How Much Money Do I Need to Start a Small Business?

Quicke Business Collective
3 days ago
3 min read

There's no single dollar figure — a home-based service business might start for a few hundred dollars, while a business holding inventory or leasing space can need tens of thousands. The right question isn't "what's the average?" but "what will my specific business cost to launch and run until it can pay for itself?" The good news: that number is knowable, and you calculate it by adding up two kinds of expenses.

Here's how to think about it, and how to land on a realistic number instead of a guess.

Budget planning desk with calculator, BUDGET binder, glasses, charts, laptop and pens on a bright office workspace.

The two kinds of startup costs

The SBA breaks startup costs into two buckets, and this framing keeps you from missing things:

One-time costs — the expenses to get the doors open: equipment, initial inventory, logo and website, permits and licenses, and legal or formation fees.

Ongoing (monthly) costs — what it takes to keep running: rent, utilities, salaries, software, insurance, marketing, and supplies. The SBA recommends planning for at least one year of monthly expenses, and notes that projecting several years is ideal.

That second bucket is the one new owners underestimate most. Your business rarely earns enough to cover itself on day one, so you need a cushion to survive the ramp-up.

Infographic from The Quicke Business Collective comparing one-time costs and monthly costs, with expense examples listed.

Common expenses to plan for

The SBA lists costs that apply to most businesses: workspace, equipment, utilities and communications, licenses and permits, insurance, professional services (legal and accounting), inventory, employee pay, advertising and marketing, market research, and your website. Not all will apply to you — a solo consultant skips inventory and rent — but running down the list makes sure nothing important is forgotten.

How to get to a real number

The SBA's advice is refreshingly practical: research published costs for the fixed items (permits, insurance, software), then talk to mentors, vendors, and service providers to learn what similar businesses actually pay. From there you build a simple report of expected startup costs — the same document lenders and investors use to compare your costs against projected revenue.

SBA webpage titled Calculate your startup costs with a startup costs worksheet download button and checklist image on the right.

Don't forget: money to live on

One cost that's easy to overlook is you. If the business won't pay you a full income right away, factor in your personal runway — how many months you can cover your own bills while the business grows. Underfunding this is a top reason new owners have to quit early, even when the business itself is working.

If you don't have the full amount saved, that's normal — the SBA's funding guide covers options like self-funding, loans, and investors. Many businesses also start lean, keeping costs low and growing as revenue comes in.

Why the number is personal

You've probably noticed this article won't hand you a figure — because an honest one has to come from your specific plan. Knowing the categories of cost is the easy part. Building your actual numbers, pricing so you reach profitability, and deciding how to fund the gap is the work — and it's exactly what the course helps you do.

Frequently asked questions

What's the cheapest kind of business to start?

Service-based businesses that use skills you already have — consulting, freelancing, cleaning, tutoring — because they need little to no inventory or space.

Can I start a business with no money?

With very little, sometimes — especially a service business you run from home. But "no money" usually still means time, and a cushion for basic tools and your own living costs.

How much should I keep in reserve?

Plan for at least several months of ongoing expenses, including your personal costs, so a slow start doesn't sink you. The SBA suggests budgeting a year of monthly expenses.

Should I get a loan to start?

Sometimes — but only against a real plan showing how you'll repay it. Borrowing to cover a business that isn't validated yet is risky.

Want to build your real startup budget?

This article covered the what and the why. The Quicke Business Collective's Business Starter Program helps you build your actual numbers — startup costs, pricing, and funding — with step-by-step, real-world guidance.

👉 Join the Business Starter Program