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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. 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. 

So, how much does it cost to start a business?

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What are start-up expenses?

Start-up expenses are those expenses you incur before you launch a new business. They have to be estimated and reflected in your business plan. They may include legal paperwork, business licenses, location expenses (such as rent), starting equipment and inventory, and basic marketing costs.

A 2007 Census Data from the Small Business Administration Office of Advocacy stated that 70 percent of entrepreneurs used less than $25,000 in business start-up costs. If your budget circles around that number, that’s good news to you. If not, no need to fret: 44 percent of these entrepreneurs started their business with less than $5,000.

What is an example of a start-up cost?

Let’s see the business start-up costs in your desired industry. Below are a few average figures of start-up costs, technically meaning the costs of starting a business before you begin making any income. Please note, these are simply averages and estimations: many 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.

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

1. Food Services

How much 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.

Or, you can get on the road and buy a food truck, which is an increasingly popular option in large cities such as Austin, Miami, Cleveland, and Philadelphia, to name a few. A food truck can cost you from $30,000 to $200,00.

2. 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 percent of store owners reported launching at 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. Start-up costs add up quickly to more than expected.

3. Professional, scientific and technical services (lawyers, veterinarians, accountants, architect, 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 percent of these professionals needed less than $5,000, and fewer than 13 percent 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 someone to make professional brochures and create a website ($5,000).
  • Buying office furniture, computers, and related supplies for your service ($2,000-$4,000).

4. Construction

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).

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5. 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.

6. 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.

7. 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.

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8. 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).

9. Auto Repair Shop

How much does it cost to start a business repairing and maintaining vehicles?

Stocking tools and 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.

10. Language Translator

Since most translators work 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 that scans, faxes, and prints 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.

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How to Calculate Your Own Start-Up Costs

If you have already decided on the industry or field of your business, you may have a general idea of the cost of starting a business in that particular sector. But to calculate the final start-up costs with accuracy, have in mind the following tips.

1. Break Down the Start-Up Costs

We previously discussed the average cost of launching a business, but you will have to break the figures down to see what the cost might entail. If you plan for every sector of your business, you are less likely to run out of capital a few months down the line.

Typical start-up costs may include but are not limited to: market research, accounting, and legal advice, statuary requirements such as license and insurance, signage and marketing, equipment fixture and fittings purchases; staffing and wages.

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

2. Account for These 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, here are a few:

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 researching some tips from those who have been there, you can save yourself the added stress. Here are a few:

  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. Entrepreneur.com offers a thorough and helpful start-up costs calculator to help you begin.
  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? 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.

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Starting a Business During the COVID-19 Health Crisis

The COVID-19 triggered quarantine has hurt the world’s economy. Many businesses have been forced to close, and thus, the finances of many Americans have been severely affected.

If you were considering starting a business before the pandemic began, we recommend waiting a bit more while the things start going back to normal. The good news is that the government has already in place a plan to reopen the economy.

If you’re thinking of starting a business to support your finances during these hard times, you need to be very careful and think things through: while the 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 have been hit especially hard.

But there are two sides to the same coming: there are many businesses that are booming during these 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.

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However, you choose to begin your business by planning ahead of time and allocating costs. By being totally aware of the cost of starting a business, you are sure to prevent yourself added stress in the future. Are you ready to start your own business? Make sure to get informed about all the resources you need to start a small business.

If you are have embarked on the adventure of running your own business, a business loan 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, since you only need to have been running your business for 9 months. If you are ready to take that route, simply fill in this online application to know instantly if you qualify for one of our loan products. It that’s the case, a loan specialist will contact you to guide you throughout the process, and you could receive the funds you need in less than 10 days.

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