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How to Calculate Business Start-up Costs and Where to Find the Money

By on April 07, 2023 5 min read
Fundid is redefining how small businesses understand and access capital.
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How to Calculate Business Start-up Costs and Where to Find the Money

Starting a business requires more than just money. It requires dedication, hard work, and the right resources. 

However, having enough money is still an essential factor in determining whether or not your business will be successful. The cost of starting a business can vary greatly depending on the type of business you’re creating and the industry you’re in. 

Generally, it would help if you had some capital to cover startup costs such as equipment, supplies, marketing materials, inventory, and other overhead expenses. 

Additionally, it is essential to have enough money set aside for unexpected expenses that may arise during the startup process. By understanding how much money you need to start your business and what costs are associated with it, you can make sure that your venture has a better chance of success.

The Friday Fund

What are the Essential Start-up Costs for a Business?

Starting a business requires careful planning and budgeting. Knowing the essential start-up costs for your business will help you to plan and prepare for the expenses associated with getting your business off the ground. 

Start-up costs can include anything from legal fees, taxes, insurance, employee salaries, office supplies and equipment, marketing expenses, and more. It is important to understand what start-up costs you will need to cover in order to properly plan your start-up budget. Utilizing a business startup cost calculator can help you identify exactly what expenses you will need to cover in order to get your business up and running.

Business registration and legal fees

You'll need to register your business with the appropriate government agency and may also need to hire an attorney to help you with legal requirements such as incorporating or setting up contracts.

Office or workspace

Depending on your business, you may need to rent office space, purchase equipment or supplies, or invest in technology such as computers, software, or a website.

Inventory or materials

If you plan to sell products, you must purchase inventory or raw materials to create your products.

Marketing and advertising

You must invest in marketing and advertising to promote your business and attract customers. This may include creating a website, designing a logo, printing business cards, or running online ads.

Employee salaries and benefits

If you plan to hire employees, you must budget for their salaries, benefits, and payroll taxes.


Depending on your business, you may need to purchase liability, property, or workers' compensation insurance.

Professional services

You may need to hire professionals such as an accountant or consultant to help you with financial or strategic planning.

Licenses and permits

Depending on your business and location, you may need legal support or licenses.

It's important to budget for these essential start-up costs and creates a comprehensive business plan that includes financial projections for the first year or two of operations. By planning and budgeting appropriately, you can help ensure your business has the resources to get off the ground and succeed in the long run.

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Identifying Your Startup Costs and Setting Up a Budget

Starting a new business requires careful planning and budgeting to ensure its success. Here are some steps to identify your startup costs and set up a budget.

Identify your startup costs: Make a list of all the expenses you will incur to start your business. 

These may include:

  • Equipment and supplies
  • Rent and utilities
  • Legal and accounting fees
  • Marketing and advertising expenses
  • Inventory and raw materials
  • Website development and hosting fees
  • Insurance and permits
  • Employee salaries and benefits

Estimate your expenses: Once you have identified your startup costs, estimate the total amount you will need to spend to launch your business. Be detailed and accurate as possible, and consider one-time and ongoing expenses.

Determine your funding sources: Consider how you will fund your business. Will you use your savings, take out a loan, or seek investors? Be realistic about your funding options and what you can realistically afford.

Set up a budget: Create a detailed budget for your business. Your budget should include all your startup costs, as well as ongoing expenses such as rent, utilities, and salaries. You should also set revenue targets and consider how you will generate income.

Monitor your budget: Once you have set it up, monitor it closely to ensure you stay within your spending limits. Adjust your budget as necessary to reflect changes in your expenses or revenue.

By following these steps, you can identify your startup costs and set up a budget that will help you launch your business successfully.

How to Get the Necessary Funding for Your Business

Getting the necessary funding for your business can be a challenging task, but it's essential to ensure the growth and success of your venture. Here are some ways to secure funding for your business:


Various grants are available for businesses from government and private organizations. These grants target specific industries or purposes, such as research and development.

light bulb green icon Fundid Recommendation: Find business grants through our Grant Marketplace! Updated weekly so you can save time and focus on starting your business. Join our platform free to start searching for funding opportunities. 


One of the most common ways to fund a startup is to bootstrap it. This means using your personal savings, credit cards, or other personal assets to fund your business. Bootstrapping is a great way to start your business without relying on outside investors or debt.

Friends and family

Another option is to ask your friends and family for a loan or investment. This is often called "love money" and can be a great way to get your business.


Crowdfunding platforms like Kickstarter or Honeycomb Credit can help you raise funds from many people. You can offer incentives or rewards to those who contribute, such as early access to your product or a discount.

Related Reading: Crowdfunding Loans with Honeycomb Credit

Angel investors

Angel investors are wealthy individuals who invest in startups in exchange for equity. They can provide not only funding but also mentorship and connections in the industry.

Venture capital

Venture capital firms invest in startups that have the potential for high growth and high returns. However, they typically require a significant equity stake in the company and may require a board seat.

Small business loans

You can also apply for a small business loan from a bank or other financial institution. These loans typically require collateral and a good credit score.

light bulb green icon Fundid Recommendation: Explore your loan options through our vetted partners. Create your free account today and find a lender who meets your business needs. 

It's essential to consider which funding option is right for your business and to develop a solid business plan and pitch to present to potential investors or lenders. It's also important to remember that securing funding takes time and effort, so be persistent and don't give up.

Tips on How to Cut Down on Start-up Costs

Starting a new business can be costly, but there are several ways to reduce start-up costs. Here are some tips:

Work from home: Instead of renting an office space, consider working from home or a co-working space. This will help you save on rent, utilities, and other costs.

Buy used equipment: Instead of buying brand-new equipment, consider purchasing used or refurbished. This can significantly lower your initial costs.

Related Reading: Buying vs. Leasing Equipment: Which is Best for Your Business?

Use free or low-cost software: Many software options are available for free or at a low cost, such as Google Suite, Trello, Asana, and Slack. These tools can help you manage your business efficiently without breaking the bank.

Outsource tasks: Instead of hiring full-time employees, consider outsourcing tasks to freelancers or contractors. This can save you money on employee benefits and other associated costs.

Negotiate with vendors: When purchasing supplies or materials, try negotiating with vendors to get the best possible price.

Use social media for marketing: Social media platforms are a cost-effective way to market your business. Utilize free tools like Facebook, Twitter, Instagram, and LinkedIn to reach your target audience.

Related Reading: 10 Ways to Grow Your Business on Instagram 

Be mindful of expenses: Track them and look for ways to reduce them. Cut back on unnecessary expenses and focus on essential costs that are critical to the success of your business.

By implementing these cost-saving strategies, you can significantly reduce your start-up costs and increase your chances of success.

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About Fundid

Fundid is redefining how small businesses understand and access capital.

We spend our time thinking about what the world would look like if the 80% of businesses that have under 10 employees had access to the capital they needed to grow and thrive. 
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