How Much Money Does it Usually Cost to Start a Business?

How Much Money Does it Usually Cost to Start a Business?

How Much Money Does it Usually Cost to Start a Business?

Jeff Bezos started his Amazon business with $100,000. Mark Zuckerberg and his co-founders received $500,000 from an angel investor. If you research further, you’ll come across billionaires who started with as low as $100.

From the figures, it is clear that business capital isn’t about a one-size-fits-all. It is quite impossible to give a precise answer on the amount of money you need to start a business. However, one can establish the average cost to start a business by identifying the industry and other inevitable expenses.

If you’ve been wondering how much it cost to start a business, you’re in the right place. Check out this guide to know the average prices of starting a business.

Average Cost of Starting a Business in Different Industries

You need to establish your industry of interest to have an estimate of the cost of starting a business. If you want to start a business in the retail sector, your financial needs will be different from an entrepreneur in the health sector.

Here are some of the common industries and the average startup cost.


A retail business is one of the most common types of ventures. If you want to start a business in retail, you need to consider the cost of purchasing raw materials, producing inventory, and marketing. The startup cost can be, on average, $32,000.

Leasing and customizing a space are some of the highest costs incurred by startups. With the growth of e-commerce, you can open a virtual store to reduce the expenses related to a brick-and-mortar store.


Entrepreneurs who have medical expertise can start a service-based healthcare venture at an average cost of $27,0000. The cost can vary depending on the approach you take. For an office setup, the price of medical equipment can make the cost shoot up, but if you’re offering services from a patient’s site, you might require minimal tools, meaning you’ll have less expenses.

Food Services

The cost to start a business in the food industry is $125,000 on average. Starting as a franchise will lower your startup cost significantly. You can get a restaurant franchise for as low as $25,000.

Conversely, you can start your restaurant as a food truck. With around $30,000, you can get a food truck, which will allow you to set up a restaurant in one of your desired major cities.

Real Estate

You can start your business in the real estate industry with as little as $ 1,000. However, you might want to consider all the licensing requirements if you plan to scale up your venture. The cost of pre-licensing, examination, licensing, and broker fee is at least $650.

Realtors spend about $1000 on marketing. You ought to put a considerable marketing budget for marketing your real estate business. It would help to seek business funding for you to thrive past your first year, where finances are a constant challenge for most startups.


A business in the transport industry will require you to consider the cost of a van as the primary tool of the trade. You can find a used van, which might cost you as low as $10,000. While at it, ensure that you budget for maintenance expenses, which can be $300.

For daily expenses, you should budget for fuel gas, which is at least $40 each day. About $200 ought to be for flyers and business cards. In the initial stages of the business, an office isn’t a necessity, but you can decide to set one up as the company expands.


If you want to start a business in the finance sector, there are multiple options. The cost to start a business in the financial industry is $52,000. A higher percentage of this amount goes towards leasing office space and marketing your financial services.


A business in the construction industry can range from being a handyman to a home improvement contractor. If you have the required skills, you’ll need about $14, 000. The charges for licensing and advertising are, on average, $5000.

You can set $5000 as your budget for specialized equipment. You don’t have to buy all the stuff at first as leasing when the need arises can be a great option.

Technical and Professional Services

A business in the professional services category, such as law or web design, is lucrative. The startup cost is at least $14,000. The seemingly lower price is because you don’t need to incur any upfront cost, especially if you work at home. However, investing in a website will be necessary for you to get clients and market your services.

The Most Significant Expenses for a Startup

Most of the significant costs of starting a business cut across different industries. How much does it cost to start a business? Well, it isn’t possible to generalize the financial aspect of all businesses, but highlighting the expenses of most upstarts is a practical guide.


More than 55% of small business owners have a business website. Whether you start your business from an office setting or the comfort of your home, a website is a prerequisite. A website is a great way to increase your online visibility.

Setting up a website can cost you as low as $100. However, a customized website with appealing features can cost you up to $30,000. If you’re not familiar with developing and designing a website, you might need to hire a web developer, which will be another cost altogether.

Office Space

Office space is one of the outstanding expenses that upstarts have to deal with. The size of the space is the primary determinant of the charges. Further, most commercial realtors will need you to sign a lease of at least five years.

A square foot of office space will cost you $34. However, you have to be ready to part with a higher amount in bigger cities such as New York, where the average cost per square foot is $83. You might also want to factor in the renovation charges and the price you’ll incur on equipment, furniture, and utilities.


A 2018 report by the U.S. Small Business Administration shows that the number of small business employees was 58.9 million. Employees for your small business are your greatest resource. Consequently, you might need to dig deeper in your pocket to cover the cost of hiring qualified employees.

The average weekly wage in the U.S is $1,152. The budget you allocate for employee compensation depends on the worker’s level of skills, market, and location. Note that top talents will mostly consider firms that have competitive packages for staff.

Business Insurance

Insurance is indispensable for a small business. When analyzing how much it cost to start a business, coverage ought to be a priority. Averagely, small business insurance is $1,281 per year.

The insurance you go for depends on your industry. However, covers such as workers’ compensation, general liability, property, and commercial umbrella insurance are essential for all businesses. Rates depend on the risk profile, carrier, and business location.


Taxation in the U.S. depends on your business entity. If you’re a small partnership, the tax rate is 23.6%. On the other hand, a proprietorship attracts a tax rate of 13.3%.  You can approximate your taxes based on the type of business.

Tax calculation can prove complex. It would help to work with a CPA to ensure that your business taxation complies with the rules within your state.


When establishing your startup cost, it is essential to have an estimate of the cost of your inventory. The amount of money you invest in your first inventory depends on your revenue goals, especially within the initial months. A practical business plan should have such information for effective financial projections.

Some Tips to Consider When Estimating How Much It Cost to Start a Business

If you’re clueless about the price of things you need for your business, making an estimate can be difficult. You should consider checking similar businesses to have an idea of the startup cost. You can get financial statements of some companies within the industry you want to explore.

It is vital to categorize costs into a variable or fixed. When you make the distinction, it becomes possible to know what to prioritize. You should also estimate the one-time and on-going costs.

Despite having a near-perfect budget for your business, accounting for miscellaneous expenses is key. A company faces several unforeseen scenarios that can set you back financially. Setting aside 10% of the business cost to act as a cushion will save you unimaginable frustrations.

How Much Money It Costs To Start a Business Remains a Concern for Aspiring Entrepreneurs

Your first step as an entrepreneur should be to understand how the cost to start a business. From the outlined breakdown, the costs involved in starting a business can be overwhelming. Most business ideas remain in paper due to the financial strain of starting the business.

However, you can seek external funding options to assist you in establishing your venture. What’s more, you might want to focus on virtual stores to forego expenses related to leasing space. Cost shouldn’t be a reason to relent.

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