How Much Money Do You Need To Start A Business?


You may wonder whether it is possible to start a business with little or no money. You need to spend at least some amount to get your business started. Successful entrepreneurs find that profit and success come easier when they have the cash to invest in their business. Without it, getting the supplies and equipment you need and diving into unexpected expenses can be difficult. Let’s find out how much money you need to start a business in 2022.

How much money is needed to start a business by sector?

Certainly, different sectors require different startup capital. Freelance jobs need no more than a strong internet connection and laptop. Food and drink businesses, on the other hand, need stock expenses, so include much higher costs.

A survey claims that most tech founders start a business with $1,217 or less. More than $12,170 in savings is needed for finance and recruitment companies. Food and property business owners require somewhere $6,085 to $12,170. Most events and consultancy organizations start with approximately $1300 to $6,500. Leisure, retail, and health industries have fairly even more costs.

READ: 120k A Year Is How Much An Hour?

Things to consider before analyzing the startup cost

Analyze the money you need to start a business so you can set strategic targets.
Evaluation of the cost to start a business

Here are some important steps that you should know before analyzing the cost to start a business.

  • Draft your business plan strategy.
  • Make a list of your objectives and priorities.
  • Evaluate available financial options.
  • Adopt flexibility
  • Enlist explicit goals before employing finances in your business.
  • Make policies to progress your goals.
  • Set profit, growth, and other success targets.
  • Examine briefly present supply and demand conditions.
  • Determine management budgets on a frequent basis.

Estimated costs for a new business

At first, you should calculate money you need to start a business.
Calculating money to start a new business

Get out a laptop and some paper, and start researching how much money you need to start a business by following the key points below.


Are you planning to sell goods? You have to set a budget to cover inventory expenses. It involves all of the resources important for the making, packaging, and delivering of your products. You need to stock your shelves for a long-run business. Additionally, research and planning are necessary accordingly. Check out the current market and you’ll get a rough idea of the estimated costs that you require to invest in inventory.

Buying your business items will have variable costs based on the scale of your business. Specialty stores that deal with high-end fashion tend to offer expensive equipment. So, your cost per product will be high. You can quickly spend $100,000, around 17% to 25% of your entire budget.

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Equipment plays a crucial role when it comes to starting a business. You need to invest in specific equipment no matter which kind of organization you’re starting.

For example; if you are a doctor, then you have to buy medical equipment, necessary machines, chairs, examination seats, and so on. If you want to deal in the restaurant business, it could make up a significant part of your equipment costs. The cash you need to start a business is usually a one-time cost that only goes through repeating if the equipment gets damaged or becomes outdated.

The cost of the equipment varies by industry and can range from $10,000 to $100,000.

Office Space

Many enterprises began with the entrepreneurs and team working from within their home or shared office space. It may help business owners to save on office rent and other expenses. However, with the progress of business, it becomes necessary to buy or rent their office space.

When you transfer your business to proper office space, it incurs various costs. The cost of office property will vary extensively as it depends on the location and several other specific requirements of the business. However, you should allocate anywhere between $100 to $1,000 per employee per month in the case of a small business. However, large business’s costs will be higher.

Licenses and Permits

Depending on the nature of your business, you’ll need to have a license or permit to keep you compliant with regulations and laws. Licenses and permits include permission from the national govt before you start your business. Moreover, you’ll also need money to register your business’s legal name, certain business activities, and copyright. Your business structure can affect the registration process and associated costs. The common legal structures are corporation (c-corp), sole proprietorship, and limited liability company (LLC).

Your location, processing costs, kind of license, and recurring fees determine the cost of your business’s license or permit. The average cost you need to start a business for license and permits varies from $50 to several hundred dollars but it usually does not outdo $300.


A business insurance policy is essential while starting a business. It bases on the purpose and nature of your business. You may need to buy this policy as it involves liability insurance, property insurance, and worker’s compensation. You can determine it by several standards, such as the amount of coverage you need, your business type, and the number of employees.

You should purchase general liability insurance for the protection of your assets, employees, and customers, and against third-party injury. The cost of a business insurance policy may vary depending on your specific organization. The average cost of insurance is approximately $1,200 per year.

Office Supplies

Do you know what will be your normal monthly spending? It’s time to figure it out. When you know the exact figure for office supplies, it will help you to stay on a monthly target. Office supplies can include chairs, tables, WiFi router, computers for your employees, and coffee for the staff room. Some other supplies like disposable tools, copy paper, and cleaning supplies will be required too. 

Furthermore, the cost of office supplies will vary by sector, you should target to stay within 10% of your total budget. You can divide your annual anticipated office supply cost by 12 after assembling the overall costs. You will be able to get monthly average expenses for the office supplies.

READ ALSO: 20 Small Business Ideas for Teens

Website and Technology

Undoubtedly, social media platforms like Facebook and Instagram are helpful to engage customers but your business website acts as an online shopfront. Therefore, you must pay for a website and domain name to integrate a point-of-sale (POS) system. You’ll need to invest money in online transactions and provide detailed information for your clients.

Bear in mind that before buying any online product or service, customers generally search online for your company. You can avail of many services to create a free website. However, for a quality premium website, it will cost you around $2000 to $10,000. This cost also includes domain registration, hosting plans, web designing, and web development.

Although, you can find multiple services that allow you to build a website for free. Premium services from Squarespace and Wix are popular and cost $40 per month on average.

Advertising and Marketing

You may also want to invest in promoting your product or service while spending around one percent of your revenues on advertising. However, suggestions sometimes can go slightly higher especially when you are at the starting up stage.  Small businesses should spend 7% to 8% of gross income on marketing.

If you think these marketing tactics are expensive, you can opt to commence with free choices like online platforms to advertise your new business. For premium services, you can use Buffer, Mailchimp, and Google Analytics.

Marketing involves commercials, flyers, and online marketing and is the most effective technique to attract customers and increase profits. You must post meaningful and unique content regularly to engage with your followers. It will help you grow your online audience efficiently.


You must pay income tax to the federal government. You should predict the tax cost to have an estimation of your yearly income.

You can also hire a certified public accountant (CPA) to you file your taxes. This additional investment may be worthwhile if the CPA can save you funds while filing.

How to get money to start a new business?

There’s one common element you need to launch your business: money. To get your small business off the ground, consider raising enough funds to lay the stone for longevity and future success. Here are the simple ways how you can get money to start your small set-up:

Use a personal savings account: Make a withdrawal from your personal savings account.

Get a loan: This is the best alternative as banks and lenders fulfill your needs. Getting a personal loan is another option you can consider.

Borrow from family and friends: Family members and friends want to see you successful, so you can put in writing the terms of the length of the loan, repayment terms, and other pertinent peculiarities.

Venture Capital and Angel Investors: SBIC investment involves three forms; loans, equity, loans, and equity.

Credit cards: Use your credit card with the lowest rate and terms. You can also pay off the credit card balance every month. Fees and interest will hold up quickly.

GET TO KNOW: Fears You Have To Overcome For Starting New Business

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