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Suanny Garcia
By: sgarcia
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How Much Does It Cost to Start A Business?

What’s the most important thing you’ll need when starting a business? Guts. What’s the second most important? Capital. So, how much does it cost to start a business?

Although many small business owners launch their business on a shoestring budget, sometimes it is advisable to have some sort of capital to fall back on, whether it be $10,000 or $100,000 — depending on the size of your business and the industry you choose.

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

business man asking himself "how much does it cost to start a business?"

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What Are Start-Up Expenses?

Start up-costs definition: They are the expenses you incur before you launch a new business. They have to be estimated and reflected in your small business plan. They may include legal paperwork, business licenses, location expenses, starting equipment and inventory, and basic marketing costs.

In other words, the costs of starting a business before you begin making any income.

Average Cost of Starting a Business

How much money do you need to start a business?

A 2007 Census Data from the SBA stated that 70% of entrepreneurs used less than $25,000 in business startup costs. And that 44% of these entrepreneurs started their business with less than $5,000.

According to writer and professor of entrepreneurial studies and economics, Scott Andrew Shane, in 2008 the average cost of starting a business was $31,150.

Couple Running Organic Food Store Together

Most profitable small business industries

Startup Cost Breakdown: How to Calculate Expenses

To calculate how much start-up funding you will need with accuracy, keep in mind the following tips.

1. Understand the Start-Up Costs

You will have to break the average cost of launching a business down to see what the cost might entail. If you make a detailed plan, you are less likely to run out of capital a few months down the line.

Business Startup Costs List

What do you need to take into consideration when trying to find out the cost of setting up a business? Typical start-up costs may include but are not limited to:

  • Market research
  • Equipment
  • Office space, furniture, and supplies
  • Utilities
  • Inventory
  • Advertising, promotion, and marketing strategy
  • Website
  • Staffing and wages
  • Accounting
  • Legal advice

The amount of cost may differ: for example, if you work from home, you won’t incur office charges like monthly rent or internet connection.

2. Other Expenses and Hidden Start-Up Costs

There are some expenses you’ll have to add to the cost of starting a business. Many entrepreneurs often overlook these added expenses. So that these may not creep up on you in the process, check out this hidden business start-up costs list:

Business Insurance

It is something you’ll want to consider, perhaps not right away, but early on.

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 there’s any risk of being sued by a customer, you probably want liability insurance.

You’ll want to consult with an expert on what is the most appropriate coverage for your business.


It can be an unpleasant surprise, unfortunately, and are unavoidable even for self-employed individuals.

Personal 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.

3. Other Tips & Tricks to Calculate the Cost of Starting a Business

Starting a business doesn’t need to be an overwhelming feat. By following some tips, you can save yourself the added stress:

  1. Check other similar businesses. Research the financial statements of any publicly listed business in your industry. Although you won’t have all the average start-up costs they do, this will help you see what they are spending their money on, ultimately helping you deduce what a worthwhile investment is.
  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 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 those things that are necessary to start a business.
  5. Fixed or variable costs? Establish which costs fall into which category. Fixed expenses include rent, utilities, administrative fees, and insurance costs. Variable expenses include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service.

successful business woman standing in front of employees

How Much Does It Cost to Start a Business? Business Start-Up Costs for 10 Common Industries

Below are a few average figures of startup costs. Please note, these are simply averages and estimations: many small business owners continued to launch their business with less than half of these average costs.

Within each industry, there are many variations and no one-fits-all formula.

1. Food Services

How much money does it cost to start a business in the restaurant and food industry?

The average cost of starting a business in this category is $125,000.

You can also opt to buy a restaurant franchise, which will significantly reduce your start-up costs.

A franchise is a business in which the owners, or “franchisors,” sell the rights to their business logo, name, and model to third-party retail outlets. These are owned by independent, third-party operators, called “franchisees.”

Restaurant franchises usually cost $25,000 to $50,00 on a low budget.

Another idea is starting a food truck, which is an increasingly popular option. How much does it cost to start a food truck business? It can cost you from $30,000 to $200,00.

Learn more about restaurant costs

2. Real Estate

Real estate agents have a passion for houses and helping people buy them. How much does it cost to start a business in real estate?

After you’ve taken the training, paid the fees ($700), and passed the exam, then 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 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. All of the above quickly add up as start-up costs in a real estate business.

3. Health Insurance

Providing health insurance to businesses and individuals can be a lucrative endeavor as everyone needs protection. 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 include 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 you’ve completed the necessary credit hours for these courses, then 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.

4. Personal Trainer

How much does it cost to start a business as a personal trainer?

On average, it’s possible to shell out $8,000 to $10,000 before you ever train your first client.

Remember you’ll need that amount of working capital to launch your training business. If you lease space at a gym or health club, they usually collaborate with certified trainers ($1,000-$1,500). Leasing space and paying utilities could cost $2,300 or more per month. Some trainers save money by meeting with clients at their homes.

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. Budget another $750 to cover office supplies, clothes, and website fees/maintenance. Furthermore, it’s essential to have money for your business license and other fees required by your county or city ($600).

5. Auto Repair Shop

How much does it cost 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.

By themselves, diagnostic machines average between $5,000-$10,000.

Many auto mechanics acquire ASE certifications to stay competitive in their field, which costs about $500 to pay for study guides and exam fees. Other standard start-up business costs include permits, advertising, and liability insurance ($3,000-$4,000). If customers don’t pay on time or you have slow periods, you’ll need cash on hand to cover ongoing costs.

6. Retail

How much does it cost to start a business in retail? The average cost of starting a business in retail is $32,000. However, 42% of small business owners reported opening a retail store with only $5,000.

Some start-up costs stay relatively constant whether you open a retail clothing store or sell furniture or arts and crafts. You may be required to put down a security deposit to lease space and secure utilities as well as 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 have in mind other miscellaneous expenses.

Keep in mind that if you start online businesses in the retail industry, the overhead expenses will be lower than in a brick-and-mortar shop.

young CEO leading multiethnic team in office

Businesses With Low Startup Costs

7. Professional services (lawyers, veterinarians, accountants, architects, photographers…)

How much does it cost to start a business if you provide a professional service? 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). When offering a professional service, it’s wise to draft and sign legal documents to operate your business as an LLC, LLP, or a sole proprietor. Expect to pay at least $4,500. Additional start-up costs include:

  • Licensing specialized software for your service niche ($3,000-$5,000).
  • Hiring graphic designers to make professional brochures and create a website ($5,000).
  • Buying office furniture, computers, and related supplies for your service ($2,000-$4,000).

8. Construction/Contractors

How much does it cost 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).

Many contractors already own tools but find they need more specialized equipment when they take on larger projects.

Set aside $5,000 and increase your tool budget as your business grows. 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 insurances to save money ($1,000-$2,500).

Learn more about the costs of running a construction business

9. Transportation

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.

How much does it cost to start a business in the transportation industry? 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 already 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. Expect to pay $40.00 a day or more for one vehicle when your transport schedule is full.
  • You’ll need business cards and flyers to hand out ($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.

10. 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?

  • Good lighting, a comfortable chair, and adequate desk space to work are essential purchases ($500).
  • You’ll need a computer with sufficient RAM to multitask and a high-speed internet connection ($800).
  • A printer is a must-have as well as 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). You may want to invest in grammar books and dictionaries ($200+), whether you prefer a personal library or access software apps online.

Female Owner Of Independent Clothing shop

Are you ready to start your own business? Make sure to get informed about all the resources you need to start a small business

Starting a Business During an Economic Crisis

If you are considering starting a business during an economic crisis, we recommend waiting a bit more while things start going back 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 think through 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 coming: many businesses will be booming during tough times. It’s also important that during a financial crisis, real estate tends to be cheaper, so it could be a good time to rent a location for a lower price.

Male Florist Outside Shop asking "how much does it cost to start a business?"

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 totally aware of the business start-up costs, you are sure to prevent yourself added stress in the future. That’s why we are happy to have answered the question “how much does it cost to start a business?”

If you are 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.

In these initial stages, a loan from Camino Financial can be the solution! We love helping small businesses thrive and achieve success.

When you apply for a loan, you’ll know instantly if you qualify for one of our loan products and you can receive the capital in as fast as 2 business days!

Apply now!



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