Small Business Startup Costs Explained 

Kody Wirth

Kody Wirth

Kody Wirth

3 min. read

Updated March 4, 2024

What will it cost to start your business

While every business is unique, there’s a common approach to helping you figure out what it’s going to take to get your business off the ground and sustain it as sales ramp up.

And, knowing the startup costs for your new business is critical before you launch. Underestimating the funds required could leave you without enough cash in the bank and heading towards failure before you even get started.

Read this guide and learn to calculate, manage, and minimize your startup costs. 

What are startup costs?

Startup costs are what a business spends to get up and running before generating revenue. 

Starting costs vary based on business type but often include expenses like lease payments, permits, and market research. They can also include asset purchases such as vehicles, real estate, and equipment. Crucially, starting costs also include the money that you need to have in the bank to cover expenses as your business launches until your sales have grown enough to cover those expenses.

Startup cost examples

Starting costs typically include expenses that occur before you start selling and major purchases, otherwise know as assets.

Startup expenses

  • Permits and licenses
  • Incorporation fees
  • Logo design
  • Website design
  • Brochure and business card printing
  • Signage
  • Down payment on rental property

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  • Cash to cover operations until sales can cover expenses
  • Improvements to your chosen location
  • Vehicles used for business operations
  • Intangible assets like trademarks, copyrights, and patents.

Why calculate startup costs?

Knowing your initial costs and expenses improves your chances of launching successfully. It helps you:

Avoid unnecessary risks:

You can avoid unexpected financial pitfalls and make informed decisions by understanding potential expenses.

Start your financial plan:

It helps you budget and determine if you have adequate funds to launch and operate until you’re profitable.

Convince investors:

A detailed breakdown of startup costs can make your business more appealing to investors, as you’ll demonstrate thorough planning and financial acumen.

Improve decisions: 

With a clear view of costs, you can make decisions about pricing, scaling, and other critical areas more confidently.

What are your startup costs?

Starting costs vary from business to business. So, how do you know your costs and, more importantly, how much money you need to cover them? 

Check out the following resources to answer those questions.

Tips for managing startup costs

Follow these steps to minimize unnecessary expenses and prioritize the right things.

Get the rest of your business finances in order

Knowing what it costs to start your business will make it far easier to get your finances in order.

Check out the rest of our startup financial resources to better understand your path to profitability.

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Content Author: Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.