How much you need to start a business depends on your business type and how you’ll operate. Costs such as equipment, employees, insurance, office space and marketing should all be factored in.
It can cost anywhere from $10,000 to $20,000 to start a business from the ground up. “Starting a small business demands financial foresight,” says Spokeo’s CEO, Harrison Tang. “For those starting from scratch, a ballpark figure can vary, but allocating around $10,000 to $20,000 for essentials is prudent.”
To get a fuller picture of what your business’s budget should look like, add your estimated expenses together. These expenses will depend on what type of business you have. Are you going to open a restaurant, clothing store, graphic design company or develop websites? Depending on the business you want to start, you’ll need to factor in employee costs, equipment, insurance, building space and more.
Not all of these startup costs will apply to every business, but there’s a good chance many will need to be factored into your business plan.
Easy business accounting
Accounting software made for small businesses and sole traders.
Many top business checking accounts can also integrate with accounting software to help streamline your expense tracking, tax saving and invoice management. For example, Grasshopper offers access to Autobooks, which allows you to send and receive digital invoices, automate bookkeeping, and manage cash flow.
There are many worksheets you can use to start estimating costs, such as the free Small Business Association (SBA) worksheet. But calculating up how much you need to fund a business is just the beginning — you’ll also need to explore options to get those funds if you don’t have at least $20,000 stashed away.
Borrowing money to start a business is often necessary. Getting a loan can help you get inventory or equipment or secure a place to do business. There are fixed installment loans and lines of credit to consider, depending on whether you need a lot of cash upfront or a revolving line of credit.
If you’re a brand new business, it can be difficult to land funding. The tough part of starting a new business is that you’re unlikely to qualify for traditional business loans. A typical business lender is likely to require at least two years in business and at least $100,000 in monthly revenue.
“Acquiring a business loan as a startup can be challenging due to revenue and time in business requirements,” says Tang. “Exploring alternative financing avenues, such as community grants, crowdfunding, or angel investors, can offer promising prospects for startups seeking capital infusion.”
Startup grants are time-sensitive and limited but a great option to get funding without having to worry about paying it back. And if all else fails, consider SBA loans. These business loans are backed by the government, which you can qualify for if your business is for profit, located in the US, meets size standards and you’ve tried and failed to get funding elsewhere.
It can cost a lot to start a new business, and it greatly varies depending on what type of business you want to open. On the whole, expect to need anywhere from $10,000 to $50,000 to get started.
For more help, see our comprehensive small business resource guide.
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