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14 Business Startup Costs Business Owners Need to Know

Randa Kriss

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Deciding to start a business is exciting, but can also be daunting if you're a new entrepreneur. Calculating business startup costs, worrying about long-term profitability, securing startup funding — it can all be pretty stressful.

The question of costs is critical because the initial investment can be significant. A Kauffman Foundations study shows the average cost to be around $30,000, and costs tend to increase each year.

Fortunately, certain types of businesses, such as micro-businesses and home-based companies, have lower financial entry barriers. Here, we’ve put together a list of 14 different types of business startup costs you’ll need to consider when launching your company.



How to calculate the cost of starting a business

Drafting a business plan is the best way to estimate your business startup costs. Within your plan, the financial projections section should estimate your revenue, profit, and expenses for the next three to five years.

There are other resources to estimate your finances as well, such as the SBA’s startup costs worksheet . Templates will help you estimate your initial investment costs, so you know how much capital you should request when you seek startup funding.

startup cost of a business plan

Keep in mind that many of the business startup costs we list below are recurring. You'll need to cover these costs over a monthly, quarterly, or annual basis — think rent, office supplies, and payroll. Other expenses, like the incorporation fee or office furniture, are one-time costs.

When calculating your business startup costs, a good rule of thumb is to be able to cover six months’ worth of expenses upfront. So don’t count on your business’s revenue to start easing your costs until at least after that early period is over. You’ll want a cushion while you get your feet under you and work on attracting business.

>> MORE: Best business budgeting tools

14 business startup costs to plan for

Although this is a typical list of business startup costs, your actual startup expenses depend entirely upon your specific business and industry.

Here are some typical business startup costs to plan for:

1. Equipment: $10,000 to $125,000

Almost every business will need to finance equipment immediately. Equipment costs for startups can range anywhere from $10,000 to $125,000, depending on the industry and size of the company.

For example, if you’re starting your own moving or shipping company, you’ll need to finance a truck. If you’re opening a restaurant, you’ll need commercial-grade ovens, stoves, dishware, and cooking utensils. If you own a hair salon, you’ll need styling chairs. And nearly any business will require computers.

Of course, these costs range according to your industry and the size of your business. Hiring employees will incur additional costs, as you may need to secure individual equipment, as well.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

2. Incorporation fees: Under $300

One of your first to-dos when setting up a business is to choose a business entity, which has tax, legal, and financial implications.

If you decide to incorporate your business or form a limited liability company, you’ll need to file articles of incorporation or articles of organization, respectively, with your state. The filing fee can range from $50 to as high as $725 depending on the state. However, the fee is under $300 in the majority of states.

Even if you’re not incorporating, you’ll probably need to apply for federal or state licensing or permits. The types of documentation you'll need will vary based on your industry and location. For example, businesses within the agriculture or aviation sectors require federal licensing. Service-based sectors may need to have trade-specific licenses. And retail companies will likely need sales tax licenses or permits.

3. Office space: $100 to $1,000 per employee per month

Paying for an office or retail space will be a sizeable portion of your fixed costs, whether you rent or buy. You might spend between $100 per employee per month up to $1,000 per employee per month — again, it will depend on the type of space you're using.

You can mitigate these costs if you work from home in the beginning, or look into coworking spaces — both ideal for smaller businesses. And if you own a service-based business, you can travel directly to clients to further decrease overhead costs.

4. Inventory: 17% to 25% of your total budget

If you’re in the retail, wholesale, manufacturing, or distribution sector, you'll likely need to secure inventory to sell, as soon as you possibly can.

Knowing how much inventory to carry can be tricky: If you have too much inventory, you risk spoilage or damage. If you have too little, you risk losing customers who won't wait for items on backorder. This is especially true for seasonal businesses where inventory can vary drastically year-round.

You should allocate between 17% to 25% of your budget to inventory, depending on your industry. When you’re first starting out, consider securing more inventory. You'll want to attract customers and generate as much revenue as you can in your company's early stages.

5. Marketing: Below 10% of your total budget (even 0%)

Marketing materials might include physical materials, like signs, banners, and business cards. You might also consider paid ads, as well as more creative options, like videos and giveaways, that might require you to hire a consultant or a video producer.

Courtney Barbee, COO at The Bookkeeper, recommends keeping overall marketing costs to a minimum. Specifically, strive to keep your ad materials under 10% of your budget.

The good news? You can do the bulk of your small business marketing, for free. Thanks to social media and other online marketing strategies, advertising costs are often much lower for small businesses just starting now than they would have been 20 years ago.

6. Website: Around $40 per month

When building your business website, you'll want it to look professional, be easy to navigate, and display information about your services, products, hours, and contact information.

Fortunately, services like Wix, Squarespace, and Weebly, make creating a website easy and cost-effective. These content management systems are sometimes free, but premium plans will come at a monthly or yearly subscription cost:

Wix : $13 to $39 per month for a premium plan.

Squarespace : $12 to $18 per month billed annually, or $26 billed month to month.

Weebly : $5 to $25 per month.

Wix and Weebly also offer basic, free website builders. If you’re relatively tech-savvy, it’s easy to build a website through one of these services, no coding background required. But if you’re not very familiar with computers, you may want to hire someone to build the website — which, of course, is an additional cost (although it might become a worthwhile investment).

7. Office furniture and supplies: 10% of your total budget

Office furniture and supplies add up fast. If you’re operating in a traditional nine-to-five office environment, then every employee will need a desk, a chair, a computer, and a phone. Add in break room appliances, small office supplies, and computer programs, like your accounting software, and you’ll reach a hefty sum.

Again, that sum varies depending on the tools your business needs to operate, and the number of employees you need to outfit. Nate Masterson, the marketing manager at Maple Holistics, estimates that the total cost for office furniture and supplies would be around $5,000. In all, though, Masterson recommends keeping your furniture and supply costs to approximately 10% of your budget.

8. Utilities: Around $2 per square foot of office space

In addition to the fixed costs of rent and a down payment, you’ll be responsible for paying the electric, gas, water, internet, and phone bills for your office space. According to Iota Communications, the average cost of utilities for commercial buildings is $2.10 per square foot.

If you intend to install HVAC units, that will incur an additional cost — usually a couple of thousand dollars, not including installation fees and upkeep.

9. Payroll: 25% to 50% of your total budget

You need to pay your employees, even in the early stages, where you’re not bringing in much revenue. Remember, payroll includes all of the following:


Overtime pay.

Paid time off.

Of course, payroll costs will vary across startups. Typically, an employee will cost 1.25x to 1.4x their salary. For example, an employee on a $40,000 salary will actually cost you around $54,000 after factoring in various payroll tax costs and insurance.

A conservative payroll budget could work if you’re a sole proprietor, or if you’re running a small enterprise and use mostly 1099 contractors — and either is a pretty likely scenario for most startups.

10. Professional consultants: Between $1,000 and $5,000 per year

It’s tempting to take a DIY approach for all your business operations. After all, who knows your business best? But working with experts and professionals can be worth the investment.

For example, certified public accountants can explain the different legal structures, help you choose an employee benefit program, and ensure you're fulfilling your responsibilities as an employer. When tax season rolls around, they’ll prepare your tax returns and help you save on your taxes.

You don't need to hire a full-time accountant either. But it’s often a good idea to consult with your accountant on a monthly, quarterly, or annual basis to review your financial statements, and for general financial guidance and advice. Consulting with an attorney regularly can also save you from major legal mistakes like failing to trademark your logo or developing relationships with vendors without a contract in place.

Every CPA and lawyer charges different hourly rates. Rates and additional fees vary depending on the number and level of difficulty involved in the tasks you need outsourced, the time it takes to complete your projects, and your consultant’s tenure. However, you can mitigate these costs by taking on some basic tasks yourself, only outsourcing the most complicated projects. There are even some options to get free business legal advice.

And with the help of good business accounting software, you can handle basic bookkeeping, like processing and managing payroll, creating and tracking invoices, and managing your business bank account.

According to SCORE , all told, the majority of small business owners spend between $1,000 and $5,000 per year on administration tasks, including accounting and legal fees. But as a startup — and by taking advantage of those cost-cutting tactics we mentioned — you’ll probably err on the lower end of that spectrum.

11. Insurance: Average of $1,200 per year

Your business needs the same protections you provide to your health, home, and car. There are many different kinds of business insurance , including protection from customers that file a lawsuit against you and disaster insurance for potential fires that can shut down your restaurant for weeks.

The type of insurance your startup needs is entirely dependent on your business, industry, number of employees, and other risk factors. For instance, a sole proprietor running an online business has far fewer insurance requirements than a construction company with several employees.

Here are a few essential forms of insurance you should look into to protect yourself, and policy costs vary according to several different factors:

General liability insurance : About $400 to $800 per year. Your industry’s risk will be the most significant factor influencing the cost of your policy.

Commercial property insurance: Anywhere from $300 to $2,500+, depending on the value of the property and its assets, and a risk factor dependent upon the nature of the business and the location of the property.

Workers compensation insurance : Approximately $0.75 to $2.74 per $100 of payroll, depending on the business’s size, location, payroll, and risk.

Errors and omissions insurance: Approximately $2,000 to $5,000 per year, depending on your business’s size, industry, location, revenue, legal history, and the quality of your contracts and employee training procedures.

12. Taxes: Variable, but 21% corporate tax rate

When planning your budget, determining the exact amount to allocate toward business taxes can be confusing. It depends on your revenue (which is difficult to predict), your deductible expenses, and your business entity.

Under current federal law, corporations pay a flat 21% corporate income tax. For pass-through entities, business income and losses pass through to the owners' personal tax returns. Pass-through entities can claim a 20% deduction on income before paying their business taxes.

But know that you can often save money and time by working with a CPA. A skilled CPA will determine what you can deduct so that you pay as little as possible.

13. Travel: Variable

Not every new entrepreneur needs to factor travel into their business startup costs. But if you have a consulting business or you visit your customers directly, you will be traveling a lot. You'll need to factor in the price of transportation, food, and lodging — multiply these costs if you have multiple employees traveling. Be mindful of how quickly those costs add up.

Try to keep total travel costs to an absolute minimum so that you can allocate your revenue toward bigger expenses, like payroll and rent. And to make some returns on all that time on the road or in the air, consider using a travel business credit card, which can earn you points and miles for every dollar you spend. If you do have to travel frequently, keep the nonessentials like business class tickets to a minimum.

14. Shipping: Variable

Service-based businesses can probably stop reading here. But if you’re in retail, you might be shipping products to customers. If so, you’ll need to factor shipping into your startup costs, including packing materials and postage. Depending on what you’re sending, these costs can reach into the thousands of dollars.

Services like Stamps.com can ease the burden of shipping costs on small business owners. With this service, you can print postage without having to buy a costly postage meter. If possible, you can secure free or low-cost shipping boxes from your shipping service of choice.

How to save on startup costs

The costs of starting a business can certainly add up, with many expenses being non-negotiable. Do your research before you splurge on high-ticket purchases, and recognize that there are ways to take care of some of these startup costs on the cheap.

For example, using software like QuickBooks can save on the costs of hiring a professional bookkeeper. Working from home or using a coworking space is a cost-effective alternative to leasing office space. And leveraging social media can mitigate your marketing costs.

Some costs are worth the investment. Don’t buy poor-quality equipment just because it’s cheaper — you’ll lose time and money making repairs and eventually need to purchase new equipment. Hire a legal or accounting expert if you’re confused. And make sure your website and advertising campaigns are professional-looking and effective.

Secure funding

If you've calculated your business startup costs and now feel overwhelmed, know that there are plenty of resources to help you find startup financing.

Your initial funding will likely come from a combination of debt and equity financing. But keep in mind that debt financing options — small-business loans — are relatively limited for brand-new businesses. Most lenders only feel comfortable offering loans to established companies with hard evidence of profitability, as well as healthy credit, which most startups simply don’t have yet.

Some lenders work with startup business owners, so don’t completely rule it out if you think it’s your best option. Check out more information on how to get a loan to start a business if you think debt financing is the right move for you.

» MORE: What is a business loan?

Get a business credit card

Once you’ve established a legal entity for your business, we recommend applying for a business credit card.

The application is simple, and a business credit card is usually easier to qualify for than a traditional business loan. Also, you typically gain access to a higher credit limit than your personal card. More importantly, a business credit of card keeps your personal and business finances separate — essential if you wish to maintain your personal liability protections after forming an LLC or corporation.

» MORE: What is a business credit card?

Just make sure you’re not maxing out your credit card or charging more than you can repay. Both can harm your credit score, which might hurt your chances of securing a small business loan down the line.

Start Your Dream Business

Frequently asked questions

1. what is the average cost to start a small business.

The cost of starting a small business depends on the type and size of the business you’re opening and your industry. For example, opening a McDonald’s franchise can cost you $1 million, while starting a social media consulting company may cost less than $10,000. The average cost will vary on a case-by-case basis.

2. How do you calculate startup costs?

The most straightforward method for calculating your startup costs is to use a budget template. Your budget will break down your startup costs and recurring expenses — rent, office supplies, payroll, and more.

It’s prudent to cover six months’ worth of expenses minimum upfront; this financial cushion will support you in your business’s early stages when your profit margins might be slim.

3. Are business startup costs tax-deductible?

While the IRS does not recognize startup costs as capital expenditures, they do state that you can deduct $5,000 of business startup and $5,000 of organizational costs paid or incurred after October 22, 2004, but only if your total startup costs are $50,000 or less.

You can review IRS Publication 535 or consult a business accountant for additional information.

4. What is considered a startup cost?

A startup cost is any expense incurred when starting a new business. Startup costs will include equipment, incorporation fees, insurance, taxes, and payroll.

Although startup costs will vary by your business type and industry — an expense for one company may not apply to another. For example, a brick-and-mortar business will need to pay to rent a separate business location, unlike a home-based online consulting company.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Business Startup Costs: It’s in the Details

startup cost of a business plan

There's more to a business than furnishings and office space. Especially in the early stages, startup costs require careful planning and meticulous accounting. Many new businesses neglect this process , relying instead on a flood of customers to keep the operation afloat, usually with abysmal results.

Key Takeaways

  • Startup costs are the expenses incurred during the process of creating a new business. 
  • Pre-opening startup costs include a business plan, research expenses, borrowing costs, and expenses for technology.
  • Post-opening startup costs include advertising, promotion, and employee expenses.
  • Different types of business structures—like sole proprietorships, partnerships, and corporations—have different startup costs, so be aware of the different costs associated with your new business.

Startup costs are the expenses incurred during the process of creating a new business. All businesses are different, so they require different types of startup costs. Online businesses have different needs than brick-and-mortars ; coffee shops have different requirements than bookstores. However, a few expenses are common to most business types.

Understanding Common Business Startup Costs

The business plan.

Essential to the startup effort is creating a business plan —a detailed map of the new business. A business plan forces consideration of the different startup costs. Underestimating expenses falsely increases expected net profit, a situation that does not bode well for any small business owner.

Research Expenses

Careful research of the industry and consumer makeup must be conducted before starting a business. Some business owners choose to hire market research firms to aid them in the assessment process.

For business owners who choose to follow this route, the expense of hiring these experts must be included in the business plan.

Borrowing Costs

Starting up any kind of business requires an infusion of capital. There are two ways to acquire capital for a business: equity financing and debt financing. Usually, equity financing entails the issuance of stock, but this does not apply to most small businesses, which are proprietorships.

For small business owners, the most likely source of financing is debt in the form of a small business loan . Business owners can often get loans from banks, savings institutions, and the U.S. Small Business Administration (SBA). Like any other loan, SBA business loans are accompanied by interest payments. These payments must be planned for when starting a business, as the cost of default is very high.

Insurance, License, and Permit Fees

Many businesses are expected to submit to health inspections and authorizations to obtain certain business licenses and permits. Some businesses might require basic licenses while others need industry-specific permits.

Carrying insurance to cover your employees, customers, business assets, and yourself can help protect your personal assets from any liabilities  that may arise. 

Technological Expenses

Technological expenses include the cost of a website, information systems, and software, including accounting and point of sale (POS) software , for a business. Some small business owners choose to outsource these functions to other companies to save on payroll and benefits.

Equipment and Supplies

Every business requires some form of equipment and basic supplies. Before adding equipment expenses to the list of startup costs, a decision has to be made to lease or buy.

The state of your finances will play a major part in this decision. Even if you have enough money to buy equipment, unavoidable expenses may make leasing, with the intention to buy at a later date, a viable option. However, it is important to remember that, regardless of the cash position , a lease may not always be best, depending upon the type of equipment and terms of the lease.

Advertising and Promotion

A new company or startup business is unlikely to succeed without promoting itself. However, promoting a business entails much more than placing ads in a local newspaper.

It also includes marketing —everything a company does to attract clients to the business. Marketing has become such a science that any advantage is beneficial, so external dedicated marketing companies are most often hired.

Employee Expenses

Businesses planning to hire employees must plan for wages, salaries, and benefits, also known as the cost of labor .

Failure to compensate employees adequately can end in low morale, mutiny, and bad publicity, all of which can be disastrous to a company.

Additional Startup Cost Considerations

Have some extra money set aside for any overlooked or unexpected expenses. Most companies fail because they lack the cash to deal with unexpected problems during the business season.

It is important to note that the startup costs for a sole proprietorship differ from the startup costs for a partnership or corporation. Some additional costs a partnership might incur include the legal cost of drafting a partnership agreement and state registration fees.

Other costs that may apply more to a corporation include fees for filing articles of incorporation, bylaws, and terms of original stock certificates.

Launching a new business can be invigorating. However, getting caught up in the excitement and neglecting the details can lead to failure. Above anything else, observe and consult with others who have traveled this road before—you never know where you might learn the business advice that helps your particular business succeed.

U.S. Small Business Administration. " Fund Your Business ."

U.S. Small Business Administration. " Loans ."

U.S. Small Business Administration. " Apply For Licenses and Permits ."

U.S. Small Business Administration. " Choose a Business Structure ."

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How to Calculate Business Startup Costs

business startup costs

Starting a business from scratch takes a lot out of you, even before you begin operating—whether it’s about selecting a revenue model, securing startup funding, or estimating startup costs.

I already knew it was challenging for entrepreneurs to calculate the startup costs accurately.

However, when I turned up to my computer, researching this article, I discovered so many challenges new business owners face while estimating startup costs that I had overlooked or didn’t pay much attention to earlier.

Thousands of startups close down every single year. 38% of them fail solely because they underestimated their startup costs and ran out of cash. You can’t ignore something like that, can you?

That said, I’m ready to pour my research into the article to help you calculate your business startup costs .

So, you’re ready to begin? Let’s dive right in.

Key Takeaways

  • Startup costs are the expenses a startup must bear in the process of starting a new business, while operational costs are the expenses that are incurred during daily operations.
  • Different types of business structures, such as sole proprietorships, partnerships, and corporations, have different costs.
  • Business insurance, formation fees, licensing and permits, and marketing are some of the most common business startup costs.
  • A modern financial forecasting tool is the most efficient method for calculating startup costs.

How much does it cost to start a business?

Startup costs for a small business depend on various factors like business model, location, industry, and scale of operations. Although it’s tough to estimate precisely, Guidant Financial’s 2023 survey reported that the average cost of starting a small business falls between $50K and $1 million .

You must consider the industry, business category, working capital requirements, and other common expenses associated with the business for the accurate estimation of startup costs.

Let’s kickstart this guide by discussing the common startup expenses to consider while starting a new venture.

Common Business Startup Costs to Consider

It is a typical list of expected business startup costs with rough cost estimates you must plan for while starting a new business. Your actual startup costs will entirely depend on your business category and the industry you serve.

Following are some of the most common startup costs to consider:

1. Equipment and tools

It’s no surprise we’re starting the list with equipment and tools. There’s no way a business can operate without the necessary equipment. The equipment costs may range from $10,000 to $120,000 . However, these costs will entirely depend on the business type and equipment requirements.

For instance, starting a food truck would require financing a food truck and expensive kitchen equipment, while starting a small daycare would only require purchasing a few play area equipment.

Here are the average equipment costs for some of the popular business types:

  • Restaurant and food trucks: $24,000 to $120,000+
  • Small Bakery: $6,000 to $8,000
  • Clothing line: $2,000 to $15,000+
  • Construction: $10,000 to $50,000
  • Law firm: $5,000 to $25,000+
  • Barbershop: $1,000 to $2,000

2. Incorporation fees

The first thing you should do is choose a business entity when you plan to form a new business. The most common and preferred business structure types include sole proprietorship, partnership, corporation, and LLC.

The business incorporation or filing fees can range from $50 to $725 in the United States depending on your industry, the state you operate in, and the business structure you choose.

However, the average incorporation fee is $300 in the majority of the states in the US. You may contact your secretary of state’s website to learn more about the filing fees or process for the articles of incorporation or articles of organization.

3. Business licensing and permits

Operating any small business requires specific licenses and permits depending on the industry compliance and regulations. For instance, a trucking company requires a USDOT number, heavy vehicle use tax, and others, while a restaurant may need licenses like food safety and liquor licenses to operate.

Similar to different filing fees for other business structures, the business licensing and permit fees vary depending on the business industry and regulatory compliance. You can expect to spend between $1,000 to $5,000 for your licensing and permitting requirements.

4. Office or retail space

If you’re starting a small business that can be operated from home like a home bakery or an online clothing store, you may not have to worry about office space costs.

But if it’s not the case, paying for an office or a retail space would make up a sizable portion of your fixed expenses, no matter whether you rent or buy the place.

Based on our research, you should spend around $100 to $1200 per employee monthly on your workspace.

However, the actual office space expense will entirely depend on your location and the type of space you’re using.

5. Legal and professional fees

Professional and legal fees may sound like an additional expense while starting up with limited resources, but it’s essential to ensure compliance with regulations and maintain accurate financial records.

You may choose legal assistance for business licensing, EIN registration, and legal paperwork, a business consultant for market research and strategic planning, and an accountant for bookkeeping and tax planning.

You can hire these professional consultants on an hourly basis; their services typically cost around $40 to $150 per hour.  You should spend around $2,000 to $10,000 per year on professional and legal fees.

6. Inventory

Retail, wholesale, distribution, and manufacturing—if your small business falls under any of the mentioned categories, you need an inventory to operate your business. Finding the ideal inventory size to carry can be challenging when entering a new marketplace.

You want to attract more and more customers and make sales in your early days. However, you can’t also risk having too much inventory since it can increase spoilage.

Consider allocating 15% to 25% of your budget to inventory, depending on your industry. You will eventually learn more about inventory management once your business starts operating and making sales.

7. Marketing and advertising

Although it’s an optional expense, marketing is something worth investing in. Your marketing expenses may include physical materials like sign boards, banners, hoarding, paid social media advertising and search ads, or money paid to marketing agencies or consultants.

It is suggested to keep your advertising and promotion costs under 10% of your budget. If you’re working on a really tight budget, there’s no need to spend big bucks on marketing or hire fancy consultants or agencies.

With social media being a free marketing platform, over 47% of small business owners run their marketing efforts themselves, and you can do it, too.

8. Website development

A business website is like an online office where customers can contact you, learn more about your offerings, and seek assistance.

When building a website, make sure it looks professional, is easy to navigate, and displays the relevant information about your product and service offerings, as well as the contact information.

You can either develop a business website using website builders like Wix and Squarespace or hire a developer to do it for you.

Creating a website can range between $1,000 to $10,000 when you hire a developer, whereas you can do it on your own with website builders by spending around 40 dollars a month.

9. Business Insurance

Like you have a house, car, and health insurance, you need business insurance to ensure your business remains intact in troublesome and inevitable times, be it a natural disaster or a customer filing a lawsuit against your business.

The level of security and type of business insurance your business will require depends entirely on your business, industry, and the number of employees you have. For instance, a big-scale manufacturing company with over a thousand employees would require much stronger insurance compared to a home bakery.

Some of the must-have business insurance types include:

  • General liability insurance—for all online, offline, and home-based businesses.
  • Worker’s compensation insurance—for businesses with 1 or more employees.
  • Professional liability insurance—for businesses offering consulting services.

You must expect to spend approximately $500 to $1500 annually on business insurance.

10. Payroll

Payroll is undoubtedly one of the major business expenses most businesses incur. However, there’s no denying how crucial it is to hire quality employees to make your business thrive.

Of course, payroll expenses are employee salaries, but there’s more to it. Your payroll expenses may also include:

  • Incentive or bonus
  • Commissions
  • Paid time off
  • Overtime pay
  • Travel allowance
  • Other benefits

Most businesses spend around 20% to 50% of their monthly budget on payroll. It can be more or less for your business depending on your business and the number of employees you have.

11. Office furniture and supplies

Those planning to have a traditional nine-to-five corporate workplace, be ready to spend some severe bucks on office furniture and office supplies.

When you operate from a corporate workspace, you need a desk, chair, telephone extension, computer, computer programs like accounting software, and, of course, a coffee machine or two.

The cost of furniture and supplies depends solely on your employee strength and the size of the office. However, it’s recommended to keep your furniture and supply costs to 10% of your total startup costs.

12. Utilities

No matter whether you plan to rent or purchase a workspace, you are bound to pay utility bills that include electricity, gas, water, internet, and phone bills for your office.

Unlike other fixed costs, it’s hard to estimate utility expenses, but the average cost of utilities for commercial buildings is $2.10 per square foot , according to a report by Iota Communications .

Besides the electricity, internet, and phone bills, the utility expenses may also incur the HVAC unit installation costs. This heating and cooling system will add a few additional thousand dollars to your startup expenses.

13. Business taxes

How much you’d spend on business taxes will depend on your business entity, tax-deductible expenses, and revenue. Since it’s hard to predict your revenue, estimating the exact amount to allocate for tax preparation may feel a bit challenging.

Under US federal law, corporations pay a flat 21% corporate income tax . If you’re a pass-through entity(a legal entity that passes all its income on to the owners), the business income or losses will pass through to your personal taxes.

However, you, as a pass-through entity, can claim a 20% deduction on income before paying taxes.

 14. Other expenses

Since you’ve reached this section, you must already have a clear understanding of all the expected startup costs, whether they are one-time or recurring expenses.

Here, we will discuss the other costs most small business owners tend to miss or overlook while estimating the startup costs— research expenses and borrowing costs .

Capital is required for starting a business, and equity financing and debt financing are considered to be the most preferred ways to acquire the initial working capital.

Equity financing, however, does not apply to most small businesses since it requires stock issuance. So, securing a small business loan seems to be the most likely source of debt financing for small business owners.

Research expenses, on the other hand, are the expenses incurred even before you started operating, spent on conducting a careful industry analysis and market research.

When calculating your startup costs, make sure to include these two as well.

Since we have already discussed common business expenses, let’s move on discussing calculating the startup costs.

How to Calculate the Costs of Starting a Business

There are various ways to calculate the cost of starting a business. Still, drafting a business plan remains the best way to estimate startup costs.

The financial forecasting section of your plan provides three to five-year projections of revenue, profit, and expense.

The other resources for estimating startup costs include using Upmetrics’ startup costs worksheet or calculator . These resources will help you estimate the initial investment required and determine how much capital or financing you’ll need.

Know that many of the common business expenses we discussed earlier are recurring, with some of them being one-time expenses.

Be sure to categorize them and calculate the recurring expenses on a monthly, quarterly, and annual basis. In contrast, consider expenses like incorporation fees and equipment financing one-time costs.

Sounds like a lot to digest? Get a business planning software like Upmetrics and calculate startup costs in minutes with AI-powered financial forecasting .

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startup cost of a business plan

Calculating Startup Costs for Your Small Business

Does your business fall under one of these categories? Excellent. We have startup cost guides for all the business categories listed below. Get a cost estimate for starting the business you plan to launch.

How to Reduce Your Business Startup Costs

Starting a business means being prepared to bear some non-negotiable expenses; there’s no other way around. However, sound research and thoughtful planning can help you save on high-ticket purchases—ultimately reducing your startup costs.

For instance, hiring professional business plan writers can be expensive for a business owner on a tight budget to create a business plan, so they can opt for a business planning software like Upmetrics to draft a business plan at a much lesser cost.

It was just an example, here are a few tips to help you reduce your business startup costs.

1. Create a business plan

It doesn’t make sense. Isn’t it another business expense? How will it reduce costs? Some of you must be having this line of questioning in your mind, but let us clear it up for you.

Brainstorming and listing all the important business costs, and estimating your total startup costs is challenging. Missing out on some critical expenses tends to happen. However, creating a comprehensive business plan makes things easier.

An AI-powered tool like Upmetrics makes sure you don’t miss out on any critical information and helps you properly estimate your startup costs.

Remember, accurate estimation of startup costs is your first step to reducing them.

2. Start small

You don’t need everything or a perfect business setup when you are not making any sales, forget about the business profits. Start small with limited resources and grow your business as it grows financially.

For instance, instead of having a big fancy office for your startup, start with a remote team or a co-working space until you raise capital or gather the necessary resources.

One way of doing that would be listing all the major high-ticket expenses and researching competitive alternatives for them.

3. Lease instead of purchasing

Of course, having your own office or a retail space feels good, but not at the cost of more than 70% of your budget for starting a business. Prefer leasing the place instead of purchasing.

It will leave you with enough working capital or cash to efficiently manage your business operations and handle the other non-negotiable costs.

Furthermore, there’s no guarantee your storefront will find success at the very first location; you may have to relocate if things don’t work out. The further process will be more straightforward with leasing, whereas the same won’t be the case when you own the place.

4. Buy used equipment, tools, or furniture

Since you’re looking for ways to reduce costs and save money, there’s no way for you to have brand-new business equipment, tools, and furniture. You can look for used equipment, tools, and furniture on online selling sites like eBay and Etsy.

Be sure to thoroughly check the equipment before purchasing to avoid any future restoration or repair costs.

5. Funding and business credit card

Now that you have a long list of capital expenditures, you will need financing or funding to manage all these costs. You can’t simply do it all on your own, can you?

It won’t reduce the startup costs but will help you get resources to manage them. Your funding options include debt and equity financing. You may apply for a business loan, reach out to angel investors, or apply for business grants to secure the initial investment for your business.

With limited debt financing options, it could be tough to get through. Applying for a business credit card can be a more accessible alternative to a business loan. You can easily qualify for it while also gaining a higher credit limit than your personal credit card.

Make sure you’re not totally relying on it or taking out more than you can repay. This can negatively impact your credit score, making it harder for you to secure business loans in the future.

And, the final section leads us to our conclusion!

And there you have it. We hope now you have a better understanding of startup cost calculation. What’s next? It’s time to estimate the actual costs of starting a business, be it a bakery, restaurant, or hot shot trucking, and start budgeting.

Get your hands on the modern and AI-powered business planning solution, Upmetrics—and create precise startup cost projections in minutes, just like that.

Frequently Asked Questions

What is the average cost to start a small business.

It is a question with a broad scope for the answer since you can start a business with an initial investment of $100, $1,000, and up to a million dollars or even more. However, the startup and first-year operational expenses fall somewhere between $30,000 to $40,000.

How do you calculate startup costs?

The most easy-to-use method to calculate startup costs is to create a business plan. It’s easier than ever to calculate your startup costs using a tool like Upmetrics. 

Simply head to the financial forecasting feature, get AI suggestions to list your startup and organizational costs, add remaining costs, and let it make the automated calculations for you.

What are business startup costs?

Business startup costs are expenses incurred when starting a new business. These can be your marketing costs, payroll expenses, or any other costs involved. These can either be recurring or one-time costs. 

For instance, your advertising costs are recurring, whereas incorporation fees are a one-time expense. Although there can be some common startup expenses, the value or costs for them may not be the same for two different businesses.

What is the difference between startup costs and operational expenses?

Startup costs are the expenses small businesses incur when starting a new business, whereas operational expenses are those incurred during normal day-to-day business operations. 

For instance, equipment financing can be considered a startup cost, whereas inventory or marketing costs can be your operational expenses.

What are the examples of start-up costs?

The following can be considered as a few examples of startup costs:

  • Equipment costs
  • Inventory expenses
  • Business licenses and permits
  • Marketing and advertising expenses
  • Payroll expenses
  • And others.

About the Author

startup cost of a business plan

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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Business Startup Costs in 2022: What Small Business Owners Can Expect

Business Startup Costs in 2022: What Small Business Owners Can Expect

Starting a new business is exciting, but it also may come with intimidating startup costs. Before you become a business owner, you’ll want to sit down and estimate the total price tag of the venture. In this article, we walk you through the process of calculating each business startup cost so you can launch your business on the right foot. 

What Are Business Startup Costs?

Every new business owner will run into costs associated with launching a business — but the amount you’ll pay depends on your business type and your needs. You’ll want to know ahead of time estimates of the business expenses you can expect so you aren’t hit with surprising costs you can’t afford during the launch process. 

Business startup costs depend largely on the type of business you open, which can be:

  • Brick-and-mortar
  • Service provider

When you start a new business, you may pay for things like business formation fees, marketing costs, business insurance, a website, and more. We cover each possible expense in detail below.

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How Much Does It Typically Cost to Start a Business?

The amount you’ll pay to start a small business will depend on the business itself. According to a 2021 Shopif y survey , small business entrepreneurs spent $40,000 on average in the first year of launching a new business. But this is an average. 

A small business with a physical location will come with a heavier price tag than a business that is run completely out of a home. You’ll have to pay for things like rent or a commercial mortgage, furniture, and physical marketing materials. But you’ll also need more insurance coverage since you’ll have a business location where customers or employees could hurt themselves. 

You can use this startup costs worksheet from the U.S. Small Business Administration (SBA) to help guide you through your estimate process.

10 Most Common Startup Expenses

In the first year of running a small business, you’ll likely encounter two types of costs:

  • Capital expenditure : One-time purchase or debt that invests in the future of your business. This can include purchasing new property, facility upgrades, updated equipment, or patents. 
  • Operating cost : Ongoing expense that allows your business to run in an efficient and productive way. Marketing, payroll, insurance, and research falls into this category.

The amount you pay for each operating cost depends on how much of the work you do yourself and how much you offload onto a professional that you’ll have to pay.

Here are the 10 startup expenses you’re most likely to encounter.

1. Research costs

Conducting market research before you launch a business can bring clarity to how effective your products or services will be. You can subscribe to a marketing research platform for a more affordable but more do-it-yourself option. Or you can hire a market research firm. According to the Vernon Research Group , hiring a market research firm can cost anywhere from $4,000 to $50,000, depending on the type of research you conduct.

2. Getting a business plan written

A business plan is an essential document that establishes your business structure and goals. You can write your own informal business plan or subscribe to software like LivePlan to guide you through the process, which charges a monthly fee. 

Otherwise, you can turn to a business plan company to complete it for you. If you hire a professional service to write your business plan, you can expect costs to start around $1,500 and increase with complexity. 

3. Business formation fees

How much you’ll pay for business formation depends on the business entity type you choose. A sole proprietor won’t have costs directly associated with founding a business, but an LLC will need to pay to file articles of organization (or if you’re incorporating, articles of incorporation). Filing fees depend on the state you live in but typically cost between $50 and $100, and may cost as much as $300. 

You may also have to pay for a state or federal business license , depending on your industry. Associated costs depend on the license.

4. Insurance and permits

Business insurance can provide protection if you need to pay for claims against your business. Without insurance, you’ll have to pay upfront for the damages and potential legal fees. You’ll likely need different business insurance if you run a fully online business than if you operate an office space, for example. 

The most common types of business insurance are:

  • General liability insurance : Protects against “general” claims for property damage, bodily injury, or personal injury. The cost is determined by how risky your industry is, like retail vs. construction. 
  • Errors and omissions insurance : Covers mistakes you or your employees make against customers or clients. The price depends on factors like the size of your business, the industry, revenue, and its employee training process.
  • Commercial property insurance : Protects offices or brick-and-mortar locations against damages from instances like flooding, fire, theft, or vandalism. The cost depends on factors like the property value and its assets, as well as its location. 
  • Workers compensation insurance : Pays for medical and benefit costs for employees that get hurt or ill while working. The cost of your workers’ compensation policy depends on the state, business size, payroll, and your industry’s risk. 

Having a business website that looks good and is functional is essential — it acts as the face of your business. Hiring a web design company to create a website for you can cost into the tens of thousands of dollars, but it can be worthwhile to pay this cost upfront to ensure that your site is everything you need it to be. You’ll also need to consider hosting options, which can determine how quickly your website loads when customers visit, and how much traffic your site can handle.

There are several affordable do-it-yourself website builders and hosting services out there, including:

  • Squarespace : You can use this website builder to create a business website for between $16 and $49 per month. 
  • Weebly : Create a business website for between $0 and $26 per month. 
  • Wix : Its website plans cost between $16 and $45 per month. 
  • Shopify : You can set up an online shop for between $29 and $299 per month. 

6. Setting up accounting systems

You don’t want to skip figuring out your accounting process before you start a business — or you may find yourself under a mountain of paperwork come tax time. Some accounting solutions cost money. To start with, opening a business bank account is a great way to separate your personal and business expenses from the beginning. (And you may pay a monthly fee, depending on the account). 

In terms of tracking your transactions, you can do it for free manually using a spreadsheet or pay for software that automates much of the process:

  • QuickBooks : $30 to $100 per month
  • FreshBooks : $15 to $50 per month
  • Xero : $12 to $65 per month
  • Wave : Accounting software is free

Connecting your business checking account to accounting software can simplify your bookkeeping and accounting. You can import your transaction information to easily see your business’s cash flow and expenditures. When it comes time to pay your business taxes, you can send this information directly to your bookkeeper or CPA. 

7. Marketing expenses

You may not need to pay for marketing, but if you do, it’s good to keep costs below 10% of your total budget. Your business may benefit from physical marketing materials, like signs or mailers, or from online marketing. Social media marketing can be free or paid. 

Come up with a small business marketing plan to make sure you are clear on your goals and not spending money without getting results. 

8. Technology and equipment fees

An office or physical location can eat up a large portion of your budget. Whether or not you have an office that staff comes into, you’ll need to equip it. You’ll need reliable technology like a computer and internet access to run any modern business. If you have a physical location or staff office, you’ll need things like office supplies and office furniture. Costs depend on how large the location is and the types of equipment you need.

9. Inventory fees

If you’re opening a business that requires you to keep inventory, like retail or wholesale, you’ll need to estimate how much your initial inventory supply will cost. You’ll want to consider stocking up more inventory in the beginning than you might later. The cost depends on how much inventory you need and what you’re ordering. 

10. Hiring employees

According to Glassdoor, it costs around $4,000 on average to hire someone new. These costs include background checks and drug testing, marketing, posting on job boards, and any internal expenses. These expenses will vary based on your business, but if you’re planning to hire employees for your new business, you’ll need to budget accordingly.

In Total, How Much Startup Cash Will You Need?

As mentioned, the average business startup costs fall around $40,000, but you can do it for much less or much more. The amount you pay for organizational costs depends on factors like your business size, the industry, the state it’s located in, and whether or not you have employees. 

If you complete your startup cost estimate and realize you don’t have enough cash on hand to launch — even though you’re ready in every other way — consider turning to lenders. Small business lenders can give you a leg up to start a new business and help you avoid waiting around for years before launching. 

Nav shows you your best options for small business loans if you need cash for things like capital expenses or business credit cards for help with cash flow. Create a free account at Nav.com to see the financing options you’re most likely to qualify for instantly.

Can You Write Off Startup Costs?

Yes, you can deduct certain startup costs on your tax return, but not all of them. The IRS provides a useful breakdown of what is allowed for a tax deduction for a new business. However, it’s a smart idea to hire a professional accountant to complete your tax return for you because of the complexity involved.

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Tiffany Verbeck

Tiffany Verbeck is a Digital Marketing Copywriter for Nav. She uses the skills she learned from her master’s degree in writing to provide guidance to small businesses trying to navigate the ins-and-outs of financing. Previously, she ran a writing business for three years, and her work has appeared on sites like Business Insider, VaroWorth, and Mission Lane.

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10 Small Business Startup Costs

David Luther

If you buy into the Silicon Valley (opens in new tab) cliché, startup expenses boil down to a team of coders with gaming laptops, some cloud infrastructure, workspace in a hip incubator and an endless supply of Red Bull, all paid for by TechCrunch Disrupt (opens in new tab) prize money.

In the real world, there’s a bit more to it.

In robust economic times, startups can often get enough VC funding to launch a business in style without any plan on how they’ll become profitable. Those days are over, for now anyway. Profitability is the new metric, and as any B-school grad knows, strong unit margins depend on keeping a lid on costs right from the start.

For a startup, spending freely while relying on sales to keep your business in the black is a risky strategy. You need to scrutinize all spending—costs to establish your company, services, inventory, payroll, equipment, marketing, software, legal fees, even whether to hire a controller—then prioritize, document and continually assess.

What are Small Business Startup Costs?

Many new businesses, excited by their big ideas, neglect the careful planning and meticulous accounting needed to manage expenses. They rely instead on an expected flood of customers to keep operations afloat—sometimes with abysmal results, judging from small-business survival statistics.

You do need a plan, but you don’t need to start from scratch. The U.S. Small Business Administration provides templates (opens in new tab) tailored to three startup categories: brick-and-mortar businesses, online businesses and service providers. We also provide a template, below.

You’ll face different startup expenses depending on your business type, though most companies will need some equipment and supplies, communications and collaboration technologies, licenses and permits, professional services such as a lawyer and for-hire bookkeeper or accountant, advertising and marketing, and a website to reach customers.

Key Takeaways

  • Estimating both one-time and ongoing costs ensures your business has enough capital to sustain itself for a period of time without completely relying on sales.
  • Document, document, document: To get a loan, you’ll need copies of agreements with key suppliers and clients, a projection of expected income and costs and more. So keep records.
  • Typical small-business startup expenses include research, licensing fees, payroll, insurance and rent.

Small Business Startup Expenses Explained

Startup costs are the expenses needed to launch a new business. Some, like costs to qualify to get into a type of industry or business, such as getting a license to practice law or sell real estate, aren’t deductible. But you can deduct $5,000 in startup costs and $5,000 in organizational costs (opens in new tab) in the first year of business as long as your total costs are $50,000 or less; if you spend more, you’ll need to amortize those costs.

Good to go:

  • Legal, brokerage, accounting, appraisal and similar costs incurred to acquire a capital asset
  • Customer surveys and other market research expenses
  • Site selection costs when choosing a physical location
  • Incorporation and partnership filing fees
  • Salaries and wages for employees who are being trained and their instructors.

Don’t try it:

  • Deductible interest and taxes, such as real estate
  • If you’re setting up a partnership, related costs, such as a broker, registration and legal fees and printing costs
  • Any costs incurred after you get the business up and running. At that point, you need to switch from startup to small-business deductions

As the SBA points out in its SMB guide, different businesses will have different types of expenses—a professional services firm may want offices, while an ecommerce store needs warehouse space.

However, there are a few types of expenses that are common for most types of businesses. What’s important to know is whether the IRS considers a cost a capital expense—that is, an asset, like machinery, office furniture or company vehicles, that’s carried on the balance sheet and depreciated over a set period of time.

Classification is important when looking to reduce business taxes because capital purchases are typically amortized or depreciated meaning the expense is spread out over several years.

It’s also crucial to determine a launch date for your business. From there, figure out the time period during which you can deduct startup costs. In most cases, you can go back as far as one year from your business’ startup date.

Why Calculate Startup Costs?

Calculating startup costs gives you a snapshot of the costs to launch and fund your business. How much do you need for one-off expenses, such as furniture? That shows how much capital you need for your business to open its doors.

Understanding recurring or ongoing expenses, such as payroll and cost of goods sold (COGs), helps you analyze your cash flow needs, so you know how much business revenue you need to at least break even. It also makes it easier for you to set aside enough money—say, six months’ worth of ongoing expenses—so you’re not heavily dependent on business revenue right away, or at least until you’re past the early stages.

Importance of Outlining Startup Costs in Your Business Plan

While venture capital has dominated headlines in the business press, very few companies pursue that financing route: In 2019, the VC industry spent $136 billion to fund just 11,000 U.S. companies. Many more businesses rely on credit cards, loans and lines of credit to fund their startup costs.

But whatever route you take, you must know approximately how much you’ll need before seeking outside funding. The documentation required for most loans includes copies of agreements with key suppliers and clients along with a detailed one-year projection of expected income and costs, with a narrative on how you expect to make those numbers match up.

Financial Summary

10 Common Small Business Startup Expenses

Though the list below is divided into one-time and ongoing startup expenses, you’ll notice some of them overlap. What’s important is being thorough and honest about your expectations.

One-time expenses

Research expenses: A business plan provides an overview and a map of your new business. It will force you to consider costs and different strategies to ensure your business’ longevity. This includes carefully researching the industry you’re in, your target market and the best tax structure for you. If you’re hiring a market research firm, this expense needs to be put in your business plan.

Borrowing costs and raising funds: Financing can be in the form of equity (such as issuing stock)  or debt (such as a bond). Most small-business owners take on debt from banks or the Small Business Administration (SBA). Depending on the financial institution, you may need to pay an initial fee, such as an application or origination fee. Of course, there will be ongoing costs in the form of principal and interest payments.

License and permit fees: Depending on the nature of your business, you may need to obtain authorizations and inspections to get your business license or permit. Some industry-specific permits may cost more than others. You’ll also need to factor in filing articles of incorporation or articles of organization, depending on state guidelines.

Equipment and supplies: All businesses need some type of supplies and equipment. These costs may be one-time or ongoing, depending on whether you make a purchase outright or decide to lease.

Ongoing Expenses

Marketing: Advertising and promotion aren’t only for the early stages. You’ll need to develop and implement a marketing plan that should be factored into ongoing costs. And, don’t neglect a PR strategy, which can increase brand visibility and build trust with the public.

Payroll and benefits: The cost of human resources includes wages, salaries, commissions, bonuses, stipends and any employee benefits you have. Planning on fair compensation ensures lower turnover and attracts talent to your organization. This cost can also include contractors if you’re not hiring employees.

Insurance: Business insurance can include workers’ compensation and short-term disability. Experts warn to be careful of overspending here. Also consider insurance to protect your customers as well as your personal assets from any business-related legal liabilities. Insurance can either be an annual or monthly cost.

Utilities: Water, electricity, internet and phone bills are common costs for brick-and-mortar businesses. These costs can also apply to home office spaces, but you can’t deduct all your utilities.

Technology: Technological expenses include the cost of a website, information systems and business software, including accounting and payroll software. Some small-business owners choose to outsource these functions to managed IT service providers or virtual CFOs or accountants to save on payroll and benefits, while others choose to purchase software-as-a-service (SaaS).

Inventory: Businesses such as those in the retail, restaurant and manufacturing sectors may need to purchase initial inventory to start and budget for ongoing operations. You must carefully calculate to ensure there is enough inventory to operate, but not so much that you’re stuck with items that aren’t necessary or may spoil. The importance of good inventory management is hard to overstate.

How to Calculate the Cost of Starting a Business

Calculating your small-business startup costs can help attract investors and estimate when you’ll start making a profit. Below are the basic steps to get started.

  • Create a list of necessary expenses. This includes one-time and ongoing costs.
  • Research estimated costs. Get as close as you can to the real cost of each item on your list. Your research should include comparing different vendors to help you minimize expenses without sacrificing quality. Depending on your business, research can include equipment leases, rent, office supplies and contractor salaries.
  • Total up expense amounts. Add up your one-time expenses. Then, look at how much your ongoing expenses will cost for one month and multiply that figure by several months to calculate your initial total startup amount. How many is “several”? That depends on when you realistically expect to see revenue or additional funding.
  • Add a cushion. A six- to 12-month cushion will help you keep your operations going, since it is difficult to forecast sales accurately to start.
  • Tally up the final amount. Add the cushion amount to your initial estimates to arrive at the final number.

Free Startup Costs Worksheet

Download this free worksheet (opens in new tab) to help you calculate your startup costs.

Using Expense Management Software to Track Startup Expenses

Calculating small-business startup expenses will be a much more streamlined process when you use  expense management software.  Software also helps to automate the expense reporting process , so you can see right away how much of your funding goes to paying for reimbursable operating expenses.

Plus, if you work with others on a team, having a single source of data that syncs in real-time makes collaboration easier. It also helps you to document your expenses easily for tax reporting and auditing.

Improve Expense Management Efficiency

Small Business Startup Expense FAQs

What are examples of startup costs.

Examples of startup costs include licensing and permits, insurance, office supplies, payroll, marketing costs, research expenses, and utilities.

What is the average startup cost for a small business?

Since businesses and industries have different requirements, costs depend on variables such as whether you need  office or warehouse space, physical inventory and licensing. That’s why it’s crucial to estimate costs, such as expenses you'll incur before your business officially opens, assets aside from cash and a cushion in the event of operating deficits during the early stages.

Financial Management

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Free 2020 Small Business Expenses and Tax Deduction Checklist

Taxes are a top financial challenge for small businesses surveyed in NFIB’s annual Problems and Priorities report—taking up four spots among the top 10 challenges. Federal taxes on business income and state taxes on…

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Written by Kevin Conner | July 18, 2022

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Many aspiring business owners don’t know where to get started. They have a vision, but thinking about marketing, hiring, product development, and more can become overwhelming. In most cases, the best place to start is crunching the numbers—determining your business startup costs.

Without a budget, you can’t make good decisions, and you can’t make a budget without understanding your expenses.

So to help you keep your business from being one of the many that go under each year, we wanted to outline some examples of typical startup costs so you can better budget your business and know what to expect. After consulting this cost checklist, you should be able to determine a forward plan of action for your new enterprise.

Note that we wanted to focus mostly on online  businesses, but other businesses can still greatly benefit and do some quick adjustments and research to make sure they’re on the right track as well.

Business Startup Costs

Supplies, furniture, and office space, marketing and web presence, inventory and production, fees, taxes, and licenses, having a backup fund, setting up your budget, paying yourself adequately.

You need to be able to support yourself without hurting yourself. If you cut corners in your own personal life (by deeply cutting your salary), it can affect your physical and mental health, which can be a contributing factor to business failure. The Global Benefits Attitudes survey shows a clear link between reduced workplace productivity and increased stress levels. Don’t sell yourself short, and don’t try to cut your own salary first.

Review the real cost of living in your area and be honest with yourself about what you would be comfortable with. Be sure to add health insurance and other benefits (for yourself and your household, if applicable) into that equation.

This is your business. Your personal well-being is a core need to consider. When calculating your salary needs, include:

•        Rent or mortgage payments •        Utility costs •        Child care costs •        Property, luxury, excise, and other taxes •        Insurance (car, home, and/or other) •        Vehicle payments or maintenance costs •        Debt or credit card payments. •        Groceries •        Entertainment costs •        Gifts •        Clothing

Your payroll for your business, especially an online business, can be a complicated item on your startup costs list. As a general rule, payroll is the greatest startup cost for a business. Fundera  considers it to be 25-50% of a total budget.

At the same time, your employees, if you have any, will make or break your business.

An online business has many options and few constraints. It might be in your best long-term financial interest to have someone on your permanent payroll. But you almost never need onsite employees, and you can look to the growing pool of remote workers .

There’s a strong possibility that you’ll want to use freelance help as you start your business, as there are a series of specialized tasks (web development, perhaps some initial marketing, graphic design, and more) that you’ll want help with.

Freelancers vary in cost greatly depending on the level of experience you are looking for. This is also the department where “you get what you pay for” matters most. Don’t let working for your business become a race to the bottom for subpar freelancers desperate for any gig.

You can find freelancers either through job boards, contacts you might have in the industry, Facebook groups, and sites such as UpWork  and Fiverr . Each platform has its advantages and disadvantages, so look for what would be best for your needs. If you need help, consult this resource on how to hire remote workers or hire for small businesses .

As for the business startup costs relating to freelancers, try to tally up the estimated hours and multiply that by the rates you are willing to pay.

Here are a few common examples of freelancers you might hire and what they might cost:

•        Freelance writers (for initial copy) – They are generally paid per word. For quality work you can expect to pay 15 to 25 cents per word. Some writers also charge per project. •        Freelance designers – $25-$300 per hour •        Web Development or Programming – $30-$150 per hour •        Virtual Assistants – $5 to $25 per hour

The rates vary due to location, service, and what the freelancer charges. Typically, US-based freelancers charge the highest rates. Here’s a more detailed breakdown of average freelancer hourly rates .

Build your business button

Just because your business doesn’t have a physical storefront doesn’t mean that you don’t need a space and tools to work with. Many owners don’t consider this until too late when compiling their business startup costs list. We’re here to help you flesh out the ideas likely already floating around your head.

Computer Equipment, Programs, Apps, etc.

Computer equipment can be a notable business startup cost. For security and organizational reasons, we recommend having a separate setup for your online business than for your personal use. Unless you’re in video production or another business that will require a much more powerful setup, the following examples of startup costs can serve as a decent guide:

  • A desktop with a monitor or two. We recommend something in the $1,000-$1,500 price range for most people.
  • A laptop in the same price range ($1,000-$1,500) is a great choice, although you won’t get as much screen space and performance.
  • A printer and scanner will prove necessary, and we recommend you pick something that will last your business a few years ($100-$200 should be a good range to start with).
  • Software such as Word and Excel, and a finance tracking program. A point of sale program might also be necessary. These might run you $100-$300 a year for the relevant subscriptions.
  • Data breaches can be extremely costly. With this in mind, a security suite and a password manager ( McAfee and Kaspersky are common choices) and a password manager ( LastPass is a fine option) are great investments for about $100 a year. You might also want protective measures for your websites and other online assets.

Home Office Space

You can run your business from your couch, but it is far from the most productive option. You need to invest in a space or working environment  free from distractions for hours at a time. It doesn’t need to be extravagant, but it does need to be comfortable and meet your needs.

As far as furnishing it, you don’t need to let it take over your business startup costs list. You should be able to find everything quite cheaply if you don’t mind things that might be used or mismatched. You can easily find a desk for at or less than $50 and a good chair for the same price. You can find a working lamp for $10 and a filing cabinet for $40-$50. Consider looking at Facebook Marketplace , Craigslist , or similar sites.

Working from home can actually ease your tax burden, but if you can’t make it work, this can easily balloon into one of your largest expenses. Another idea would be to find a coworking space or startup incubator in your area. They often have tiered options, from floating desks to private offices, that can grow with your business.

Read more: Learn How to Start a Small Business at Home

Marketing makes your business stand out from the rest of the pack. You might be intimidated by the huge costs of large marketing firms, but don’t worry. You don’t need to work with a firm when you are starting out. You can DIY your marketing and as you scale, start outsourcing  your marketing tasks to freelancers and/or agencies.

To manage marketing-related business startup costs wisely, you might want to start with some of the following options first:

Use Your Personal Network: You shouldn’t spam everyone you’re connected to, but you should reach out to anyone who would be genuinely interested, via email or social media. Talk to them about what you’re doing. Seek not to just promote your brand but to help people while promoting your brand. The only cost is some of your time.

Note the Importance of Word of Mouth Marketing: As this Invesp infographic  shows, many studies have been done to the effect that word of mouth marketing is by far the most effective long-term option for most businesses. Building a strong reputation is an effective strategy for long-term success, and building a strong reputation is more about your service and product quality than any single expense.

Content Marketing:  This tends to be a long-term investment, which might not sound great for a business startup cost, but content marketing will in time help get more eyes on your online business. Focus on quality, not quantity, and offer information no one else can. As for the cost, you can either hire content specialists (which can be expensive, depending on the field and quality of writing you want) or work on it yourself for the cost of your time. To learn more about content marketing and the potential tactics to use, Content Marketing  Institute is a great resource.

Here is a list of some typical content marketing tasks. As far as the costs, they entirely scale, so you will want to determine your marketing budget and see how much you wish to invest in each method.

  • Content creation: refer to freelance writing rates earlier in this article.
  • Influencer marketing: Rates range from free product for influencers to thousands per content piece posted, depending on the popularity of the influencer.
  • Search Engine Optimization: When you start your business, you can do your own SEO. As you grow, you may want to consult with experts. You can either hire a freelancer (see section above) or use an agency. An agency will cost you the most money, with packages in the thousands of dollars per month. Costs will vary, but here are some industry averages .
  • Social Media: Social media marketing won’t cost you anything but your time and maybe a few posting tools to help you stay organized. As you grow, you can hire a social media manager to create content and manage your profiles. We talk more about social media in the next section.
  • Advertising : Be careful when it comes to social media advertising . In the past 2 years, competition and cost have drastically increased. So hire a trusted agency, or professional, or learn how to do it from an expert. Costs can range from $40-$60 per hour or more depending if you’re working with an independent contractor to set up your ads or working with a full-service agency.

How to Build the BEST INSTAGRAM for your Ecommerce Brand | PART ONE

Web and Social Media Presence

Your web and social media presence is for all intents and purposes your storefront. Even if you have a brick-and-mortar business, it’s a nearly mandatory business startup cost.

Here are the things you need to work on and their associated costs:

Social Media Accounts

Facebook and Twitter are useful platforms to engage with your audience and build a community of followers.

Instagram is another important account to create, especially if you’re dealing with physical products that you want to show off to potential customers. Consider platforms where your audience (or potential customers) spend screen time. Don’t be afraid to start on platforms like TikTok . Even if you don’t have time to invest in different channels, securing the handles will ensure your brand is secure if you want to pursue growth at a later time.

Regarding upkeep and maintenance, you don’t need a professional social media manager in the beginning, as they are simply another monthly cost of running a business that you can spend elsewhere.

Focus on the platforms you think will be most effective for your business, favor in time expenditures, and invest in a few social media management apps such as Hootsuite , Buffer  or Sprout Social   to make things easy on yourself. The plan/app will cost $30-$100 a month (some have a free option).

A Quality Website

Since in most cases this will be your storefront, your website is a business startup cost you’ll want to make a priority. Look into getting professional help, but note the tiers of cost:

  • A fully functional bespoke (100% custom) website can cost you upwards of $10,000, but you likely don’t need to start there.
  •   $50-$100 for the basic template. (Here’s a popular WordPress template gallery )
  • $25-$50 per hour for a developer to customize the template
  • Additional varying costs based on the content you want on your site (see freelancing costs).
  • Another few hundred per year for additional features such as security measures, an SSL certificate, guarantees and support costs, and miscellaneous website expenses.
  • You can use sites like  UpWork  to get contractors to bid on your website project. You may be able to get a basic functional site for your business for a few hundred dollars. Just make sure to check the reviews of the applicants and choose providers with a long work history and good reviews.

If you have a little technical know-how and you want to load the WordPress template yourself and tinker around with it, you will only need to purchase the template. Templates come with customization instructions that don’t require a developer. You will, however, need a developer if you want to go above and beyond the template’s capabilities.

WordPress Alternatives

If you are starting an ecommerce business, Shopify  is an all-in-one website creator. Similar to WordPress, you can customize the templates within Shopify’s capabilities, but above and beyond that will require a developer. In most cases, most ecommerce businesses do not need a developer, as Shopify offers many apps that cover most ecommerce needs. Pricing starts at $29/month.

If you are running an agency, or freelancing or consulting or starting a creative endeavor, Squarespace  may be an option. The templates and customization are limited but they are modern and beautiful. Squarespace will be an option if you are looking for something simple and streamlined. Pricing starts at $12/month billed annually.

Note that these options above include  website hosting and maintenance in the price. That’s why there is a monthly fee. If you go with WordPress.org, you will have to secure your own hosting.

Web Hosting

Web hosting will, at least at the start, cost you perhaps $10 a month, and scale up from there. The domain name will be an additional few dollars a month, and outside of that it depends on the tools and other services you might be using.

We would like to note that professional help in this area is often worth it. The hours you would have to put in to create a great website can often be costlier than hiring someone else.

Inventory is a wildly varying business startup cost. If your online business is service-based or you don’t have any inventory to worry about, please feel free to move on to the next section.

Otherwise, the main priority from a business startup cost perspective is to make sure that there is always enough product available to fulfill orders. If you can’t fulfill orders, you can’t make any profit and you’ll likely lose customers.

Consider the following factors:

  • Do the products expire or age in any way? Does it require any special type of storage conditions in order to maintain optimum quality?
  • How easily can you restock? Is there anything that, at times, might be unavailable? How long does a manufacturing order or shipment to your processing center (or office) take?
  • How quickly do you expect products to sell? Does your business focus on moving a lot of inventory or selling the right, more expensive items to a few buyers?
  • Can you scale up storage in the event of success? You don’t want to be caught unaware by an unexpected spike in sales.

You will also want to consider storage costs, which can similarly vary based on the nature of your products. Look into what’s locally available or consider an external fulfillment service.

How to Price Your Product | Gretta Van Riel's Shopify Tips

If you are handling manufacturing or creating your own products, you will need to consider production costs. The numbers here will vary so greatly that only you can do the math, but we do have a few tips and action items:

  • You can mitigate some of the production costs through bulk orders, but you’ll become a little less adaptable in the process. What if you want to change your design or model after you start? What if you find a small design flaw in the first batch? You will need to strike the right balance.
  • A manufacturing partner can be expensive, but things like reliability and accessibility mean a great deal and can be worth the added cost. For example, if a factory shuts down, has other orders, or simply goes off the grid for a few days when you need to reach them, those lost days will eat into your profit margin.
  • If you perform production yourself in any way, you will want to consider the costs of scaling up should you find success. Can you reasonably put more time and effort into creating more cakes, for example? What’s the cutoff point for your own effort?

This guide can provide you with further information on inventory and production pricing through the cost of goods formula (COGS).

When determining and managing your business startup costs, you are going to want to spend some time making sure these routine costs are accounted for.

Taxes are another item that will vary from business to business, and the nature of online business often makes it trickier. You do not want to deal with a tax bill you never anticipated nor budgeted for. You might need to deal with several different levels of taxes, depending on how and where you operate.

  • As an individual, you should learn more about self-employment taxes .
  • You will need to pay taxes quarterly.
  • You will need to pay taxes on any profits your business generates.
  • You will likely need to pay payroll taxes , unemployment taxes , and workers’ compensation taxes (this varies depending on your country or region).

You will also either want to consult a tax professional or review the regulations in your area via the website of your state’s department of revenue.

Processing Fees

These can add up to cost you 1-2% of your revenue if you’re not careful. If depends partially on the deal you have going with your payment processor. PayPal often takes a cut ($0.30 USD, plus 2.9% of the amount you receive (more on Paypal fees here ), and credit card processing ( can range from very low to 3%+ depending on your agreement) will be the most common culprit. Also, beware of banking fees.

Licenses and Permits

While we won’t go into too much detail here (there are too many options, and it would be wise to look this up if applicable on your own), we do, however, want to remind you to budget for appropriate licensure and permits in your industry. This is more likely to apply to food service industries, construction industries, and some financial service industries. This guide from Fundera  is a great resource to work from to learn more. You should also look at local (city and town) regulations that might pertain to your industry.

Game changing advice button

Most businesses are not profitable at first, and it could take quite a while to break through and earn a steady stream of income. While the costs of an online business aren’t exorbitant as they might be for more traditional businesses, they can still be a drain, especially if you’re also working on it full time and have no other sources of income. You do not want to make business decisions based on short-term personal financial needs.

When starting out, you need to make sure you either have a reliable stream of income or enough in the bank to keep full operating costs going for at least one year and up to three years, if you think your platform or idea might take a while to take off. This guide will break down the different types of routes to funding a startup. This amount can vary greatly depending on your industry, so do some extra research beforehand and know how much you should have stored away.

Your budget should, at the end of the day, be one of the guiding documents of your business, alongside its mission statement and business plan. You can organize it how you would like. Just remember that businesses that don’t keep the details in mind generally aren’t as efficient as businesses that do. As for how to set it up, follow these steps:

  • Make an itemized list of every expense or potential expense associated with your business.
  • Plan out each item over the quarter as well as the year, as best as you are able.
  • Set up a system where you can easily and nearly automatically update it each day or week with any new expenses, etc.
  • At the end of each quarter, review your budget and adjust it as necessary. Be OK with the unexpected occurring and the numbers not perhaps being what you expected, but take the new data into consideration when making adjustments.

While there are further details, those are the basic steps. You can either use a program such as Float  or Freshbooks  to help you, or you can use a spreadsheet (and there are templates to help, you can download plenty from Microsoft  alone for Excel).

No two budgets should ever look the same, but here are a few additional things you should consider when setting up your budget for business startup costs:

  • Have an emergency fund outside of your backup fund ready. If you have the resources to deal with it, it’s less of an emergency and more of an inconvenience. Try to have at least three months of expenditures on hand for an emergency, or more if you know something particularly expensive could happen such as upcoming car repairs.
  • Try to keep a simplified budget handy that you can check at a glance, so you can refer to it as you make decisions.
  • A budget is at times an evolving document. The budget should reflect reality as best as possible, and sometimes that requires changes to be made.
  • Track everything. There is no expense too small. There are apps and programs to help with this if you think it will be too much of a chore (and those feels are justified). Some of these are Mint , Moneybook , and QuickBooks .

📈 5 Things to Know Before you Structure Your Finance 🤔

Managing Your Business Startup Costs

We encourage you to bookmark this page so you can check back for reference later. No one expects you to understand everything all at once and this can serve as a great business startup costs list.

Remember that your labor and energy are important things to consider when establishing how much it cost to start a business. Be aware of service and recurring costs, hidden opportunity costs, and similar items. Keep all of your options available to you, and don’t forget that managing costs effectively doesn’t always mean cutting corners. Above all else, be open to new opportunities and adapting to the market.

You shouldn’t have to start your business alone. Explore our free training series for frameworks at every stage of your entrepreneurial journey.

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About Kevin Conner

Kevin Conner is the founder and CEO of Vast Bridges, a customer acquisition and lead generation company in the home services arena. Kevin has contributed to outlets such as Startup Stockpile , AgilityPR and more. Kevin Conner and Vast Bridges have been featured in Inc and the Jacksonville Business Journal .

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startup cost of a business plan

Home > Finance > Loans

Breaking Down Business Startup Costs: What to Expect

Sarah Ryther Francom

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

When it comes to small-business ownership, you really do have to spend money to make money — which is why small-business owners often apply for loans from traditional lenders to get their businesses off the ground. But along with a business license, most traditional lenders  require proof of revenue before they’ll agree to a loan. So how are new business owners supposed to start making money without qualifying for a business loan?

Well, for better or worse, most first-time business owners have to use their own money to launch their companies. And unless you have thousands of dollars of ready cash, this means you’ll probably need to take out a  personal loan  or turn to crowdfunding, credit cards, or alternative lenders to acquire enough capital to start your business (and start making money).

But the amount of money you need to start a business isn’t always clear.  In fact, when we polled 700 small-business owners, more than 50% said they underestimated how much they’d have to spend during their first year of business to make money.  

We'll dig into how much money you need to start a business and resources to help you budget for your first year of business.

How much revenue are small-business owners generating in their first year?

For most of the small-business owners we polled, their initial investment paid off:

  • Online business owners average $50,000 in revenue their first year.
  • Mobile business owners average $100,000 in revenue their first year.
  • Storefront business owners average $105,000 in revenue their first year.

Remember that revenue isn’t the same thing as profit: Revenue is your business’ income, while profit is the amount of money you take home after paying for expenses, daily operations, employee paychecks , loan interest, and other debts.

The length of time it takes business owners to become  profitable is usually a year or more — and only 15% of business owners polled started to turn a profit in under a year. Many business owners (40%) report turning a profit within their first or second year of business.

How much does it cost to start a business?

People tend to believe that starting a business requires an endless amount of money. On the contrary, freelancers, such as sole proprietors, and home-based businesses can get going for practically nothing.

These business ideas are perfect if you want a part-time business or a business that costs $1,000 to get going.

Other businesses, such as construction companies, trucking companies, restaurants, or franchises can have much higher startup costs.

So what costs will you face when you start your business? The answer, of course, depends on your business model.

Per our survey results, online-only business owners spend an average of $35,000 during their first year of business.  But you might end up spending more depending on the type of business you start: 

  • Mobile business owners spent an average of $92,500
  • Storefront business owners spent an average of $100,000

Bear in mind that most mobile and storefront business owners  also  operate online, which is one key reason they spend more than online-only business owners.

Which small-business expenses cost the most?

startup cost of a business plan

Startup costs are expenses of getting a business up and running. In our poll, we learned a lot about how first-time business owners spend their money in their first year of business. Here’s how first-year spending broke down for most business owners: 

  • 30% on inventory
  • 21% on equipment
  • 15% on location 
  • 12% on taxes
  • 7% on utilities
  • 6% on payroll

Other common costs included insurance, marketing, and research expenses — though, again, the amount of money spent on each type of expense depends on the type of business you start. If you own an online or mobile business, expect to spend more of your money on inventory. If you own a storefront business, you’ll probably spend more on location, such as renting, lease agreements, building repairs, and property taxes.

What are the most unexpected small-business expenses?

Inventory and equipment are fairly standard expenses, but first-time business owners also cope with unexpected expenses that can take a surprisingly hefty bite out of their budgets. For instance, 46% of business owners surveyed were surprised by the amount of money they had to spend on taxes. And 43% of our respondents were surprised by how much money they had to invest in technology, 40% were surprised by tech costs, and 39% were surprised by shipping costs. 

Other costs that business owners didn’t always account for in their first-year budgets included licensing fees, insurance fees, legal fees, and patent costs.

startup cost of a business plan

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What startup expenses can I deduct from my taxes?

If you’ve officially started a business, you’re entitled to deduct specific startup costs and business expenses from your tax return. Any startup expenses you can't currently deduct have a 15-year amortization period (or a length of time allowed to write off expenses) from the first month you begin business. The IRS divides eligible startup costs into three different categories:

  • Preparation costs: Before officially opening your doors, you’ll likely spend money on traveling, advertising, wages, or employee training. Business owners should treat these costs as capital expenses — which are all deductible.
  • Research costs: Depending on your trade or business, you may need to perform research and survey certain markets to help your business succeed. Any costs associated with this type of research can be deducted.
  • Legal and organizational costs: Setting up a partnership or corporation typically requires legal fees, accounting fees, state organizational fees, and filing fees. We know what you’re thinking — that’s a lot of fees. But these costs are 100% deductible.

What are funding options for small businesses?

To help your company thrive at every stage, you may need to find ways to externally fund your business . Working capital can help pay for expenses, one-time costs, full-time employees, and more. Here’s a roundup of funding options for your small business.

Friends and family

This is perhaps one of the most popular ways to find outside funding. However, if your business goes under and is unable to pay the loan back, be prepared to attend some rather awkward family gatherings. So it’s important to think long and hard before going down this road — regardless of the dollar amount.

Business loans

If you’re hesitant to reach out to friends or family, we have your next course of action. Consider applying for an online small-business loan to fuel your business. Most traditional banks and lenders like to see a personal credit score of at least 620. If you’re trying to work your way out of a credit score hole, we recommend microfinancing, otherwise known as microlending or microcredit. There are also a number of small business loans for startups that are great for brand-new businesses without cash flow or profit history. Regardless of your unique situation, the variety of loan options should encourage you and ease your worries.

If you’re looking for your personal Mark Cuban to be your angel investor for your small business, we recommend applying for Shark Tank . If that doesn’t work, we have the next best thing: crowdfunding sites like Kickstarter and Indiegogo can help you reach your funding goal. Equity crowdfunding, otherwise known as crown investing, connects you with potential investors who provide funds in exchange for a stake in the business. These new and innovative sites are truly lightning in a bottle.

If you’re lucky, an advisory firm may advise their clients to invest in your product or service. To show your investors that you’re serious about utilizing their capital, you’ll need a well-constructed startup financial model. It should not only be properly structured and compelling but also lay out financial projections, customer lifetime value, fundraising goals, unit economics, and expenses. And instead of reinventing the wheel, consider using a template.

Personal loans

This option should be your last resort. Although personal loans are a quick way to inject some cash into your business, they tend to be higher risk and more expensive. So if you end up going this route, it’s important to pay off the debt as soon as possible. Otherwise, you may harm your personal credit score .

Avant’s secure personal loan options and next-day funding make it our top pick for brand new businesses not yet qualified for business loans.



No min. time in biz

No min. revenue

550+ credit score

Enter your loan needs and qualifications to get matched with a list of lenders best suited to you. Then, sort by the financing factor that you find most important. (Note: not all lenders allow personal loans for business use.)

Additional findings

Only 30% of new small-business owners we polled qualified for more traditional small-business loans. Among the remaining 70%, funding came from a variety of more personal sources: 

  • 39% used their personal savings to start their business.
  • 33% used a personal loan.
  • 34% used a personal credit card.

The takeaway

When it comes to startup costs, they can vary depending on your type and size of business.

More than 30% of the business owners we polled said starting their small business was one of the hardest things they’ve ever done. Whether you consider yourself part of that percentage or not, we hope our data helps you feel a little less alone.

Finally, 51% of small-business owners polled said they wished they’d used a startup cost calculator before launching their businesses. If you want help budgeting for your first year of business, our startup cost calculator  can get you started.

But no matter what your business ends up being, take the time to carefully estimate and plan for your startup expenses. It never hurts to be prepared.

Related reading

  • 10 Best Startups Loans for Bad Credit in 2023
  • Best Startup Business Line of Credit 2023
  • 9 Top Marketing Strategies for Startups
  • 5 Essentials to Know Before Marketing Your Startup
  • Best Crowdfunding for Startups 2023: How to Fund Your Small Business


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How to Write a Business Plan: Step-by-Step Guide + Examples

Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needi

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

  • The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

  • Raise money
  • Grow strategically
  • Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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  • What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

  • A summary of the problem you are solving
  • A description of your product or service
  • An overview of your target market
  • A brief description of your team
  • A summary of your financials
  • Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

  • Supply chain management
  • Manufacturing processes
  • Equipment and technology
  • Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

  • A description of each task
  • The proposed due date
  • Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

  • Website launch date
  • Store or office opening date
  • First significant sales
  • Break even date
  • Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

  • Conversion rates
  • Customer acquisition costs
  • Profit per customer
  • Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

  • Sole proprietor
  • Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

  • Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
  • Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
  • Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
  • Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
  • Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

  • Company logo
  • Business name
  • Value proposition (optional)
  • Business plan title
  • Completion and/or update date
  • Address and contact information
  • Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

  • Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

  • Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
  • Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
  • Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
  • Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
  • Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

  • Did you meet your sales goals?
  • Is spending following your budget?
  • Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

  • Write a brief executive summary
  • Describe your products and services.
  • Conduct market research and compile data into a cohesive market analysis.
  • Describe your marketing and sales strategy.
  • Outline your organizational structure and management team.
  • Develop financial projections for sales, revenue, and cash flow.
  • Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

  • 1. Not taking the planning process seriously.
  • Having unrealistic financial projections or incomplete financial information.
  • Inconsistent information or simple mistakes.
  • Failing to establish a sound business model.
  • Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

  • How will your business make money?
  • Is there a need for your product or service?
  • Who are your customers?
  • How are you different from the competition?
  • How will you reach your customers?
  • How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Noah Parsons

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Start stronger by writing a quick business plan. Check out LivePlan

Table of Contents

  • Use AI to help write your plan
  • Common planning mistakes
  • Manage with your business plan
  • Templates and examples

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How To Estimate Startup Costs With Confidence (2024 Guide)

  • by Stefan Vucicevic
  • November 6, 2023
  • 1 share 1 0 0
  • 4 minute read

How to estimate your startup costs — your guide for 2022

Table of Contents Hide

What are startup costs, attract investors and lenders, build a reliable financial plan, costs before opening your business, costs after you launch your startup.

From payroll to customer acquisition, office space, and tech stack — you need to manage a lot of expenses as a startup founder. Foreseeing costs and planning accordingly often make the complete difference in determining whether your startup will be a success. So in this post, we look at startup costs and how you can plan for a sound financial plan in 2024.

Once you read it, you’ll learn:

  • What are startup costs
  • Which startup costs you should be aware of
  • Why being realistic about your startup expenses matters
  • Costs to bear in mind after the launch

Startup costs are the expenses and bills you incur as you build your business from an idea to a fully fledged brand. They include every penny you need to spend to make your business a success, from the initial administrative fee to holiday bonuses for your global team. Normally, startup costs mean costs and bills you pay from establishing your business until launching your services or product. Think of them as pre-work expenses.

Why is it important to calculate startup costs?

Facing the hard reality of building your startup from the ground can be off-putting.

Still, if there’s one thing that matters when building a business, is to know the income and expenses at all times. This lets you plan, pivot when needed, and also helps you focus on the most important bits first. If there’s a chance you might need to trade off your employees’ wages and a new marketing campaign, it’s better to know it well ahead and act accordingly.

But there are other benefits here. The better you understand your startup costs, the easier it will be for banks and potential investors/stakeholders to trust you. A clear overview of startup costs shows that you are diligent — which is a good signal for attracting investors.

Knowing your costs will help you create a reliable financial plan. This means that you will be able to make realistic estimates of your growth. And each time you adjust and update your costs, you will be able to consistently update your estimates and the financial plan. This gives you the edge, as you will secure time to make sensible business moves, without reacting out of necessity.

Create financial projections for your startup – Start your free trial

What are typical startup costs?

While each startup is unique, the costs vary only to some extent. And it’s important to keep in mind that each stage of your business will bear different costs . Many startups focus solely on the flurry of initial customers, but this can prove fatal to business longevity. Instead, be meticulous with planning for business expenses at each stage.

Your pre-launch startup costs will vary depending on your industry, business model , and target market. Still, you can plan for most of the costs at this stage, as they’re somewhat standardized.

As a rule of thumb, you can split these costs into two categories: one-off costs and recurring costs.

One off-costs  

At this stage, you will typically need to cover the following expenses:

  • Initial research of costs and market (you may choose to hire an established research firm to conduct market research)
  • Creating a business plan
  • Expenses to procure technology for the initial team (including hardware, software, licenses)
  • Administrative costs and fees (incorporating your business, paying for a business representative services, where applicable)
  • Permits , licenses to operate, and related fees
  • Initial equipment and supplies — this depends on the industry/product/service that you provide, but can include anything from office chairs to desks and to
  • Borrowing costs — unless you already have enough initial funds, you will probably need to take a small business loan; remember, while you may not need to pay it off straight away, always include and be aware that this is still an expense you need to cover.
  • Brand design , which includes anything from a logo to website launching, printing and ordering business cards.

Recurring costs

These are the expenses that you will need to continue paying at regular rates, both before and after the launch of your product, but just on a different scale. These costs will increase as your team and product grow. They include:

  • Legal services
  • Employee wages for the founders/ founding team
  • Insurance payments
  • Loan repayment
  • Utilities/office space

Employee wages, contributions, and benefits make a significant part of your startup spending. Be sure to include and plan for all employee expenses, including your own wages.

As you go about growing your customer base, you’ll need to invest in marketing efforts. Now, this amount depends on whether you rely mostly on paid ads, where costs can shoot through the roof in some industries, or look for more organic means of promotion. Still, even if you want to use just social media, you may want to include costs such as paying influencers to advertise or offering a loyalty program; it’s important to approach this strategically and plan ahead for potential costs.

Startup assets

Assets typically stand on the opposite end of your balance sheet and many startup founders, especially first-time business owners, tend to forget about them. But as you and your team use company property it starts deteriorating, and you need to ensure you have enough funds to cover their maintenance and repair. This includes anything from company laptops and other devices, to vehicles, office equipment and furniture, and the starting inventory.

Unexpected costs

No matter how well you plan ahead, there’s always some chance that things won’t go exactly as planned. This could be anything from hardware or software failures, or any force majeure event, such as floods or earthquakes or the Covid-19 pandemic.

So, this is the list of main startup costs you’ll encounter as you build your business. They can vary greatly, but if you include them in your initial projections, you will already be covering the largest share of your startup expenses. And so you do this, you will be able to plan better and have a lasting, profitable business.

Need help building a blueprint of your startup costs? Try Idea Buddy’s financial plan for free today and don’t let any hidden cost surprise you as you build a lasting venture.

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Blog Feature Updates Startup Business Plans 101: Your Path to Success

Startup Business Plans 101: Your Path to Success

Written by: Jay Nair Jul 24, 2023

startup cost of a business plan

It’s time — you’ve got a promising idea and you’re now prepared to invest the necessary effort to turn it into reality. Startup business plans are vital hack tools that will guide you through your entrepreneurial journey and a business venture with clarity and purpose.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. These plans will serve as strategic documents outlining your company’s vision, mission statements, business objectives, target market, financial forecasts and growth strategies.

To simplify the creation of a robust business plan as an entrepreneur, you can harness the power of a business plan maker . This invaluable tool streamlines the process and ensures a polished and well-organized presentation.  Startup business plan templates provide pre-designed frameworks that can be customized to suit your specific industry needs, saving valuable time and effort while preserving the essential structure of a comprehensive business plan.

Ready to begin? Let’s go!

startup cost of a business plan

Just so you know, some of our business plan templates are free to use and some require a small monthly fee. Sign-up is always free, as is access to Venngage’s online drag-and-drop editor.

Click to jump ahead:

  • Laying the foundation of your startup business plan
  • Business plan executive summary
  • Writing your business description
  • Marketing & sales strategies
  • Startup operational plans
  • Financial plans – forecasting and projections
  • Team and management
  • Appendix and supporting documents

FAQs on startup business plans

  • Use Venngage to create your startup business plan

Preparation and research: 6 steps to laying the foundation of your startup business plan

  • What problem does your product or service solve? 
  • Who are your target customers? 
  • What differentiates your offering from existing solutions in the market? 

This self-reflection will help you establish a clear direction for your startup.

  • Next, conduct market research to gather valuable insights about your target market , including demographics, preferences, and purchasing behavior . This data will enable you to tailor your product or service to meet the specific needs of your customers. Identify trends, industry growth projections, and any potential barriers or challenges you may encounter.
  • Competitive analysis is another critical aspect of preparation and research. Study your competitors to understand their strengths, weaknesses, and strategies. Analyze their pricing, marketing tactics, customer experience, and product/service features. This analysis will allow you to identify gaps in the market and position your startup to offer a unique value proposition .
  • Financial research is equally important during this phase. Calculate the costs associated with starting and operating your business , including overhead expenses, production costs, marketing expenses, and employee salaries. Assess potential revenue streams and estimate your expected sales. This financial analysis will help you determine the feasibility of your business idea and outline a realistic financial plan.
  • Additionally, gather information about legal and regulatory requirements that apply to your industry and location . Understand the necessary permits, licenses, and certifications you need to operate legally. Complying with these regulations from the outset will prevent potential setbacks or legal issues in the future.
  • Finally, organize your findings and insights into a coherent business plan. Create your business plan outline , list your business plan goals, strategies, target market, competitive analysis, marketing plan, financial projections and any other relevant information. This compilation will serve as a roadmap for your startup, guiding your decisions and actions moving forward.

You’ve just encountered a wealth of information and are well on your way to becoming a seasoned business owner! This can sometimes feel overwhelming. But don’t worry, take a moment to breathe deeply and remember how far you’ve come. You’ve got this!

To help you condense and organize your essential points, I have brilliant one-page samples of business plan layouts and templates that will capture everything in a concise format.

startup cost of a business plan

Knowing when to use a one-page business plan versus a more comprehensive plan depends on various factors. A one-page business plan is ideal for providing a quick overview, saving time, and internal planning. However, it may not suffice for detailed information, complex business models, or meeting external stakeholders’ expectations.

Ultimately, consider the purpose, audience, and complexity of your business when deciding whether to utilize a one-page business plan or opt for a more detailed approach.

Executive Summary: Your Startup’s Elevator Pitch

First impressions are crucial, and a concise yet comprehensive executive summary is your chance to grab potential investors’ attention.

To create a compelling elevator pitch, consider the following key elements:

Problem Statement : Clearly articulate the problem or pain point that your startup addresses. Emphasize the significance of the problem and the potential market size

Solution : Concisely describe your innovative solution or product that solves the identified problem. Highlight its unique features or benefits that differentiate it from existing alternatives.

Target Market : Define your ideal customer segment and outline the market potential. Demonstrate a deep understanding of your target audience’s needs, preferences, and behavior.

Competitive Advantage : Showcase the competitive edge that sets your startup apart from competitors. This could include intellectual property, strategic partnerships, cost advantages, or disruptive technology.

Business Model : Briefly explain how your startup generates revenue and sustains profitability. Outline your monetization strategy, pricing model, and any recurring revenue streams .

Traction and Milestones : Highlight any significant achievements or milestones reached by your startup. This could include customer acquisitions, partnerships, product development progress, or market validation.

Team : Showcase the expertise and qualifications of your founding team or business partners. Highlight key members and their relevant experiences demonstrating their ability to execute the business plan.

I can sense your eagerness to dive right in! To expedite your progress, I’m excited to present you with a collection of meticulously crafted executive summary templates. These templates have been thoughtfully designed and structured by Venngage designers, ensuring seamless integration into your thorough business plan. All you need to do is infuse them with your brilliant startup ideas, and you’ll be well on your way to success!

startup cost of a business plan

Now, remember that there’s still a ton of work to be done. Let’s take a moment to regroup and ensure we’re on the right track. Before diving into the process of writing your business plan , it’s imperative to gather a wealth of essential information. Conducting comprehensive research is key, and it should encompass the following aspects:

How to assess your target audience

To gain comprehensive insights into your potential user base, creating a user persona report is invaluable. This persona guide report will help you develop a detailed understanding of various user profiles, enabling you to tailor your products or services to meet their specific needs and preferences.

startup cost of a business plan

Understanding Your Market and Competition

Analyze your market and any trends relevant to your startup. Research your competitors, their strengths and weaknesses, and identify what differentiates your offering from the competition.

startup cost of a business plan

Developing a Unique Value Proposition

A business Unique Value Proposition (UVP) is a concise statement that communicates the unique advantage a product or service offers over competitors, addressing a specific problem or need. It highlights the distinctive value and benefits customers can expect, helping businesses attract and retain customers by differentiating themselves in the market.

Your unique value proposition (UVP) is the cornerstone of your startup, defining what sets you apart from your competitors. A strong UVP focuses on the specific benefits and solutions your startup offers to customers.

startup cost of a business plan

Company Description: Painting the Picture

Your company description allows you to showcase your startup’s unique features and provide more in-depth details about your business. This section should include:

The Purpose of the Company Description

Clarify the purpose of your business, your goals and how your startup is uniquely positioned to achieve them.

Essential Information to Include

Include details such as your company’s legal structure, location and a brief history of any founders or key personnel.

Showcase Your Company’s Unique Features

Emphasize the unique aspects of your startup, explaining how these features translate into a competitive advantage.

Allow me to provide you with a dash of inspiration to ignite the momentum for your startup business plan:

startup cost of a business plan

When it comes to showcasing your company’s unique features, keep in mind that it is essential to emphasize and highlight the distinctive aspects of your startup . Clearly articulate how these features set your company apart from competitors and translate into a tangible competitive advantage . 

Whether it’s through cutting-edge technology, innovative business models, exceptional customer service, or a combination of factors, conveying the value and impact of these unique features is crucial. By effectively communicating the benefits they bring to customers, investors, and partners, you can demonstrate the significance of your offerings and differentiate yourself in the market.

Product/Service Line: What You’re Bringing to the Table

This section highlights the finer details of your product or service offerings:

Detailing Your Product/Service Offerings

Provide a thorough description of your products/services, highlighting key features and their intended use.

startup cost of a business plan

Highlighting Features, Benefits, and Solutions

Demonstrate how your startup’s offerings solve specific problems or address customer needs through an analysis of product features and associated benefits.

startup cost of a business plan

Defining Your Pricing and Revenue Model

Outline your startup’s pricing strategy and how it aligns with the overall business model. Detail any plans for scaling or expanding your revenue sources in the future.

startup cost of a business plan

Presenting Your Market Research Findings

Share insights from your market research, including target customer demographics, market size, and growth potential.

startup cost of a business plan

Identifying Market Trends and Opportunities

Discuss current trends, emerging opportunities, and how your startup will capitalize on these developments.

startup cost of a business plan

Marketing and Sales Strategies: Spreading the Word

Developing a robust marketing and sales strategy plan aligns with your overall business strategy and ensures steady growth. Marketing planning will be an essential part of your journey once you’ve got your business plan tight-knit! Also, creating a marketing strategy can be the most fun part of your business plan!

Developing a Comprehensive Marketing Strategy & Plan

  • Outline Specific Marketing Goals : Clearly define your marketing objectives, whether it’s increasing brand awareness, driving website traffic, generating leads, or boosting sales . Set measurable targets to track progress.
  • Identify Target Audience : Conduct thorough market research to identify your ideal customer profiles. Understand their demographics, behaviors, preferences, and pain points. Tailor your marketing messages to resonate with their needs.
  • Select Effective Marketing Channels : Consider both digital and traditional channels that align with your target audience and marketing goals. This may include online advertising, social media marketing, content marketing, search engine optimization (SEO), email campaigns, print media, events, or partnerships.
  • Craft Compelling Messages : Develop persuasive and consistent messaging that highlights the unique value proposition of your products or services. Clearly communicate how your offerings solve customer problems or improve their lives.

startup cost of a business plan

5 Tips for Effective Sales Techniques and Growth Strategies + free templates

  • Define Your Sales Strategy : Outline the approach and tactics your sales team will use to reach and convert customers. This may involve direct sales, channel partnerships, online sales, or a combination of strategies. Specify your sales process, including lead generation, qualification, nurturing, and closing.
  • Expand Your Customer Base : Identify opportunities to expand your customer reach. Consider targeting new customer segments, entering new geographic markets, or exploring untapped market niches. Develop strategies to attract and engage these potential customers.
  • Penetrate New Markets : Assess the feasibility of expanding into new markets or verticals. Market research will help you understand the dynamics, competition, and customer needs in these markets. Adapt your marketing and sales strategies accordingly to effectively penetrate and capture market share.
  • Innovate Products/Services : Continuously evaluate and enhance your product or service offerings to meet evolving customer demands. Identify areas for innovation or improvement and develop a roadmap for launching new features, versions, or complementary offerings.
  • Perform a SWOT analysis : By conducting a sales SWOT analysis , you will gather valuable insights to enhance your department’s performance. This analysis involves evaluating your company’s strengths, weaknesses, opportunities, and threats, enabling you to identify areas for improvement and capitalize on advantageous factors in the market.

Here’s a hack to get you organized – Get right into it with the help of these growth strategy templates and strategic planning templates :

startup cost of a business plan

Operational Plan: How Your Startup Will Run

Define an efficient and scalable operational plan, keeping in mind the following points:

Defining an Efficient and Scalable Plan

Outline the day-to-day operations, including processes, timelines, and necessary resources.

Legal Considerations for Your Startup Business

Identify any legal requirements or considerations, such as licenses, permits, or regulations that may apply to your startup.

Key Elements of Supply Chain Management and Logistics

Discuss supply chain and logistical aspects relevant to your business. Include details on how you plan to manage and scale these processes.

Here’s a kickstart on how you can structure your operating plans:

startup cost of a business plan

Financial Projections: Crunching the Numbers

A startup’s financial projections are vital in securing investor buy-in. This section should address:

The Importance of Financial Forecasting and Budgeting

Explain the significance of accurate financial forecasting, budgeting, and the assumptions made in your projections.

Identifying Key Performance Indicators (KPIs)

Highlight the KPIs used to gauge your business’s financial health and growth trajectory.

Outlining Funding Requirements

Detail the amount and type of funding your startup requires , including how the funds will be allocated and how this investment positions the company for growth.

startup cost of a business plan

Team and Management Structure: Building Your Dream Team

Your startup’s success depends on the people behind it. This section should cover:

Tips for Building the Right Team

Share your strategy for assembling a skilled team that supports your startup’s vision and growth trajectory.

Founders’ Background and Roles

Provide an overview of the founders’ backgrounds, their roles within the company, and how their skills contribute to the startup’s success.

Organizational Structure and Key Management Personnel

Outline your startup’s organizational structure, including any key management personnel who play a pivotal role in day-to-day operations.

Appendices and Supporting Documents: Backing Up Your Plan

Include any other relevant supporting documents, such as:

  • Research data, market analysis, or competitor analyses.
  • Financial statements, budgeting or forecasting data, and other financial documentation.
  • Legal documents, agreements or contracts, and any patent or trademark information.

Finally, remember to review and update your business plan regularly as the industry, market, and competitive landscape evolve!

1. Why is a business plan essential for a startup?

A startup business plan is crucial for a startup because it provides a framework for strategic decision-making, facilitates financial planning, helps assess risks, aligns teams, communicates your vision, and ensures effective resource allocation. 

2. What should a startup business plan include?

A startup business plan should include:

  • Vision and Direction : Set clear goals and objectives, and outline strategies to achieve them. With a well-defined plan, you will stay focused, make informed decisions, and ensure alignment with your vision.
  • Market Analysis : A business plan necessitates thorough market research to understand your target market, identify competition, and assess product/service demand. These insights enable you to tailor offerings, meet customer needs, and gain a competitive edge.
  • Financial Planning : By constructing a financial roadmap through projected statements such as income, cash flow, and balance sheets, a business plan unveils the expected revenues, expenses, and profitability. This comprehensive planning not only anticipates challenges and sets realistic goals but also serves as a magnet for attracting investors and securing funding.
  • Risk Assessment : Devise strategies for risk mitigation and contingency planning. By proactively doing this, you can significantly enhance the likelihood of success by anticipating and effectively addressing potential obstacles.
  • Communication and Team Alignment : From fostering effective communication with both internal and external stakeholders to aligning team members and showcasing your startup’s unique value proposition, a business plan plays a crucial role. It enables you to articulate target market insights, competitive advantages, and growth strategies to potential investors, partners, and employees.
  • Resource Allocation : A business plan helps you identify the resources required to launch and operate your startup successfully. It includes an assessment of your human resources, technology needs, infrastructure requirements, and other key resources. By understanding your resource needs, you can allocate them effectively, ensuring that you have the necessary assets to execute your business strategy.
  • Adaptability and Flexibility : Your business plan should be flexible enough to accommodate changes and adapt to new circumstances. Startups operate in dynamic environments, and a well-designed plan allows you to monitor progress, evaluate outcomes, and make adjustments as needed. This agility enables you to seize new opportunities and navigate challenges effectively.

3. What is the ideal length for a startup business plan?

The optimal length for a startup business plan typically depends on the specific requirements and intended audience, but a concise and focused plan of around 20 to 30 pages is often recommended.

4. How to write a good startup business plan?

To write a good and effective startup plan, include an executive summary, company description, market analysis, detailed products/services description and a clear marketing and sales strategy. Also incorporate a comprehensive financial plan, outline your organizational structure, and demonstrates your team’s expertise and capabilities. Your plan should be well-researched, concise, and compelling, with a focus on your company’s unique value proposition and market opportunity, making it attractive to investors and stakeholders.

Utilizing Venngage templates & other tools for success

A visually appealing and professional business plan needn’t be a daunting task. Leverage tools like Venngage Business Plan Maker for effective templates that cater to various industries and streamline the process. 

  • Leveraging Venngage for Visually Appealing and Professional Business Plans

Venngage offers a range of templates designed specifically for business plans, allowing you to craft a polished and visually engaging plan without any design experience. Simply choose a template, customize it to suit your startup’s branding, and populate it with your content.

  • Exploring Additional Resources and Tools for Entrepreneurs. In addition to Venngage, several other resources and tools can assist entrepreneurs in crafting the perfect business plan. Examples include:
  • Small Business Administration (SBA) – Offers guidance on writing business plans and provides templates and resources for each section.
  • SCORE – A nonprofit organization providing mentorship, workshops, and other resources for entrepreneurs.
  • Industry-specific resources – Research relevant professional organizations, industry publications, and blogs to stay up to date on industry trends and insights.

Embarking on the entrepreneurial path may present formidable challenges, yet it offers abundant rewards in various aspects. Embrace the art of continuous learning, delving not only into the essence of your business idea but also immersing yourself in the vast world that surrounds it. Cultivate a genuine passion for understanding every facet of your enterprise, for it is through this journey of exploration that you will uncover invaluable insights and experience the true fulfillment of entrepreneurship.

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Business Plan Startup Costs Template

The business plan startup costs template can guide you in crafting the part of your plan that details the initial financing your business will need. 3 min read updated on February 01, 2023

The business plan startup costs template can guide you in crafting the part of your plan that details the initial financing your business will need. This is one of your most important tasks as a new business owner. It serves as the guide for how you will run your business. A good budget can help you understand the growth of your business and whether adjustments need to be made.

Types of Startup Costs

Startup costs are usually categorized as either one-time or monthly expenses. Common one-time costs include consultant fees, building purchase, and tech and other required equipment. Monthly costs include utilities, lease payments, and salaries. Other fixed costs include one-time and ongoing marketing and/or legal services and initial stock of inventory.

Reserve for contingencies and working capital are typically the most significant portion of your business startup costs. The contingency fund is designed to cover unexpected costs of operating the business.

Working capital lets you keep your business running by paying bills and buying inventory while awaiting customer payment. Lack of working capital is a common cause of failure for growing businesses. To make sure you have enough working capital , leave a realistic buffer between the day a sale is made and the day payment is received.

Using a Startup Budget Template

You can download a basic spreadsheet template to create a startup budget for your business. This can be customized to reflect your business's specific expenses.

  • First, decide on the number of months your startup budget will include. Ideally, you should budget for your monthly costs until you project that your business will be profitable. For example, if you think you'll be in the black after 18 months, create an 18-month startup budget.
  • Next, enter the costs into the appropriate spreadsheet cells.
  • If your spreadsheet has embedded formulas, your totals should populate automatically.
  • When completed, you'll have an itemized list of startup costs to include in your business plan.

For best results, use the most accurate numbers possible when creating your startup budget. This requires online research and may involve calling potential providers and suppliers. You should also comparison shop to get the best price, but don't forget to consider delivery options, reliability, level of service, and available payment terms when choosing a vendor.

Funding Sources

Once you've listed your startup costs , make a list of potential funding sources for your business. This includes savings, credit lines, bank loans, and money supplied by investors. In some cases, it could include asset sales, endowments, or grants.

Compare these funding sources to the amount of startup capital you need to determine whether you have a deficit or surplus of funds. In the case of a deficit, you must decide whether to look for additional funds or cut startup costs where possible. If you have a startup, double check to make sure your numbers are realistic.

When seeking a bank loan, you will need to provide information about assets that can be used as collateral for the loan and estimate their value. You'll need to provide supporting documents for these estimates.

Restaurant Startup Costs

Starting a restaurant is often expensive because of the need for special facilities and equipment. These items can sometimes be leased, which can reduce your initial costs. Don't forget to account for costs like menu creation, supplier sources, cleaning services, and uniforms.

Home Business Startup Costs

Home businesses are often less expensive to run than other types of start-ups. That's because you already pay for utilities, office space, furniture, and internet services. In fact, those who qualify can deduct some of these items on their income tax returns.

Web-based businesses are also affordable, particularly if you can create your own website. However, you may need to budget for custom database creation, hosting services, website design and development, and search engine optimization. Online retail businesses will also need to pay usage fees if they sell through eBay, Amazon, or similar storefronts.

Franchise Start-Up Costs

When making a budget, new franchise owners should also account for monthly franchise dues, fixed franchise fees, and cooperative marketing fees. You can get more information on these costs from the corporate office for your franchise.

If you need help with startup costs for your business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

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  • How Much Money to Start a Corporation

Small Business Start Up Costs

No matter what kind of business you intend on owning, it is a good idea to estimate your business startup expenses prior to jumping in. Whether you plan on starting a small business or a larger franchise, you may be surprised at the total start up cost. Nearly all new business owners underestimate the cost of starting their business, leaving it exposed to the risks of being underfunded. To help you avoid this common mistake, use our Free Business Start Up Costs Template to help you determine how much money you need to get your start up business up and running safely. See below for additional information, tips and resources.

Calculating business start up costs should be a part of starting any business. An entrepreneur is usually required to put these costs together as part of a business plan , loan or grant application. They are also helpful when putting together proforma financial statements.

Business Start Up Costs Template

Other versions.

License : Private Use (not for distribution or resale)

"No installation, no macros - just a simple spreadsheet" - by Jon Wittwer


This Excel workbook will help you put together an estimate of costs and funding required to start your business. It is pre-populated with expense categories common to many small businesses and home-based businesses, so it can be very useful in helping you identify all of your start up costs, including many you may not have considered.

As you add your own costs or expense categories, the template will help you understand whether you have adequate funding. Once you have your funding secured and you pull the trigger, use the worksheet to track your actual expenditures to help you keep your costs under control.

As you get your business going, you may want to consider using a more detailed business budget and other financial statements .

Starting a restaurant? This free template also includes a customized start up cost sheet with many cost categories specific to owning and operating a restaurant. Perfect for helping you capture all of those Restaurant Start up Costs.

Starting a franchise, web business or home business? Continue reading below for some help with costs specific to these types of businesses as well as links to other helpful resources.

Start Up Costs for Different Businesses

Restaurant business start up costs.

Starting a restaurant can be expensive because of the specialized equipment and facilities that are required. Luckily, there are usually leasing options available for the expensive items and many landlords will work with you on leasehold improvements. Use the Restaurant specific worksheet in the Business Start up Cost Template to help you consider other expenses such as cleaning costs, uniforms, menu development and supplier sourcing costs.

Home Business Startup Costs

The nice thing about a home based business is that you can forgo many of the typical expenses of a startup. Things like internet, office space, furniture and utilities are already taken care of. Better yet, if you qualify for the home office deduction, now you can write some of these items off as business expenses. Simply put $0 in the template or delete the rows for those expenses already covered. If you are starting a home-based internet business , continue on to the next section.

Internet Business Startup Costs

A web based business may be one of the least expensive businesses to start, especially if you can do the web development work yourself. Use the basic template and decide which expenses apply to you – simply delete the rest. You may also want to consider some items not listed, such as custom web page design and development work, custom database development and scripting, search engine optimization (SEO) and advanced hosting services to name a few. Also, if your business is retail, don't forget to include all of the referral and usage fees for selling through storefronts like Amazon and Ebay.

Franchise Business Start Up Costs

Our Business Start up Cost Template will also help you if you are looking for a start up franchise opportunity or looking for franchises for sale. Along with all of the regular costs of starting a business, the template also includes categories for fixed franchise fees as well as monthly franchise dues and marketing co-op fees. You may also want to check with the franchise corporate offices. Many of them provide tools to help you estimate your start up and operating costs.

How to Use the Business Startup Cost Template

The key to putting together accurate numbers is to get into the details. This requires doing detailed research by calling suppliers and providers, searching the internet and listing any and all costs that may be applicable. To help you, the business cost template comes pre-populated with many of the most common expense categories. It also contains additional suggestions and tips for each category to help you make sure you considered everything. Feel free to add additional line items that are unique to your business.

Funding Sources

Start by listing the sources of funding that you believe will be available to you in the Estimated column. This would include money supplied by owners and investors, funds available from bank loans or other lines of credit. In some cases you may be pursuing other sources of funds such as grants, endowments or sale of assets.

Fixed Costs

After all your funding sources have been outlined, start putting in the estimated fixed costs. These costs are one-time costs associated with getting your business up and running. This includes things like leasing space, purchasing assets, stocking up on inventory and getting your legal and marketing issues in order.

Two key parts to the fixed costs are the Working Capital and a Reserve for Contingencies – these can be significant. Any startup is advised to have a Contingency Fund as there are always last minute surprise costs and fees. Consider the risks of your business and set aside sufficient funds accordingly.

Be sure to include enough Working Capital to fund your normal business operations as you grow. Remember that there can be a significant amount of time between when a sale is made and when you actually receive payment. Sufficient working capital is needed to allow you to continue to purchase inventory and pay bills while waiting for payment. More than one growing business has failed because it lacked sufficient working capital.

Monthly Costs - Until Profitable

Many entrepreneurs fail to understand that businesses are seldom profitable the first day. In order to have a clear picture of actual cash required, it is important to estimate your monthly operating costs as well as how many months it will take you to move from the red to the black. The template is setup to assist you in determining these important costs. Simply identify how many months you believe it will take to get up and running and fill in the estimated monthly costs.

Ready, Set, Go

As a time window is provided and all the sources and costs are identified, the spreadsheet will calculate whether you have a surplus or deficit in funding. If you have a deficit, then you will need to figure out if there are ways to scale back your costs or look for additional funding. If you have surplus and are confident in your numbers, you may be good to go.

Keeping Things in Check

The excitement of starting the business can cause entrepreneurs to spend more than they planned. Use the template to keep you grounded. As you collect funds and begin to spend money, record the Actual amounts next to the Estimated numbers. The spreadsheet will calculate whether you are running over or under you estimated numbers so you can make adjustments as you go.

Additional Business Startup Expense Tips

  • Securing lines of credit can take some time. Be sure to have them in place before they are needed.
  • Be aware of credit card processing fees. These can be 2% to 5% of the total.
  • Little items may not seem like much, but they can add up quickly. Don’t overlook them.
  • Business Startup Costs are only part of the financials that any new business owner should put together. Consider putting together a proforma cash flow statement and balance sheet.
  • If you are searching for funding, odds are you will need a business plan. Business plans can be a great way to concentrate your thoughts and to really put together a game winning strategy as well as get feedback from mentors and associates.

References and Resources

Below are a number of great references that can help provide you with more information and direction on starting your own business.

Startup Costs For Different Businesses

  • Estimating Startup Costs at sba.gov - Information on estimating start up costs from the U.S. Small Business Administration (SBA) office.

Business Startup Loans and Grants

  • Small Business Loans and Grants at sba.gov - Information and assistance on understanding the various Business Startup Loans and Start up Business Grants available to small businesses.
  • Official Site of U.S. Grants - Official site for finding and applying for U.S. Grants including Business Startup Grants.

How to Start a Business

  • Starting and Managing a Business at sba.gov - Helpful information from the SBA on starting and managing a business.
  • Starting a Business at entrepreneur.com - Many different articles and tips on starting your own business.
  • 10 Steps to Starting a Business at business.gov - Detailed information from the U.S. Government on the 10 steps for starting a business.
  • Writing a Business Plan at sba.gov - SBA information about how to put a solid business startup plan together.
  • Business Plan Software at paloalto.com - Great software for putting together a business plan. Will guide you through the process and has hundreds of industry specific examples.

Small Business Information and Assistance

  • Online and face-to-face Mentoring at SCORE - SCORE,a non-profit organization, partners with the SBA to educate entrepreneurs and help small businesses.
  • Minority Business Development Agency at mbda.gov - Tools, information and help for those starting Minority Owned Businesses.
  • Small Business and the FDA at fda.gov - Great information for those who are launching business under the purview of the FDA.
  • Federal Business Opportunities at fbo.gov - Official government site for identify and bidding on opportunities to do business with the U.S. Government. Can even use it to come up with Business Startup Ideas.
  • Information for Entrepreneurs at startupnation.com – Site dedicated to helping entrepreneurs to build a business.

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  • May 10, 2024   •   27:42 Stormy Daniels Takes the Stand
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Stormy Daniels Takes the Stand

The porn star testified for eight hours at donald trump’s hush-money trial. this is how it went..

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This episode contains descriptions of an alleged sexual liaison.

What happened when Stormy Daniels took the stand for eight hours in the first criminal trial of former President Donald J. Trump?

Jonah Bromwich, one of the lead reporters covering the trial for The Times, was in the room.

On today’s episode

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Jonah E. Bromwich , who covers criminal justice in New York for The New York Times.

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In a second day of cross-examination, Stormy Daniels resisted the implication she had tried to shake down Donald J. Trump by selling her story of a sexual liaison.

Here are six takeaways from Ms. Daniels’s earlier testimony.

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The US could give homeowners a $980 billion stimulus at no additional cost, 'Oracle of Wall Street' says

  • A housing proposal could unlock nearly $1 trillion for homeowners, Meredith Whitney wrote for the FT.
  • The idea is for Freddie Mac to start purchasing secondary mortgages, offering a cost-effective way for borrowers to tap equity.
  • Homeowners face few options to do this, as there aren't many willing buyers.

Insider Today

An idea is percolating at one of America's government-sponsored mortgage finance giants that could unlock a huge new lifeline for homeowners, Meredith Whitney wrote for The Financial Times

"As early as this summer, a proposed move could begin to unleash almost $1tn into consumers' wallets. By the autumn, it could be on its way to $2tn," Whitney wrote. 

That's if Freddie Mac secures approval from its regulator to operate in the market for secondary mortgages, also commonly known as home equity loans. If greenlighted, the scheme would be equivalent to a huge stimulus injection, but without a cent added to the national deficit, the "Oracle of Wall Street" explained.

Related stories

Under the plan, Freddie Mac could start purchasing second mortgages and package them into bonds the way it does with primary home loans now. As Freddie Mac is a massive provider of mortgage market liquidity, the move could encourage more banks to extend this financing to customers. 

Whitney points out that Americans are sitting on a massive and growing pile of home equity, but little of that is being tapped. More widely available home equity loans would be a boon in particular for older Americans, who are taking on more debt than other age groups and are at growing risk of a financial shock. 

Approval would also be well-timed. The proposal noted that options are limited for homeowners who want to tap their equity, meaning that few are benefiting from the housing market's appreciation.

"For the many homeowners who purchased or refinanced their homes during a period of lower mortgage rates, a traditional cash-out refinance today may pose a significant financial burden, as it requires a refinancing of the entire outstanding loan balance at a new, and likely much higher, interest rate," it said.

Freddie Mac's participation seeks to offer a cost-effective alternative. According to Whitney, part of the issue as to why households have so few affordable avenues is a consequence of Great Financial Crisis, as a large number of bank lenders decreased their mortgage exposure following the 2008 crash. 

Freddie Mac's entry into the market could result in $980 billion of home equity financing becoming available to Americans, with that number growing to $3 trillion, Fannie Mae and Ginnie Mae follow suit, Whitney estimated. 

"By opening up the securitization market for second mortgages, not only would more institutions be inclined to originate the loans, but the cost to borrowers would meaningfully decline with more finance providers," Whitney said: "It would also provide big stimulus to an economy and consumer that appear to be slowing down without adding a dime to government debt."

Watch: What happens when the US debt reaches critical levels?

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Politics latest: Keir Starmer accused of 'rank hypocrisy' by Rishi Sunak after setting out what he'll do to tackle small boat crossings

Labour leader Sir Keir Starmer lays out his party's plans to try and tackle small boat crossings if it wins power. Listen to the latest episode of the Electoral Dysfunction podcast as you scroll.

Friday 10 May 2024 18:30, UK

  • Starmer says small boat crossings 'one of the greatest challenges we face'
  • Explained: What's in Labour's plan to try and tackle problem
  • Darren McCaffrey: Will Labour's plan cut it with voters?
  • Starmer says no flights to Rwanda will take off under Labour
  • Sunak accuses Starmer of 'rank hypocrisy'
  • Electoral Dysfunction:  Jess Phillips says Elphicke defection like 'being punched in gut'
  • UK exits recession | Economy 'returning to full health'
  • Faultlines:   Can British farming survive?
  • Live reporting by Tim Baker

Across the UK, anger is brewing amongst some farmers.  

Protests have already been held in London, Dover and Cardiff, with more planned - mirroring similar tensions seen across Europe in the last six months.     

They say they’re annoyed about cheap foreign imports and changes to subsidies forcing them to give up land in favour of environmental schemes.    

But what does this mean for the food on our table - and does British produce risk becoming a luxury product for the wealthy only?    

On the Sky News Daily , Niall Paterson is joined by West of England and Wales correspondent Dan Whitehead to find out why farmers are so concerned, and speaks to Liz Webster, the founder of Save British Farming, about why she believes eating British isn't just good for our farmers - it's good for the nation's health, too.   

In response to our report, Farming Minister Mark Spencer, said: "We firmly back our farmers. British farming is at the heart of British trade, and we put agriculture at the forefront of any deals we negotiate, prioritising new export opportunities, protecting UK food standards and removing market access barriers. 

"We've maintained the £2.4bn annual farming budget and recently set out the biggest ever package of grants which supports farmers to produce food profitably and sustainably."

The Welsh government said: "A successful future for Welsh farming should combine the best of our traditional farming alongside cutting-edge innovation and diversification. 

"It will produce the very best of Welsh food to the highest standards, while safeguarding our precious environment and addressing the urgent call of the climate and nature emergencies."

👉  Listen above then tap here to follow the Sky News Daily wherever you get your podcasts   👈

Following the defection of the Dover and Deal MP Natalie Elphicke to Labour, Beth, Ruth and Jess discuss the surprise move and whether it could have been handled differently by Sir Keir Starmer.

They also talk about Beth's interview with the former immigration minister Robert Jenrick and his warnings about Reform UK.

Plus, how significant was the defeat of former Conservative mayor of the West Midlands Andy Street? Beth and Jess were both there to tell the story.

And they answer a question on Labour and the Muslim vote, and what the party can do to restore confidence and trust.

Email Beth, Jess, and Ruth at [email protected] , post on X to @BethRigby, or send a WhatsApp voice note on 07934 200 444.     

👉 Listen above then tap here to follow Electoral Dysfunction wherever you get your podcasts 👈

In January 2023, Rishi Sunak made five promises.

Since then, he and his ministers have rarely missed an opportunity to list them. In case you haven't heard, he promised to:

• Halve inflation • Grow the economy • Reduce debt • Cut NHS waiting lists and times • Stop the boats

See below how he is doing on these goals:

The Sky News live poll tracker - collated and updated by our Data and Forensics team - aggregates various surveys to indicate how voters feel about the different political parties.

With the local elections complete, Labour is still sitting comfortably ahead, with the Tories trailing behind.

See the latest update below - and you can read more about the methodology behind the tracker  here .

Speaking to Sky political editor  Beth Rigby , Sir Keir Starmer has defended his decision to allow Tory MP Natalie Elphicke into Labour.

Ms Elphicke was on the right of the Conservative spectrum, and previously defended her sex-offender ex-husband, comments which she apologised for this week following her defection.

Addressing Tory voters, Sir Keir says he wants Labour to be a "place where they who have ambitions about their families, their communities, their country, can join and be part of what we are trying to build for their country".

Asked by Beth if he was ruthless, Sir Keir said: "Yes, I'm ruthless in trying to ensure we have a Labour government that can change this country for the better.

"Not ruthless for my own ambition, not ruthlessness particularly for the Labour Party - I'm ruthless for the country. 

"The only way we'll bring about a change in this country is if we're ruthless about winning that general election and putting in place a government of public service, that’ll be a major change.

"Politics, I believe, should be about public service, that's what I've been about all my life."

More now from political editor Beth Rigby's interview with Labour leader Sir Keir Starmer.

She reminded him that he previously ruled out doing a deal with the SNP - but has not done so for the Liberal Democrats.

Sir Keir again ruled out a coalition with the SNP - adding that he is aiming for a "majority Labour government".

He says Labour needs "to keep working hard, keep disciplined and getting our message across, which is something fundamental to me".

Pushed on his lack of ruling out a possible agreement with the Lib Dems, Sir Keir says: "I'm going for a majority.

"That's the answer I gave you a year ago. It's the same answer I'm giving you now."

Sir Keir Starmer was earlier today pushed on whether Rwanda deportation flights will take off if he was prime minister - although it was not clear if he would cancel flights which had already been organised.

Sky News understood that previously booked deportation flights to Rwanda would still go ahead if Sir Keir entered Number 10. 

But the Labour leader has now gone further.

Speaking to political editor Beth Rigby , Sir Keir has ruled out any flights taking off.

"There will be no flights scheduled or taking off after general election if Labour wins that general election," he says.

He says: "Every flight that takes off carries with it a cheque to the Rwanda government. 

"So I want to scrap the scheme - so that means the flights won't be going."

Sir Keir says he would rather spend the money on his own measures to counter small boats.

"No flights, no Rwanda scheme. It's a gimmick," he says.

By Alix Culbertson , political reporter

Scotland's new first minister has told Sky News that the controversial gender recognition reforms "cannot be implemented."

John Swinney,  who became first minister this week , has faced questions over his stance on gender recognition after MSPs voted in 2022 to pass a bill to make it simpler for people to change their gender without having to obtain a medical diagnosis.

The UK government blocked the bill from being made into law and the Supreme Court rejected a request by the Scottish government for a judicial review.

Asked if he would be fighting to push the bill through, Mr Swinney told Sky News: "The reality of the situation we face is that the Supreme Court has said that we can't legislate in that area. We can't take forward that legislation."

The UK economy is no longer in recession, according to official figures.

Gross domestic product (GDP) grew by a better-than-expected 0.6% between January and March, the Office for National Statistics (ONS) said.

Economists had predicted the figure would be 0.4%.

Prime Minister Rishi Sunak said it showed the economy had "turned a corner".

He told Sky News's Ed Conway: "I am pleased that while there's more work to do, today's figures show that the economy now has real momentum, and I'm confident that with time, people will start to feel the benefits of that.

"We've had multiple months now where wages are rising, energy bills have fallen, mortgage rates are down and taxes are being cut... I'm pleased with the progress that we're making."

Mr Sunak added: "I am confident the economy is getting healthier every week."

You can read more here:

Rishi Sunak has criticised Sir Keir Starmer's position on Rwanda as "rank hypocrisy".

Speaking to broadcasters, the prime minister says the Labour leader has announced things the government is "already doing".

He gives the example of "punching through the backlog, having more law enforcement officers do more, that's all happening already".

"We've announced all of that more than a year ago," the prime minister adds.

"The question for Keir Starmer if he cares so much about that, why did he vote against the new laws that we passed to give our law enforcement officers new powers? 

"They've now used those to arrest almost 8,000 people connected with illegal migration, sentenced them to hundreds of years in prison.

"And if it was up to him, all those people would be out on our streets, so I think it's rank hypocrisy property of his position."

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  19. Stormy Daniels Takes the Stand

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