bank loans
  • Applying for grants

Answering the question, how much money does it cost to start a business? gets easier after considering these factors.

Business Startup Costs List

I love talking about startups, but I never loved talking about costs. Yeah, I know that’s not a good thing. It is not even possible to start a business without knowing the startup costs (all the money needed to start a business is called startup costs). 

Calculating our business start-up cost can be overwhelming, but don’t worry we don’t need to know calculus or any theorems. A few basics down there will help us get our business in gear.  

1. Marketing Costs

Obviously, to get sales, we need to do marketing. I believe business depends on sales, and sales depend on marketing. What do we think?

Allocating a sufficient amount of our budget to marketing costs would be a fair decision. After all, we have to let people know about our business. Marketing expenses include advertising through print and online media, sponsorships, public relations, campaigns exhibitions, SEO, social media, and newsletters.

So, as a startup, try to spend 20% to 30% on marketing for the first year at least. It will pay off!

2. Equipment And Supplies

Products or services solely will not help us run our business. We need to have equipment and supplies to operate our business smoothly. Equipment and supplies can range from heavy-duty manufacturing machinery and parts like high purity stainless steel tubing to office essentials like printer laptops. Equipment is usually a one-time expense and runs for a long term.

If we are stepping into a small industry, like an online handicraft business, we will not need a lot of bucks to spend on equipment and supplies. But, when we have a business in a large sector, the equipment can grab a significant portion of our business costs. 

I and most aspiring entrepreneurs buy supplies in bulk to lower per-unit costs. You can do it too!

3. Office Space

No matter if we are having an online business or operating stores, we need to have space where we and our staff can work comfortably. If we own space, it’s a plus point. Whereas, we can rent a work area. It will cost around $200 to $2000 per month.

A larger space will cost more than that. I will recommend adjusting to the smaller space for the first year. Not only will it help us in operating efficiently at the initial stage but also save us from larger rent, maintenance, and electricity costs month to month. 

4. Website Development

To develop an effective brand identity, we should go digital. A good website design with a Point On Sales system can help us get more detailed customer insights. We can boost our sales by having an e-commerce store too. I think in this digital era, it’s a must!

A user-friendly and sleek website design can cost around $1000 to $10,000. However, the amount depends on the number of pages, level of interactivity, complexity, and size of the website. 

5. Taxes

This one is important. Taxes fall in business administrative affairs. It is unavoidable at any cost. We have to bear it.

When starting our business, we need to file our taxes with our state’s tax authority. Moreover, keep in mind, the tax amount is not fixed, however, we have to pay some percentage of our earnings. 

6. Payroll

We must recompense our staff for their work. Examine competing job postings to determine how much we will need to allocate for each employee’s payroll. The exact cost, however, will vary depending on our employees’ level of education, training, and location.

7. Inventory Costs

If we are planning to start a retail, wholesale, or manufacturing business, we will likely need to secure inventory. 

I know it’s tricky to know how much inventory we will need, but we can be wise by having enough inventory at the initial stage because too much or too less inventory can cause regrets of spoilage or losing customers.

As per Nerd wallet, we should spend 17% to 25% of our budget on inventory. 

8. Personal or Legal Fees, Permits, and Licences

Do we want to be on the safe side? This one is crucial.

Financial implications, legal documentation, licenses, and permits are all necessary when choosing a business entity. Whether we want to incorporate our business or not, we will probably need to apply for licensing or permits. Depending on the state, the fee can range from $50-$700.

In addition to that, you may have to bear the fee for the services you leverage to get those permits and licenses. This Incfile vs ZenBusiness comparison in GovDocFilling post will help you identify the right service for you that could save you some money.

How Much Does It Cost To Start A Business Online?

Business Online

An online business can somehow save us a bit from the side of the office or warehouse space, however, other things remain necessary. As per Shopify’s research and business advisors, the recommended online business budget allocation is:

Cost Category Average Allocation In First Year
Operations 10%-15%
Product 28%-36%
Shipping 8%-12%
Online 9%-12%
Marketing 7%-12%
Team 14%-30%


Business Startup Expenses For 6 Common Industries

1. Professional Services

This sector mainly includes architects, lawyers, analysts, accountants, and auditors. Here, office space expenses are one of the largest upfront expenses. The average capital needed for professional services can range around $70,000.

2. Personal Trainer

Original trainer is more about services so chin up because we are not going to spend a lot on products and manufacturing. The average startup cost for a personal trainer is around $23000.

3. Health Insurance

Health insurance business is more about expertise, management, and healthcare background. We have to invest in our skills here; the average startup cost for the healthcare insurance business is around $12,000.

4. Retail 

To break into this vibrant industry, we have to open our own retail store. As we are opening a store, we will be needing equipment, a team, a license, permits, marketing, and more. On average, we will be needing around $180,000 for retail trade.

5. Food Services

The main cost for food services includes kitchen appliances, marketing, raw materials, and a restaurant with a good ambiance (if we don’t solely provide online services). As per the Restaurant Owner survey, the food services startup costs can range from $175,500 to $750,500. \

6. Real Estate

Real estate is mainly about investing in lands and buildings. The average startup cost of a real estate business is around $12000 since we are on the safe side regarding inventory.

How To Get Money To Start A Business?

1. Credit Cards

These are appealing and simple to employ for a startup cost but proceed with caution. On amounts that roll over from month to month, most credit cards charge double-digit interest rates. If you wish to go this way, look for the best rates and terms on the credit card.

2. Use Money From A Personal Savings Account

To get started, I used my own savings. But, as per my experience, I recommend accumulating at least a year’s worth of living expenses before channeling money into the business. This is because, in the early stages, you may have to forgo a salary for a few months, in order to build a grip on business.

3. Get A Loan

This one is difficult. To meet that standard, we will need a solid business plan or business model and a stellar credit history. Even so, anticipate a lot of hurdles to be jumped through.

Do the research and find a guaranteed large or small business loan program.

4. Borrow From Family And Friends

If we choose this, be upfront about the terms of our loan, and make sure everything is in black and white. Consider borrowing the money for a specific length of time at a low-interest rate.

How To Run A Successful Business

  • Do what you love. The greatest driving power of a successful business is passion. When starting your own business you must be sure you love what you are doing as you will spend lots of time and energy. There is no point in starting a business of sweet corn when we hate them.
  • Always keep a source of cash. We can have a side hustle to overcome any uncertainties and keep our cash flow smooth.
  • Never underestimate the power of a team. Don’t try to be a single boss. We may need a mentor to always guide us and give us invaluable advice.
  • Make contact with clients. Building the necessary network with our customers gives us some assurance that our business is getting known.
  • Consistently do the research. No matter if we are starting our business or in the middle of our business. Research will always help us keep operating smoothly and correctly.

Tips To Save On Startup Costs

Starting a business can be expensive and one of the best ways to save is to cut costs wherever possible. Here are the following tips to do that.

  • Negotiate with suppliers. It is one way to save money when starting a business. This can be done in several ways, such as negotiating on price, size, or terms of service. It’s worth considering ordering in bulk.
  • Get creative with office space. If we need an office, consider sharing space with another business or renting a smaller area than we might need. We can also sublease extra space to another company or individual when we are not using our office space.
  • Try to use free or low-cost marketing channels. Initially go with social media platforms to reach our target market.
  • Higher independent contractors or freelancers can save us a good amount of money as compared to full-time employees. we won’t have to pay for benefits or other associated costs.

So, How Much Does It Cost to Start a Business?

Being a true entrepreneur means having to answer your own questions. If you’re haunted by the question, how much money do you need to start a business? it’s time to revise it.

The real question is, how much money do you need to start your business? What does your success look like and how much money might get you there?

Once you’ve made connections, built a community, and established your company, you can invest the money you make for long-term expansion.

It’s true that you get what you give. You have to spend money to make money. Get started now to see for yourself!

Join Our Small Business Community

Get the latest news, resources and tips to help you and your small business succeed.


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