Startup Budget Calculator

The good news is that calculating your startup costs involves basic addition (or simply plugging the figures into the calculator on this page). But you’ll likely need to do some research to accurately estimate all your expenses. 

Here are the steps to calculate your startup costs:

1. Create a list of one-time expenses and get an accurate estimate of their costs.
2. Create a list of one-time expenses and get an accurate estimate of their costs.
3. Add your one-time and ongoing expenses to get your estimated total startup cost. 

Let’s do a sample calculation together.

Jenna Coleman, a graphic designer, and Trevor Eubanks, a photographer, are founding a limited partnership design studio called Sugar Pine Design. They know they need to set up a legal business entity, which they expect will cost about $1,200.  They plan to spend $550 on their website setup, $2,400 on equipment, and $1,600 on furnishing their studio. 

Sugar Pine Design’s one-time expenses costs should come to $5,750.

$5,750 total one-time costs = $1,200 legal and accounting costs + $550 website costs + $2,400 equipment costs + $1,600 furnishings

The owners do not plan to take a salary for the first year but do plan on hiring a part-time employee for $12,480. They will rent a design studio for $10,800 a year and estimate utilities to cost $4,140. They’ll also hire a marketing consultant to create and execute their digital marketing strategy at $9,000 a year. 

That brings Sugar Pine Design’s total ongoing expenses to $36,420.

$36,420 total ongoing expenses = $12,480 wages + $10,800 rent + $4,140 utilities + $9,000 marketing consultant fees

Now we just need to add the total one-time costs and ongoing expenses.

$42,170 startup costs = $5,750 total one-time costs + $36,420 total ongoing expenses 

Calculating startup costs helps entrepreneurs create accurate budgets and financial projections. It’s also key to knowing how much money is needed from lenders or the necessary credit limit on business credit cards. Diligent and careful planning in the startup phase is key to achieving profitability. The work entrepreneurs do here creates a waterfall of benefits, including, 

• Assessing financial viability
• Identifying and managing risks
• Supporting negotiations with vendors and suppliers
• Planning for future expenses and investments
• Monitoring progress
• Scaling the business
• Identifying potential funding sources
• Attracting investors and partners

The startup costs of a small business vary a lot but generally include some or all of the following:

• Legal and accounting fees
• Equipment and inventory
• Rent or mortgage payments
• Mortgage downpayment
• Business loan payments
• Utilities and insurance
• Marketing and advertising expenses
• Payroll for employees
• Website development and hosting
• Business licenses, permits, and incorporation fees
• Office supplies and furnishings
• Business consulting services

Keep in mind that business expenses vary depending on the type of business and its location. Entrepreneurs need to do significant market research and possibly consult with experts to get an accurate estimate of startup costs.

There are several ways to lower startup costs:

• Minimize initial inventory and scale up as sales increase.
• Outsource non-core tasks to freelancers or contractors.
• Use free or low-cost marketing and advertising methods such as social media and content marketing.
• Use free or low-cost software and tools.
• Rent or lease equipment instead of buying it.
• Find a cheap location for your business.
• Look for small business loans and grants.
• Optimize your business model.
• Start as a home-based business.
• Form a partnership or seek out a co-founder to share costs

It’s also a great idea to visit the Small Business Administration (SBA) website for more resources about starting a business.