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How Much Money Do You Need to Start a Business?

So you’ve decided to start a business. Congratulations! Starting and running a business is a lot of work, but it’s also incredibly rewarding. And if you do it right, it can be financially rewarding as well. But now that you’ve decided to take the first step, it’s time to think about start-up costs. Let’s break down how much money you need to start a business.


What Are Start-Up Costs?


Start-up costs are the one-time expenses involved in starting a business. While there’s always room to save money on business expenses, start-up costs are pretty much nonnegotiable. That’s because these expenses are necessary for getting your business official, legal, and off the ground.


For most small businesses, start-up costs consist of…


  • Office space and transportation, if you’re running a brick and mortar business or need a work vehicle. This includes utilities and other expenses involved in renting a space.

  • Equipment and supplies, like a work computer and production supplies. These are usually lower for service-based businesses than they are for product-based businesses.

  • Your business license and registration. If you’re not sure which type of entity you should be, check out this blog post.

  • Business insurance. No matter what type of business you have, you need business insurance. Most states require it.

  • Necessary marketing, like a website or ads to attract your first clients.

  • Staffing expenses if you plan to hire immediately.


Your actual needs will vary depending on the type of business you’re starting.


The Biggest Expenses for New Business Owners


Registration: $50-$500


Before anything else, you’ll want to register your business. In most states, you can do all the registration yourself for a very small fee (around $50). If you can afford it, I highly recommend investing in a service like LegalZoom to do all this work for you. Registering a business is complicated, and it’s easy to mess things up. LegalZoom allows you to file for an LLC for as little as the cost of your state’s filing fees. If you want even more protection and less headache, you can pay more for their premium services.


Equipment & Supplies: Varies Widely


Depending on the type of business you’re starting, you might have a hefty bill for equipment and supplies. Here’s what that can look like:


For an online service provider…


… you’ll need very few supplies, but the ones you do need can be costly. You’ll probably need a reliable computer, which can cost anywhere from a few hundred to a few thousand dollars. You might also need to invest in a few softwares, like a payment processor and a scheduling app. If you want to save money, invest in a CRM like Honeybook or Dubsado. It’s a bit more expensive up front, but it’ll save you hundreds in the long run.


For a product-based business…


… you’ll need not only equipment to help you run the business (like a computer and/or phone), but also equipment for creating, packaging, and shipping your products. Consider things like a postage printer, branded packaging, raw materials, and specialized tools. If you’re trying to save money, I recommend cutting corners on the disposables (like packaging and labels) so you can invest more of your budget into the products themselves.


Initial Marketing: $100-$1000


Unless you already have an online audience or in-person connections, you’ll probably need to invest in some marketing. You can design a website for as little as $16 per month for six months on Squarespace. That being said, I recommend setting aside enough for six months worth of any necessary subscription or service. In addition to a website, you might need to invest in ads, business cards, or other promotional materials. It just depends on your business structure.


So How Much Money Do You Really Need to Start a Business?


If you want an actual number, I’ve got you. Download my free guide to calculating your small business start-up costs, and take your first step towards becoming a bonafide business owner!




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