How Much Does It Cost to Start a Business on Average?
According to one study, about 20% of small businesses fail within the first year.
If you’re an entrepreneur, you might be wondering what the cost to start a business is.
If you’re going to start a business and ensure that it doesn’t fail, you should make sure you can afford these costs. Keep reading to find out how much you should budget!
Average Business Startup Costs
The average business startup costs depend on the state and what kind of business you’re starting. Some studies say that some entrepreneurs used less than $25,000 to start up their small businesses.
A smaller handful of people had used less than $5,000.
However, the average cost is around $31,000.
One-Time vs Ongoing Costs
There are many different costs that will go into your overall startup cost. If you have one-time expenses, you’ll only have to pay for them at the beginning of the company.
Your cash flow might be disrupted for a month, but it’ll go back to normal the next month.
Ongoing costs will be paid on a regular basis, and this might be something like utilities or rent.
When you get business funding, you might need to use some of that money on equipment.
for example, if you’re going to be a landscape business, then you need to buy equipment like lawnmowers. If you’re a coffee shop, you will need to buy fridges or even a coffee maker.
If you don’t have funds to buy equipment right now, you can look into used equipment. Or some businesses will even lease your equipment. However, if you’re going to run your business long-term, you should buy your own equipment.
Hidden costs are overlooked expenses, like business insurance, taxes, permits, personal fees, or licenses.
Business insurance will help insure the inventory on your property. For example, a popular type of insurance is property and liability insurance.
You’ll also have to set aside some taxes for your own business. You should look up the tax rate in your state.
You may want to hire a tax accountant or a lawyer who can help you run your business.
You’ll also have to hire people for your business. While you can budget the salary, you’ll also have to budget benefits, employment taxes, and other types of compensation.
As a general rule of thumb, you will have to pay 1.25 to 1.4 times the salary. This will include taxes and benefits.
As your business grows, make sure you monitor your budget to see who you can hire in the future.
Discover More About the Cost to Start a Business
These are only a few factors to consider in the cost to start a business, but there are many more business startup costs.
We know that running or starting a business can be difficult, but we have more information to help you out!
If you loved this info, make sure you check out our other articles on our website!