Why there’s no reliable “average” cost
You will see headline averages quoted online, but they mix very different businesses and are often based on small surveys. Your costs depend on what you sell, where, and how you start: from home or in premises, with stock or made to order, alone or with staff. The useful question is not “what does it cost on average?” but “what will my business cost?”
Step 1: List every cost
The SBA’s list of common startup costs is a good prompt:
- Office space or premises
- Equipment and supplies
- Communications (phone, internet)
- Utilities
- Licenses and permits
- Insurance
- Lawyer and accountant
- Inventory (stock)
- Employee salaries
- Advertising and marketing
- Market research
- Printed marketing materials
- Making a website
Online businesses often add platform subscriptions, apps and payment fees; service businesses add tools, training and travel.
Step 2: Split one-time and monthly costs
One-time costs are paid to get started: major equipment, a logo, permits and fees, a lease deposit. Monthly costs keep coming: rent, salaries, utilities, software, marketing. The SBA notes that one-time costs can often be deducted for tax purposes, so keep receipts and ask your accountant.
Step 3: Decide how many months to cover
Most new businesses take time to reach steady sales. The SBA suggests counting at least one year of monthly expenses, and says five years gives the full picture. If that feels like a lot, it is a sign to start smaller or keep your job while you grow.
Step 4: Add a buffer and find your break-even point
Things go wrong and prices rise. The SBA’s break-even guidance suggests adding a little extra, such as 10%, for costs you can’t predict. Then find your break-even point with the SBA’s formula:
Example (made-up numbers): $900 monthly costs ÷ ($35 price − $16 variable cost) = 47.4, so about 48 sales a month.
If the break-even number looks unrealistic, change something before you launch: cut costs, raise prices or rethink the product.
Ways to keep startup costs low
- Start from home or online before taking on premises.
- Make or buy to order instead of holding lots of stock, or test with a small first order.
- Use free tiers of software and upgrade only when needed.
- Buy second-hand equipment where safety allows.
- Pre-sell: take deposits or pre-orders to fund your first batch.
- Keep your job and start part time, if your contract allows.
From our Etsy shop: Dropshipping Starter Kit. Google Sheets & Excel: profit and ROAS calculators, supplier list, ad testing tracker and a starter guide.
A realistic view of the risk
According to U.S. Bureau of Labor Statistics data, about half (51.4%) of private-sector establishments opened in the year to March 2020 were still open five years later. Planning your costs carefully and keeping a buffer improves your odds of being in that half.
Sources: SBA: calculate your startup costs · BLS Business Employment Dynamics, table 7
Add up your own numbers
List your one-time and monthly costs and see how much money you need, plus your break-even point.
Open the startup cost calculatorFrequently asked questions
What is the cheapest business to start?
Usually a service using skills and equipment you already have, such as tutoring, bookkeeping, cleaning, design or writing. Costs can be very low, though you may still need registration, insurance and a simple website.
Should I include my own salary in startup costs?
If you need the business to pay your living costs, yes: add your own pay as a monthly cost. If you keep another job at first, you can leave it out, but be honest with yourself about how long that can last.
How do I pay for startup costs?
Common options are savings, friends and family, bank or SBA-guaranteed loans, investors and crowdfunding. The SBA describes each in its “fund your business” guidance.
What is a good buffer?
The SBA suggests something like 10% for unpredictable expenses. Some owners choose more if their costs are uncertain.
Last reviewed: October 2026. General information only — check providers' official sites for current features and pricing.