How Much Does it Cost to Start a Business?

September 21, 2018 · 7 minute read

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How Much Does it Cost to Start a Business?

Looking to start your own business? You’re not alone. A survey from America’s Small Business Development Center found that almost half of millennials want to start their own business within the next three years. And that’s no surprise. Small businesses are thriving all around us, from small-time side hustles auctioning antique VHS tapes online, to full-fledged independent bookstores.

Starting your own business allows you to be your own boss, work in an area you’re passionate about, and grow your income faster than many traditional jobs. The biggest challenge to becoming a small business owner, however, is navigating small business startup costs.

In fact, the most common concern when it comes to starting your own business is the cost. The thousands of dollars usually required to start a business can seem like a barrier to entry for many who want to jump into the business world. In fact, for 45% of millennials, access to capital is the biggest hurdle to starting their own business.

Unsurprisingly, the average cost to start a business varies widely depending on the type of business. Some businesses have almost zero startup costs, while others, like storefronts and restaurants, require significant capital to get up and running. Even when small businesses require more startup capital, there are more ways than ever to fund your dream.

Typical Small Business Startup Costs

Every business costs money to run. Whether you are paying employees, restocking shelves, or hosting a website, the old adage is true: you have to spend money to make money. And unfortunately, some of the biggest business costs can come during the startup phase, when you are defining your business goals, finding a location or purchasing domain names, and generally investing in the infrastructure.

In order to make sure that your business is on firm financial footing, it is important to estimate your small business startup costs in advance. This list of common small business startup expenses gives you an idea of what you’ll need to budget for:

Office Space

No matter what your business is, you’ll need somewhere to work. Will you need to lease a storefront or will you buy a membership to a co-working space or startup incubator? Will you need to pay utilities? If you’re planning on working from home, will your new business increase your electric or internet bills? Office space costs vary widely from free to thousands of dollars per month.

Licenses, Permits, and Insurance

Some businesses, especially storefronts and restaurants, require more legal leg work than others. If you’re starting a native-plants landscaping business, will you need a permit? If you’re starting a new bar, will you need a liquor license?

Licenses and permits vary by city and state. Most, however, require that you pay a fee to apply. Likewise, your new business may require an insurance policy to protect you in case of future litigation. While daunting, these costs help regulate businesses and protect consumers. Planning ahead for them will make sure that your small business thrives.


If you’re starting a business that sells products, you’ll need to have a stock of your product ready to go. This is true whether you’re planning on starting an internet-based business or a storefront. Calculating stock as part of your start-up costs ensures that you can buy your product in advance so that you’re ready to serve customers from day one.


Many small businesses start out as a company of one, but if you’re planning on starting a small business that requires employees, their salary is one major startup cost you’ll have to cover. Employees power your business and having adequate funding to pay them fairly ensures that they will do their best work to help you and your business succeed.


Getting the word out about your new business is one of the most important things you can do to ensure that business starts off strong. Whether you want to advertise on social media or take out a billboard, your startup costs should reflect money you plan to put toward taking out ads for your business.

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Differences in Startup Costs Based on Industry

Of course, the actual cost of starting a small business can vary wildly depending on what exactly your business is. Here’s what you might be looking at to start some of the most common types of small businesses in the United States:

Online Business Startup Costs

Like brick and mortar stores, the cost of doing business online varies depending on the type of business. If you’re selling products, you will need to invest in inventory, and if you’re providing services, you may need to hire employees.

One benefit of starting your small business online, however, is that the startup costs can be pretty small. After all, most internet-based small businesses don’t require you to rent office space, which can be a major savings. If your online business doesn’t require you to purchase stock or hire employees, you may be looking at startup costs of
under $500 .

Storefront Startup Costs

If your business idea requires a physical space, your startup costs might range from $2,000 for a small kiosk inside a mall or park to more than $250,000 for something like a clothing or home goods store.

Although $250,000 might seem like a daunting number, remember that many smaller, independently owned stores began with a much smaller budget. Many small business owners get by on only $30,000 in startup money.

Restaurant Startup Costs

If you’re betting on bringing in bank by selling your grandma’s famous bánh mì, you could be looking at startup costs of anywhere from $15,000 on the low-end for a food truck or cart to up to $3.5 million to buy a franchise restaurant. Most small restaurant costs, including coffee shops, fall somewhere in the $80,000 to $250,000 range.

How to Finance Your Startup Business

Many who want to start a business are daunted by the initial costs, but funding your passion project has never been easier. From calling on friends and family to using smart savings strategies, there are plenty of ways to fund your business.

Friends and Family

Perhaps one of the most common ways to raise money for your small business is asking friends and family to invest in you. Some will inevitably want to support your passion project merely because it makes you happy. Other friends and family may be excited to loan you money.

Friends and family loans can be ideal for financing a new small business because you can negotiate low-interest rates, flexible pay-back schedules, and avoid bank fees. Of course, borrowing money from friends and family can quickly become complicated by family drama, so make sure to agree on conditions before taking out a family loan.

Outside Investors

When we hear about startup companies, we frequently hear about so-called “angel investors” sweeping in to fully fund new businesses, but there are other practical ways to fund your small business with outside investors.

Some small businesses use crowdfunding platforms to find investors who each contribute a small amount, and others use startup funding networks to find investors looking to fund their specific type of business. Outside investors want to know that your business is likely to succeed, so you’ll need a solid business plan and a dose of charm to land outside funders.

Personal Savings and Investments

Most people end up covering some of their small business start-up costs out of their own pocket. Self-funding your new business venture can be the most convenient option. After all, if you’re your own funder, you don’t have to worry about family drama or picky investors. And putting your own money on the line can be an extra motivation to make sure that your business is set up to succeed.

Of course, it can seem overwhelming to save up enough money to fund your small business. Luckily, there are easy ways to manage your money. Switching a SoFi Checking and Savings®, for example, allows you to spend, save, and earn all in one place—all with no account fees (subject to change).

In addition to using a checking and savings account with SoFi, you can also leverage an investment account with SoFi in order to make smart investments in the market with the help of a qualified advisor.

Using SoFi Invest allows you to make an investment plan that meets your goals, whether that’s buying a building for your new tote bag-making enterprise or covering the full startup costs of your new photography app. Whatever your goals, SoFi Invest can help you get there quicker.

Every business is different, but SoFi can help you leverage your money so that you can be the boss, CEO, and primary investor in your dream. Learn more about how SoFi can help you tackle your small business startup costs.

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