If you’ve been asking how much does it cost to start a business, the honest answer is: it depends on what you’re building and how quickly you want to scale. Some businesses can start with as little as $100–$1,000, especially if they’re online or home-based. Others—like retail stores, restaurants, or product-heavy brands—can easily require $50,000 to $500,000+ once you factor in licensing, equipment, inventory, rent deposits, and staffing.

In this guide, you’ll learn the average cost to start a business, what counts as one-time startup costs vs monthly operating expenses, and the real expenses most founders underestimate. You’ll also get cost examples by business type and a simple method to calculate a realistic startup budget—so you can launch confidently without financial surprises.

Quick Answer: How Much Does It Cost to Start a Business?

How much does it cost to start a business? The typical range is anywhere from $100 to $500,000+, depending on your business model, industry, location, and how quickly you plan to grow. Some businesses can launch with minimal upfront costs, while others require large investments in inventory, space, equipment, and staffing.

For most small businesses, a realistic mid-range startup budget falls between $2,000 and $50,000. This estimate usually covers the basics—like business registration, branding, tools, marketing, and initial operating expenses—without the higher costs associated with physical locations or large-scale hiring.

Here’s what the cost range often looks like by business type:

• Online / home-based: Usually $100 to $10,000, depending on tools, website needs, and marketing budget.
• Service-based: Commonly $500 to $20,000, especially if you need certifications, equipment, or professional insurance.
• Retail / brick-and-mortar: Often $50,000 to $500,000+, largely due to rent deposits, renovations, inventory, and staffing.
• Ecommerce / dropshipping: Typically $1,000 to $25,000, depending on platform fees, branding, product sourcing, ads, and fulfillment strategy.

The biggest reason startup costs vary is that every business has different requirements—industry regulations, regional pricing (rent, labor, permits), and staffing needs can quickly change what “starting small” actually costs.

Startup Costs vs Monthly Costs (Know the Difference)

When planning your budget, it’s important to separate startup costs from monthly operating costs. Many first-time founders underestimate how much ongoing cash they’ll need after launch—and that’s where most financial pressure comes from.

One-Time Startup Costs

These are the expenses you pay before you officially open or launch. They’re usually paid upfront and often include:

• Business registration and legal setup
• Licenses and permits
• Branding (logo, design, packaging)
• Website or ecommerce store setup
• Equipment, tools, or initial inventory

Recurring Monthly Operating Costs

These are the expenses you need to cover to keep the business running every month. Even low-cost businesses have ongoing operating costs such as:

• Rent or workspace fees
• Software and subscriptions
• Payroll or contractor payments
• Marketing and advertising
• Utilities, shipping, or ongoing inventory

One-Time vs Monthly Costs

Why This Matters

Many businesses don’t fail because the idea isn’t good—they fail because the cash runs out. If you only plan for startup expenses but ignore the monthly costs that follow, your business can struggle even if you’re getting sales. The goal is to budget not just to launch—but to stay open long enough to grow.

The 10 Biggest Startup Costs You Should Budget For

If you’re calculating how much does it cost to start a business, this is the section that gives you the clearest picture. Most startup budgets don’t fail because founders miss one huge expense—they fail because small costs add up fast, and cash runs out before the business becomes stable.

Below are the 10 most common startup cost categories, with realistic cost ranges and why each one matters. Use this as a checklist while building your startup budget so you don’t underestimate what it actually takes to launch and operate smoothly.

1. Business Registration and Legal

Typical cost: $50–$2,000+
This includes business registration, licenses, permits, incorporation fees, and legal support. It matters because many industries require compliance upfront, and skipping legal setup can lead to penalties, tax issues, or blocked operations later. You may also want to budget for trademarks if brand protection is important.

2. Insurance

Typical cost: $300–$3,000+ per year
Common policies include general liability insurance, professional liability, product insurance, or workers’ compensation (if you hire employees). Insurance protects you from the unexpected—accidents, claims, or customer disputes can quickly become expensive if you’re uninsured.

3. Location and Rent Deposits

Typical cost: $0–$50,000+
Home-based businesses may only need a workspace setup. A leased location can require deposits, rent upfront, renovations, signage, and utilities. This is often the biggest cost difference between online businesses and brick-and-mortar startups.

4. Equipment and Inventory

Typical cost: $500–$150,000+
Equipment includes tools, laptops, machinery, POS systems, furniture, or delivery vehicles. Inventory costs depend on what you sell and how much stock you need upfront. This category matters because it directly affects how quickly you can start selling and fulfilling orders without delays.

5. Branding and Website Setup

Typical cost: $200–$10,000+
Includes your domain, hosting, website design, ecommerce platform setup, product photography, logo design, and packaging. Your branding and website are the first things customers judge—strong presentation builds trust and improves conversion rates, especially if you sell online.

6. Technology and Software

Typical cost: $50–$1,000+ per month
This includes accounting tools, project management software, CRM systems, payroll tools, email marketing platforms, and ecommerce apps. Software may feel like a “nice-to-have,” but these tools save time, reduce errors, and help you operate professionally from day one.

7. Hiring and Payroll

Typical cost: Varies widely (often the largest ongoing cost)
If you hire employees, your total employment cost is usually 1.25 to 1.4× the salary once you account for taxes, benefits, onboarding, equipment, and training. This matters because payroll creates long-term financial responsibility—and many businesses underestimate the real cost of staffing.

8. Marketing and Advertising

Typical cost: $300–$20,000+ for launch
Marketing includes paid ads, influencer partnerships, SEO content, email marketing tools, branding campaigns, and promotional materials. Even great businesses struggle if customers don’t know they exist. The smartest approach is budgeting early for both launch marketing and consistent monthly visibility.

9. Utilities and Ongoing Services

Typical cost: $100–$2,000+ per month
This includes internet, phone plans, electricity, payment processing fees, shipping services, subscriptions, and other operational essentials. These are easy to overlook, but they quietly reduce profit margins, especially in the first few months when revenue is still growing.

10. Working Capital

Typical cost: 3–6 months of operating expenses
Working capital is your cash buffer—money set aside to cover your monthly costs while the business builds momentum. This is one of the most important parts of your startup budget because it protects you during slow sales periods, unexpected expenses, or seasonal downturns.

How to Use This Cost Breakdown

To accurately estimate how much it costs to start a business, list these 10 categories and add your expected ranges. The goal isn’t to spend more—it’s to plan realistically so you don’t launch underfunded.

A smart startup budget doesn’t just cover “opening day.” It covers the first few months when your business is still finding customers, refining operations, and stabilizing cash flow. That’s how you avoid the most common startup mistake: running out of money too early.

Real Startup Cost Examples by Business Type

When people search how much does it cost to start a business, they’re rarely looking for one universal number. They want a realistic estimate based on the type of business they’re planning to launch. A freelance service business, for example, doesn’t require inventory or rent deposits. But a physical store or restaurant often needs major upfront investment before the first customer even walks in.

Below are realistic cost ranges based on common business models, along with what typically drives those expenses. Use these examples as a benchmark to estimate your own startup budget more accurately.

Online Business

Estimated startup cost: $100–$5,000

Online businesses are usually the most affordable to launch because you don’t need a physical location or large inventory upfront. Your costs typically go toward building a professional presence and getting customers.

Common expenses include:

• Domain and hosting
• Website or ecommerce setup
• Branding and design
• Basic software tools (email, accounting, marketing)
• Initial marketing budget (SEO or paid ads)

If you’re starting lean, you can keep costs closer to the low end. But if you invest in professional design, content, and ads early, your upfront costs may be higher.

Service Business (Freelance, Agency, Consulting)

Estimated startup cost: $500–$10,000

Service-based businesses are also relatively low-cost because you’re selling skills, expertise, or time rather than physical products. However, certain industries require certifications, insurance, or tools that increase your startup budget.

Common expenses include:

• Business registration and insurance
• Laptop and work tools
• Portfolio website and branding
• Software subscriptions (CRM, invoicing, project management)
• Marketing (ads, SEO content, outreach tools)

If you’re starting as a solo freelancer, you can launch with minimal costs. But if you’re building an agency that requires contractors, branding, and client acquisition campaigns, you’ll likely need a larger budget.

Ecommerce Business

Estimated startup cost: $1,500–$25,000

Ecommerce has a wider cost range because it depends heavily on what you sell and how you fulfill orders. Your biggest decision here is whether you carry inventory or use a fulfillment model like dropshipping.

Common expenses include:

• Ecommerce platform setup
• Website design and product pages
• Branding (logo, packaging, photography)
• Payment processing and apps
• Marketing (ads, influencers, content)
• Fulfillment and shipping setup

Inventory vs Dropshipping Costs

• Inventory-based ecommerce usually costs more upfront because you need to buy stock, pay for storage, and manage fulfillment.
• Dropshipping typically lowers startup costs because you don’t purchase inventory upfront—you list products and pay suppliers only after you receive orders.

However, dropshipping can require a stronger marketing budget early on because you’re competing in a crowded market and need to build trust quickly. The upside is that it offers a more affordable way to test product demand without heavy financial risk.

Brick-and-Mortar Business (Store, Restaurant, Salon)

Estimated startup cost: $50,000–$500,000+

Physical businesses cost significantly more because you’re paying for both the setup and the space. In many cases, you also need staff from day one, which increases ongoing expenses quickly.

Common expenses include:

• Lease deposits and rent
• Renovation, interiors, furniture
• Equipment and tools
• Permits, inspections, and compliance
• Inventory and supplies
• Staffing and payroll
• Utilities, security, signage
• Local marketing and promotions

For brick-and-mortar businesses, the biggest cost driver is usually location and staffing. Renting in a high-demand area can dramatically increase costs, and payroll becomes a major monthly expense even before your revenue stabilizes.

What These Examples Mean for Your Startup Budget

The real takeaway is that startup costs are not random—they’re shaped by what your business needs to function from day one. If you want a realistic estimate, start with your business model, list your essential expenses, and include at least three months of operating costs so you don’t run out of cash early.

This is how you plan a startup budget that supports both launching and staying operational—especially in the critical first months when revenue is still inconsistent.

How to Calculate Your Startup Costs (Simple 3-Step Method)

If you’re trying to figure out how much does it cost to start a business, the most reliable approach is to calculate your costs the same way lenders and experienced founders do: break everything into setup costs, monthly operating costs, and a buffer for surprises. The U.S. Small Business Administration recommends estimating startup expenses before you launch so you understand how much funding you need, what your break-even point looks like, and how much cash you’ll need to survive the early months.

This simple 3-step method will help you build a realistic startup budget without guessing—and without underestimating what it takes to stay operational.

Step 1: List Essential Costs (Must-Haves vs Nice-to-Haves)

Start by writing down every expense required to open your business and make your first sale. The key here is separating “essential” expenses from upgrades you can add later. This prevents overspending before you’ve proven the business is profitable.

Must-have costs (examples):

• Business registration, licenses, legal setup
• Core equipment or tools
• Insurance
• Website, ecommerce setup, payment processing
• Inventory or supplies (if required)
• Basic marketing to get your first customers

Nice-to-have costs (examples):

• Premium office space
• Fancy branding and packaging early
• Advanced software tools you may not use immediately
• Large inventory orders before you validate demand
• Hiring full-time staff before revenue is consistent

A practical rule: if you can delay a cost by 30–60 days without affecting your ability to operate, it likely belongs in the nice-to-have category.

Step 2: Estimate Your Monthly Runway (3–6 Months Minimum)

Once you know your setup costs, calculate what it will cost to keep your business running every month. This is where most startup budgets fail—founders plan for launch, but not for staying open long enough to grow. The SBA specifically highlights the importance of understanding your ongoing bills so you don’t run out of cash early.

Start with these recurring monthly expenses:

• Rent or workspace costs (if applicable)
• Payroll or contractor payments
• Software and subscriptions (accounting, ecommerce, marketing tools)
• Inventory replenishment or materials
• Marketing and advertising
• Utilities, phone, internet
• Shipping, packaging, and payment processing fees

Next, multiply your total monthly operating costs by 3 to 6 months.

Why 3–6 months? Because most businesses take time to reach steady sales. A runway protects you while you refine your offer, test marketing, and build repeat customers. If you’re starting in a competitive niche or running a physical business, aiming closer to 6 months is typically safer.

Step 3: Add a 10–20% Contingency Buffer

Even well-planned businesses face unexpected costs—equipment breaks, marketing tests flop, suppliers change pricing, or legal and compliance needs appear mid-launch. That’s why most startup cost calculators and finance templates recommend adding a contingency to cover surprises rather than relying on perfect estimates.

A good rule is to add 10–20% of your total projected costs as a buffer.

This buffer helps you:

• Avoid taking on expensive emergency debt
• Stay confident during slower months
• Make smarter decisions without panic
• Protect cash flow during unexpected operational changes

One-Line Startup Budget Checklist

Your final startup budget = setup costs + runway + contingency.

This formula gives you a clear number you can use for planning, saving, or funding—and it’s one of the most reliable ways to estimate how much it costs to start a business without underestimating what it truly takes to launch and survive the early months.

How to Start a Business With Less Money (Cost-Cutting Tips)

If you’re researching how much does it cost to start a business, it’s also smart to explore ways to reduce your startup expenses without sacrificing quality. Many successful companies start lean, test demand early, and scale only after they see consistent traction. This approach is often called bootstrapping—funding your business with personal savings and early revenue instead of relying heavily on outside funding.

Here are practical, proven ways to start with less money while still building something credible and sustainable.

Start Lean With an MVP (Minimum Viable Product)

Instead of investing heavily upfront, launch the simplest version of your product or service that solves one clear customer problem. This reduces waste and helps you validate demand quickly. Once customers respond, you can reinvest revenue into improvements.

Use Freelancing Tools Instead of Hiring Early

Hiring full-time employees is expensive and adds long-term financial pressure. In the early stage, use freelancers or contractors for tasks like design, copywriting, bookkeeping, or development. You get professional output without ongoing payroll obligations.

Buy Used Equipment or Refurbished Tech

For many businesses, equipment is a major startup cost. Consider buying used laptops, tools, furniture, or machinery from trusted platforms. Refurbished tech can cut costs significantly while still offering reliable performance.

Rent Instead of Buying

If your business requires equipment or workspace, renting can help you preserve cash. Renting is especially helpful when you’re not fully sure what tools or space you’ll need long-term. It also reduces the risk of locking money into assets too early.

Start Online First

One of the easiest ways to lower startup costs is to start as a digital-first business. Selling online, offering virtual services, or operating from home removes the biggest cost drivers like rent, deposits, renovations, and physical staffing.

Avoid Unnecessary Employees Early

Payroll is one of the fastest ways to increase monthly operating costs. Before hiring, ask: “Does this role directly create revenue or reduce a critical bottleneck?” If not, it’s often better to delay hiring until revenue is stable.

Use No-Code Tools Before Custom Development

Custom apps and development can be costly. No-code tools can help you build landing pages, automate workflows, accept payments, and manage customers with minimal expense. Once your business model is proven and profitable, you can invest in custom solutions.

Keep Fixed Costs Low Until Revenue Is Predictable

Bootstrapped businesses tend to stay flexible because they avoid high monthly commitments. If you can keep rent, payroll, and subscriptions lean, you’ll have more runway to experiment and grow without financial stress.

How Do People Pay for Startup Costs? (Funding Options)

Once you’ve estimated your startup budget, the next question is how to fund it. The best option depends on how quickly you want to scale and how much risk you’re willing to take. Many business owners use a combination of savings, financing, and revenue from early customers.

Below are the most common ways people cover startup costs, with one-line pros and cons for quick decision-making.

Bootstrapping

• Pros: You keep full control and avoid debt or giving away ownership.
• Cons: Growth can be slower, and your personal cash runway may be limited.

Small Business Loans

• Pros: Gives you access to a larger budget to launch and scale faster.
• Cons: Requires repayment with interest and may involve eligibility requirements.

Grants

• Pros: Free funding that doesn’t need repayment.
• Cons: Competitive, time-consuming to apply, and often restricted by industry or region.

Credit Cards (With Caution)

• Pros: Fast access to cash and can help cover short-term expenses.
• Cons: High interest rates can become risky if revenue doesn’t grow quickly.

Investors (For High-Growth Businesses)

• Pros: Large funding potential plus mentorship and business support.
• Cons: You give up equity and may lose some control over decision-making.

Final Takeaway: How Much Does It Cost to Start a Business?

So, how much does it cost to start a business? It can range from a few hundred dollars to several hundred thousand, depending on your model, location, and staffing needs. The good news is that smart planning makes the biggest difference. When you budget for both startup costs and monthly expenses, you reduce financial surprises and give your business room to grow. Start lean, validate demand early, and scale only when revenue is stable. If you’re launching an online store, Spocket can help you source quality products from reliable suppliers and start dropshipping without upfront inventory.