How Much Money Do You Need to Start a Business? Real Numbers by Industry

The Real Answer: It Depends on the Business

One of the most common questions aspiring entrepreneurs ask is how much money they need to get started. The honest answer ranges from under $500 for a freelance service business to over $500,000 for a restaurant or manufacturing company. Knowing your specific industry's typical startup costs helps you plan realistically.

Startup Costs by Industry

Industry	Low End	Typical	High End
Freelance/Consulting	$500	$2,000	$10,000
E-commerce (dropship)	$1,000	$5,000	$20,000
E-commerce (inventory)	$5,000	$25,000	$100,000
SaaS/Software	$10,000	$50,000	$250,000
Food Truck	$30,000	$75,000	$200,000
Salon/Spa	$40,000	$100,000	$250,000
Restaurant	$75,000	$250,000	$750,000
Retail Store	$50,000	$150,000	$350,000
Construction/Trades	$20,000	$80,000	$200,000
Medical Practice	$100,000	$300,000	$1,000,000

The Six Categories of Startup Costs

1. One-Time Setup Costs

These are expenses you pay once when starting: business registration, legal fees, initial inventory, equipment, website development, and office/storefront build-out.

2. Monthly Operating Costs

Recurring expenses that begin immediately: rent, utilities, insurance, software subscriptions, and marketing. You need enough cash to cover these for at least 6-12 months before relying on revenue.

3. Inventory and Materials

Product-based businesses need initial inventory. Plan for 2-3 months of inventory at launch, factoring in supplier minimum orders and lead times.

4. Marketing and Customer Acquisition

Many startups underestimate marketing costs. Budget for website, branding, initial advertising, and at least 6 months of ongoing marketing spend.

5. Professional Services

Accountant, lawyer, insurance broker. Plan for $2,000-$10,000 in year-one professional fees depending on complexity.

6. Cash Reserve

This is the amount most people forget. You need a cash cushion to survive the gap between when expenses start and when revenue covers them.

Critical Rule: Take your estimated startup costs and add 20-30% as a contingency. Startups almost always cost more than projected, and running out of money before reaching profitability is the most common failure mode.

How to Calculate Your Specific Number

Step 1: List every one-time cost with estimated amounts.
Step 2: List monthly operating costs and multiply by the number of months until break-even (typically 6-18 months).
Step 3: Add a 25% contingency buffer.
Step 4: Subtract any revenue you expect during the ramp-up period (be conservative).

Use the break-even calculator to determine when your revenue will cover costs, and the profit margin calculator to ensure your pricing generates enough margin. For more on runway planning, read our guide on how to calculate your business burn rate.