How Much Does It Typically Cost to Start a Business?

How Much Does It Typically Cost to Start a Business?

Are you looking to open a business but aren’t sure about the startup costs?

It’s no secret that starting a business can cost a lot of money. Unfortunately, one of the biggest reasons small businesses fail is due to a lack of capital. According to the Small Business Administration, 67 percent of businesses fail within the first ten years.

No matter how much determination you have, you still need the capital to get your business up and running. How much does it cost to start a business?

Check out this guide to learn everything you need to know about the cost of starting a business.

How Much Does It Cost to Start a Business?

Estimating small business startup costs can be very difficult, as it all depends on the industry you’re in, the size of your business, your location, and other factors.

Generally speaking though, it’s estimated to cost around $30,000 to start a small business. Of course, you shouldn’t just take this estimation and run with it. Instead, you need to breakdown all of your potential startup costs so you can get a picture of how much money you’ll need to spend.

Let’s discuss the various startup costs that you’ll need to calculate.

Incorporation Fees

When setting up a small business, one of the first things you need to do is decide on a business entity. Which entity you choose will determine your tax status, and it’ll also have financial and legal implications.

The two main options are to either form a limited liability company (LLC) or an incorporation (Inc.). Filing fees are around $300 but can be as little as $50 to as much as $750.

Should you choose not to incorporate your business, you’ll still need to apply for state or federal licensing and permits. Depending on the industry you work in, this may cost a couple of hundred dollars or more.

To figure out which business entity you should form, we suggest speaking with a lawyer. You can click here to find a business formation attorney near me.


The cost of equipment can vary greatly, but generally speaking, you can expect to pay anywhere from $10,000 to $125,0000 for business equipment.

The good news is, equipment fees are usually a one-time fee, especially if you invest in quality equipment. To get an idea of how much you’re going to be paying, you need to do some deep research into your industry.

For example, if you plan to start a moving company, then you’ll need to finance money for a truck, packing materials, and dollies. If you’re planning on starting some type of office-based business, you’ll need to invest in printers, photocopiers, computers, scanners, and general desk supplies.

If you want to open a restaurant, then you need to invest in a commercial-grade oven, dishwasher, stove, cooking utensils, and more. When estimating your equipment costs, keep in mind how many employees you plan to hire, as you may need to purchase individual equipment for each employee.

Office or Retail Space

Office or retail space is another very big ongoing cost you need to take into consideration. Before you look into renting office space, ask yourself if doing so is really necessary.

For example, if you’re starting a digital marketing business, it may be possible to have all of your employees work remotely. Or, if you’re starting a mobile catering business, you may be able to do all of your prep work from a home kitchen.

If you have a business that can operate partially remotely, or if you have a really small team, you can also look into renting a room in a coworking space.

If you’ve decided that office space is necessary, then your costs will depend on how many employees you have. You can expect to pay anywhere from $100 to $1000 per month per employee.

Also, keep in mind that you’ll need to make an initial investment in office furniture. Again, your total costs will depend on how many employees you have, but generally speaking, you can expect to pay at least $5000 for desks, chairs, couches, tables, and other furniture items.


If you plan to sell any sort of physical product, then you’re going to need to calculate inventory costs. In the beginning, figuring out inventory can be really tricky, as you have no idea how successful your business is going to be during those early days.

This is especially the case for food-service businesses, as you run the risk of your inventory spoiling if you don’t use it up fast enough.

Generally speaking, you can expect 17 to 25 percent of your budget to go toward inventory costs.

Website and Marketing

Of course, you’ll also have to put some money into getting the word out about your business.

The first thing you want to focus on is building a professional-looking website. Luckily, building a professional website is very affordable. You can expect to pay about $5 for a domain and $40 per month to run your site.

You can use Wix, WordPress, Weebly, or Squarespace as your website builder. Thanks to the internet, your marketing efforts can also be very affordable. You can use the power of social media and word of mouth to market your business when you’re just getting started.

Of course, you’ll eventually want to invest in other forms of marketing and advertising such as digital ads, billboards, brochures, and TV commercials. You should allot around 10 percent of your budget to ongoing marketing costs.

Are You Ready to Start Your Business?

Now that you understand the costs associated with starting a business, it’s time to figure out how you’re going to fund your venture. Unless you have a lot of money already saved, you’ll need to apply for small business loans.

You can do this through banks, credit unions, angel investors, or venture capitalists. While the cost to start a business can be large, the payoff can also be quite big.

Be sure to check back in with our site for more tips on starting a business.