How Much Money Do You Need to Start a Business

Camino Financial21 Feb 2024
How Much Money Do You Need to Start a Business

How much money do you need to start a business? The amount can range anywhere from a couple hundred to hundreds of thousands of dollars.

The total depends on various factors. Some include your business structure if you want a brick-and-mortar or an online store, how many employees you need, and your industry.

In this article, you'll discover how much it costs to start a business in the most common industries, and we'll explain how to calculate startup costs.

How Much Does It Cost to Start a Business?

The average basic costs of opening a business can range from $100 to $400,000. A lot of factors might affect this cost.

The most important factor to consider is what type of business you want to start.

For example, on the lower end, you can find online dropshipping businesses and businesses with a lot of employees and inventory on the higher end.

Starting a brick-and-mortar business, you'll need more money than someone who wants to start an online business. That's because you'll have more overhead expenses, like rent, utilities, and inventory costs. Basic expenses (like office space, supplies, and marketing) are $5,000 to $10,000. If you're planning to hire staff or build an inventory, your costs will be higher. The next factor to consider is your business model. Each model has different financial needs. For example, if you're manufacturing products yourself, you'll need money for supplies, machinery, and employee wages. On the other hand, if you're providing services online, your main expenses will be marketing and website development. Finally, your personal financial situation is also a factor to consider when determining how much money you need to start a business. Do you have savings that you can use? How much debt can you afford to take on? Answering these questions will help you determine how much personal financial risk you can take and how much external funding you'll need to raise.

Business Startup Costs List

There are several factors to consider as a new business owner. The following is a general list of some of the most common expenses.

Personal or Legal Fees, Permits, and Licenses

You may need to hire a tax professional or lawyer to help you set up your business, and you may also need a professional to help you apply for a permit or license. Law firms typically charge an hourly rate for their services. The cost of legal representation can add up quickly, especially if your business is complex or you're litigating a dispute. Also, each state has different requirements for businesses looking to operate within its borders. Generally speaking, businesses will need to file for a business license and/or tax ID number and any relevant permits.

Equipment and supplies

The cost of business equipment and supplies can vary greatly, depending on the type of business. For a home-based business, the most common expenses include computers, software, printers, office furniture, and telephone/Internet service. Generally, start-up costs for a new business can range from several hundred dollars to $100,000 or more. The amount you'll need to spend depends on the size and complexity of your business and whether you're starting from scratch or buying an existing business.

Office Space

Your office space costs will largely depend on the city or town in which you live. You can expect to pay anywhere from $400 to $2,000 per month for small office space in major metropolitan areas. Larger spaces will obviously be more expensive. If you're willing to work out of your home, you can save quite a bit on office space costs. However, there are some drawbacks to working from home – namely, that it can be difficult to stay focused and productive when there are so many distractions around you.

Business Insurance

It's possible that you won't need it for online business start-up costs. But it is something you'll want to consider, perhaps not immediately, but early on. Insurance costs In the U.S are around $1,200 per year. If you have a lot of inventory on your property, there's a good reason to get property insurance because anything can happen, from a fire to a flood. If you want to avoid the risk of a customer suing you, you probably wish to have liability insurance. You'll want to consult with an expert on what is the most appropriate coverage for your business.

Marketing Costs

It's important to allocate a fair share of your startup budget to marketing costs. After all, you won't get very far if nobody knows about your business. However, the recommendations are to keep these ad and marketing costs below 10% of your budget. Here are some common marketing expenses:
  • Advertising (print, online, TV, radio)
  • Public relations and publicity campaigns
  • Sponsorships and donations
  • Trade shows and exhibitions
  • Promotional materials (brochures, website design, logo design)
  • Website development and SEO
  • Sales visits and trade shows


Unfortunately, it can be an unpleasant surprise and is unavoidable even for self-employed individuals. To start a startup business, you'll need to file taxes with the IRS and your state tax authority. There are different business entities, and each has its own taxation requirements. For example, starting a sole proprietorship, you'll need to file a Schedule C form with your personal tax return.

Inventory Costs

The biggest costs for starting a business tend to be around inventory. If you're manufacturing products, you'll need to factor in the cost of materials, labor, and shipping. Even if you're not making physical products, you'll likely have some inventory costs associated with your business. For example, if you're a service-based business, you may need to purchase supplies or pay for event space rental in advance. Of course, many other startup costs are associated with launching a business (marketing, legal fees, etc.), but inventory tends to be one of the biggest line items on the start-up budget.

Website Development Costs

The cost of developing a website can vary greatly depending on the features and complexity of the site. However, as a general rule, you can expect to pay anywhere from $2,000 to $10,000 for a basic website. The cost will be higher if you want more features or custom design work. Some of the factors that can affect the cost of website development include:
  • The size and complexity of the site
  • The number of pages and sections
  • Whether or not there is a custom design involved
  • The level of interactivity required (e.g., dynamic content, forms, etc.)
According to these features, some costs of types o websites are
  • Basic website design/development: $1,000 - $5,000
  • E-commerce website design/development: $5,000 - $10,000
  • Web application development: $10,000 - $25,000


There are a lot of factors that go into calculating payroll costs for a new business. Generally, you'll need to account for salaries, withholdings, and benefits. You'll also need to factor in the cost of unemployment insurance, workers' compensation insurance, and state disability insurance. In some cases, you may also need to pay Medicare and Social Security taxes. These taxes can add up quickly, so it's important to plan for them when starting your business.

    Business Startup Expenses for 10 Common Industries

    Below are a few average figures for start-up costs. Please note that these are simply averages and estimations; many small business owners continued to launch their businesses with less than half of these average costs. Within each industry, there are many variations and no one-fits-all formula for small businesses.

    Food Services

    How much money does it cost to start a business in the restaurant and food industry? The typical cost to start a business in this category is $125,000. You can also buy a restaurant franchise, significantly reducing your start-up costs, or you can hit the ground running by purchasing another agent's clients. Restaurant franchises usually cost $25,000 to $50,00 on a low budget. Another idea is starting a food truck, an increasingly popular option. How much money do you need to start a business? It can cost you from $30,000 to $200,00.

    Real Estate

    After you've taken the training, paid the fees ($700), and passed the exam, you need to find a real estate broker. The broker assumes responsibility for the day-to-day operations saving you those costs. Most brokers charge anywhere from $25-$500 per month, so you can operate as an agent. Tax-related expenses include annual membership dues ($200) and marketing costs ($1,000+) for business cards, a website, and advertising your properties. Keep in mind that the costs to start a business may include the gas money you'll expend traveling to show properties, the lunches with clients, and costs for a home office. You should also budget for continuing education ($50-$300 per year) to stay up to date on licensing.

    Health Insurance

    How much does it cost to start a business as a health insurance provider? The cost of starting a business in this category range from $5,000-$50,000 and includes these typical expenses:
    • Each state requires that you take general education and ethics courses that range anywhere from $300-500 per course. Many are available online so that you can progress at your own pace.
    • After completing the necessary credit hours for these courses, you can take the licensing exam for each insurance category (set aside about $50 for each exam).
    • If you set up your business from home, you'll save substantially on start-up costs. For example, you won't be paying for rent, furnishings, and additional utilities.
    • You can hit the ground running by purchasing another agent's clients. These costs are negotiated between agents and represent the bulk of your start-up costs.
    • Management software helps complete administrative tasks within the insurance industry. Plan on spending $50-$300 per month to access the software's features.

    Personal Trainer

    On average, it's possible to shell out $8,000 to $10,000 before training your first client. Remember, you'll need that amount of working capital to launch your training business. They usually collaborate with certified trainers if you lease space at a gym or health club ($1,000-$1,500). Leasing space and paying utilities could cost $2,300 or more per month. Regardless of where you provide personal training, you may spend up to $5,000 for equipment. Since you need to track your clients' progress, allocate roughly $1,000 for software and a laptop.

    Auto Repair Shop

    How much money do you need to start a business repairing and maintaining vehicles? Stocking auto repair equipment in your shop isn't cheap. Lifts are a necessary expense to work under cars and trucks and cost $4,000+ each. More than likely, you may already own an inventory of tools. If you don't, plan to pay $15,000 to purchase the manual and electric hand tools, jack stands, multimeters, tool chests, and other essential supplies.


    The average cost of starting a business in retail is $32,000. However, 42% of small business owners spend around $5000 to open. Some start-up costs stay relatively constant whether you open a retail clothing store or sell furniture or arts and crafts. For the first month, you will require a security deposit to lease space and secure utilities and the first month's rent. All of this may add up to more than $3,000 as start-up costs. Don't forget to allow another $3,000 to $7,000 to customize the rental space, buy store fixtures like shelves and bookcases, and consider other miscellaneous expenses.

    Professional Services

    How much does it cost to start a business if you want to provide a professional service? Some professional services include lawyers, veterinarians, accountants, architects, photographers, etc. The average cost of a start-up is $18,000. Over 54% of these professionals needed less than $5,000, and fewer than 13% spent $50,000 or more. To comply with state and local authority regulations, you'll need to purchase the necessary licenses (upwards of $1,000).
    • Licensing specialized software for your service niche ($3,000-$5,000).
    • Hiring graphic designers to create professional brochures and a website ($5,000).
    • Buying office furniture, computers, and related supplies for your service ($2,000-$4,000).


    How much money do you need to start a business in the construction industry? The average cost of starting a business in construction is $14,000, with half reportedly starting their business with less than $5,000. In addition to hiring a lawyer to help you register your business name with the state, you'll pay licensing fees and advertising costs ($4,000-$6,000). Set aside $5,000 and increase your tool budget as your business grows. The contractor's insurance protects you and others when injured on the job site. It's possible to bundle your business owner's liability and surety bond insurance to save money ($1,000-$2,500).


    If you already own a van, why not transport people to work, the airport, and other locations? You could also use the vehicle to help people move or provide services to seniors. In addition to licensing and insurance start-up costs already mentioned for other professions, here you have a breakdown of the cost of starting a business in transportation:
    • Assuming you own your van, you'll have ongoing maintenance expenses to service the vehicle. Budget $300-$500 per month to allow for unexpected repairs.
    • Fuel gas cards mean you don't carry extra cash to buy gas. When your transport schedule is full, expect to pay $40.00 a day or more for one vehicle.
    • You'll need business cards and flyers ($200).
    • As your business grows, you may decide to set up an office. As discussed earlier, you'll pay rent, buy furniture and office equipment, and pay other operating expenses.

    Language Translator

    Since most translators start their businesses at home, they can set up an office without renting space. How much does it cost to start a business as a translator?
    • You'll need a computer with sufficient RAM to multitask and a high-speed internet connection ($800).
    • A printer is a must-have and accounting and translation software ($1,500-$2,000).
    • Most translators invest in continuing education courses to hone translation skills and learn other languages ($500-$1000).
    Moreover, you'll also pay typical start-up costs like setting up a legal entity, creating a website and paying marketing costs ($750-$1,250). Whether you prefer a personal library or access software apps online, you may want to invest in grammar books and dictionaries ($200+).

    Other Industries

    Some other industry average costs to start are
    • Agriculture & Farming $5,000 - $10,000
    • Manufacturing $50,000 - $100,000
    • Retail $10,000 - $50,000
    • Technology $5,000 - $100,000
    As you can see from the table above, the cost to start a startup business varies widely depending on the industry you're in. The good news is that there are options for funding your venture regardless of how much money you need to raise.

    How to Get Money to Start a Business?

    There are several ways that you can get capital to start a business. Here are the most common 4 options.

    Get a loan

    You could get a startup loan. These are the best alternatives because banks and lenders created them with your needs in mind. Another option is a personal loan, which is also a good alternative but not ideal. Camino Financial offers alternative financing to help you strengthen an existing business (with at least 12 months operating). Loans range from $10,000 to $50,000 at a fixed monthly rate for terms of 24 months. Apply For A Startup Business Loan!

    Borrow from family and friends

    Family members and friends want you to succeed, so most won't charge interest (although they could). You should write the terms of the loan agreement to include repayment terms, the length of the loan, and other pertinent details. The thing is that you put your relationships in danger if you fail to pay back the money.

    Use money from a personal savings account

    If you can keep 6 to 12 months of living expenses in your savings account, then it's okay to make a withdrawal. Otherwise, you shouldn't.

    Credit cards

    Shop for a credit card with the best deal (lowest rate and terms). Just keep in mind that the monthly credit card balance, fees, and interest add up quickly.

    What Are Startup Expenses?

    Startup expenses are the expenses you incur before you launch a new business. You have to estimate them and reflect them in your strategic plan. They may include legal paperwork, business licenses, location expenses, starting equipment and inventory, and basic marketing costs.

    How to Run a Successful Business

    Starting a business doesn't need to be an overwhelming feat. By following some previous steps, you can make estimating realistic start-up costs:
    1. Check other similar businesses. Research the financial statements of businesses in your industry. Although you won't have exactly the same average start-up costs, this comparison will help you understand what they are spending their money on and help you decide what to invest in.
    2. Estimate ongoing vs. one-time costs. Be sure you estimate which costs you'll pay month-to-month or year-to-year and which will only be one-time start-up costs or payments.
    3. Overestimate start-up costs. Many experts recommend adding 10% to your business cost to account for unforeseen or miscellaneous expenses.
    4. Essential or optional? While identifying these costs, decide whether they are essential or optional. A realistic start-up budget should only include the things necessary to start a business.
    5. Fixed or variable costs? Establish which costs fall into which category. Fixed costs include rent, utilities, administrative fees, and insurance costs. Variable expenses include inventory, shipping and packaging costs, sales commissions, etc., associated with the direct sales.

    Tips to Save on Startup Costs

    These tips will help you start your business with the least amount of capital:
    • Whenever possible, complete the work yourself. For example, purchase accounting software to write checks, track payments, and print financial statements. That way, you save the costs of hiring an accountant.
    • If possible, have a virtual office rather than rent office space and pay utilities until your business is financially able to handle those types of payments.
    • Outsource work to freelancers for specific tasks, thereby saving employer and payroll costs. You can also save money by hiring an intern.
    • Stick to a predetermined business budget. It doesn't take long to overspend if you don't know where the money goes.
    • Buy items you'll use over and over in bulk. Examples include office supplies and materials used to manufacture products. Call your suppliers to find out if they offer discounts on bulk orders.
    • Purchase used equipment and office furniture that's in good condition.
    • Take every tax deduction that's coming to you. A short 2-hour meeting with an accountant will pay off handsomely so you know which start-up expenses you can write off, which increases profit.
    • Market your product or service using multiple social media platforms rather than pay a marketing consultant.
    • Consider getting a business loan to help you finance your startup business.
    Apply For A Startup Business Loan!

    Starting a Business During an Economic Crisis

    If you are considering starting a new business during an economic crisis, we recommend waiting a bit while things start returning to normal. If you're thinking of starting a business to support your finances during hard times, you need to be very careful and think things through: while the typical costs might be the same, things will not be the same as during a normal situation. You also need to consider what type of business you'll start, as many industries will be hit especially hard. Also, business costs might go up during a crisis. But there are two sides to the same coin: many businesses will be booming during tough times. It's also important that real estate tends to be cheaper during a financial crisis, so it could be a good time to rent a location for a lower price.

    It's Time to Start your Business!

    It doesn't matter how you choose to begin your business; you need to plan ahead of time and allocate costs. If you are aware of the business start-up costs, you are sure to prevent added stress in the future. If you have embarked on the adventure of running your own business, small business loans can bring the injection of capital you need to buy equipment, hire staff, or make renovations. A loan from Camino Financial can be the solution if you have at least 12 months in operation! We love helping small businesses thrive and achieve success. Apply For A Startup Business Loan!


    How to start a business without money?

    There are several ways to start a business with no money. The first is to start your company, starting a business with little money, using only personal resources. Another option is to seek out incubators, accelerators, or co-working spaces that offer funding in exchange for equity in your company. Finally, you could look into crowdfunding platforms such as Kickstarter or Indiegogo.

    How much does it cost to be an entrepreneur?

    Generally speaking, the average cost of entrepreneurship is around $10,000. This includes costs like website design & development, marketing initiatives, etc. But entrepreneurs deal with more than the monetary aspect of running a business. They weigh the consequences of working long hours, hiring the right people, and exploring every opportunity to create revenue.

    How to estimate the cost of doing business?

    First, research your business industry to determine typical expenses business owners pay. Calculate the total costs by segregating them into expenses you pay once and adding what it costs to run your business daily. Once you come up with a close ballpark figure of expenses, plan to set aside an emergency fund covering 6 to 12 months of expenses.

    What are the steps to start a business?

    First, you need to come up with a business idea. Once you have an idea, you must validate it by researching the market and your competition. After that, create a business plan and track milestones to ensure your progress. Finally, launch your business and start marketing it to customers.

    How much money should you have before you start a business?

    At a minimum, you should save an equivalent of 6 months of living expenses. According to a 2019 consumer expenditure survey, the average monthly expense for one person in the US is $3,189. So that's $19,134 you should have, at least. You could need less or more depending on the average startup and operation costs for your specific business industry.

    What business can I start with $2,000?

    Here are some examples of businesses you could start with as little as $2,000.
    • Maintenance Worker
    • Seamstress
    • House Cleaner

    Is starting a small business worth it?

    Starting can be a tough but rewarding experience. Potential business owners must know whether they succeed or fail is up to them. Starting a business can be extremely tiring from working long hours, plus, they might not see a real profit for a long period. The buck stops at their desk. However, most entrepreneurs take pleasure in starting a business and being in charge of making their business dreams come true.

    Prequalify in
    5 minutes

    Select your desired loan type.

    Latest Articles

    Prequalify in 5 minutes

    • Stay connected

      Join a community of over 40,000 micro-entrepreneurs for access to informative resources, helpful tips, and best practices on growing your business

    • Mission-driven company

      Camino Financial is a nationally certified Community Development Financial Institution (CDFI) with oversight by the U.S. Department of Treasury. By partnering with other mission-aligned organizations, Camino Financial is able to pool and distribute low-cost funding and educational resources to underbanked minority-owned businesses. Camino Financial is headquartered in Los Angeles, California with supporting offices in Mexico City, Mexico.

    © 2024 by Camino Financial, Inc. All Rights Reserved. Camino Financial is a Licensed Finance Lender & Broker in California under its subsidiary Salas & Company LLC.
    Camino Financial Better Business Bureau A+ accredited businessCloudflare

    11501 Sunset Hills Rd, Reston, VA 20190 || Tel (800) 852-0655

    NMLS License: Salas & Company LLC #2186459 | CFL License: Salas & Company LLC (DBA Camino Financial) #60DBO-43053

    CDFI Certification Number: 181CE054231