Small Business Financing 101: Estimating Startup Costs

Katie Fleming

Katie Fleming

Co-founder and COO of Owner Actions

Adding machine tape shows many inputs as an owner tallies up his startup costs.

What does it cost to start a business? It varies for every company, but having a guide you can depend on to estimate your startup costs can be immensely helpful. Here’s why.

A realistic estimate of startup costs can help you:


Let’s dive into how to form your estimate.


How do I estimate my startup costs?

The challenge of estimating your startup costs is that you’ll need to be detailed and relatively accurate, but most of your estimate is a guess.

To be clear, your estimate is an informed guess backed by research of your industry, your market, and similar organizations, and it’s confirmed as you test your hunches. You’ll form your estimate through web searches and by making phone calls to a variety of organizations to understand your one-time costs, such as logo design, signage, and permits, and the ongoing costs you’ll need to begin paying and account for over time.

Let’s explore some of the costs you can expect to pay in each of those categories.

Note: In this article, we share links to Amazon products. As an Amazon Associate, Owner Actions can earn from qualifying purchases.


One-time expenses can include:


Ongoing expenses can include:


There may also be essential assets to purchase to begin operations. For many businesses, these include:


And, finally, you’ll need to account for the extra cash you should have on hand to begin operating your business. Some experts recommend keeping enough cash on hand to cover the first six to twelve months of operations. Others encourage new business owners to estimate the deficit their businesses will create over the first few months of operations and determine when they will break even. That information can help them put a plan in place to cover shortfalls. You can work with an accountant to form the best strategy for your business.

Would you like to connect with an accountant who can help you with this task? Check out some of our favorite firms:

Play Video


Your Business Deserves the Very Best

Reconciled is an award-winning organization and one of the fastest-growing accounting firms in the country. Their team of entrepreneurship gurus, e-commerce pros, and tech-loving cloud accounting specialists look at your business holistically and help you analyze your spending, measure costs, and find opportunities to enhance margin and profitability, along with taking on your day-to-day bookkeeping. Want to learn more? Click the connect button below for an introduction.

Play Video


Be Tax Ready All Year Long

With Xendoo, you can access a dedicated team of expert CPAs and accountants who provide monthly bookkeeping, tax preparation and filing, and tax consulting, three services that will help you stay on top of all your financial needs. Their team can also help you with your personal tax returns, too. You can explore their plans with totally transparent pricing by following the link below, and for a limited time, you can try their online bookkeeping service free for one month. Restrictions may apply. See Xendoo’s site for details.

Play Video


Say Hello to Better Online Accounting

Business owners love 1-800Accountant. Here’s why. First, the service pairs you with a CPA who is an expert in your state and industry and can answer the tough questions you have about your business. Second, while many others charge by the hour, or worse, by minute, 1-800Accountant sets you up with an affordable, flat-rate pricing plan so you always know what you’ll be paying. Follow this link to try 1-800Accountant for 30 days with a money-back guarantee.


How do I determine what each of these items will cost?

The only way to take on this step is to research costs.

Start by listing each of your upfront and ongoing expense items. Then, talk with vendors, service providers, and other business owners to determine how much you should set aside to cover them.


How should I tally my startup costs and expenses?

Many owners like to use a worksheet to input their startup expenses, startup assets, and long-term assets.

It’s easy to create a worksheet. offers this example worksheet that you can use as a guide for modeling your upfront business expenses.

It’s even simpler to use a startup cost template that can be customized to suit your needs., Microsoft 365, and Vertex42 offer free templates available for immediate download.

Sites like LivePlan and IdeaBuddy also make the task simple, and the work you put into these programs can pay dividends when it’s time to raise capital. Here’s how they can help:



How can I cover my startup costs?

There are many ways you can raise the capital you need to cover your startup expenses. Read our article, Your Go-to Guide to Raising Capital for Your Small Business, to learn about bank loans, loans backed by the Small Business Administration (SBA), and other forms of financing that may work seamlessly with your objectives.



What’s next?

Log into your owner’s portal for more articles and a free step-by-step guide to preparing for startup.

Want to take on other tasks?

Owners like you love our free step-by-step guides. Build one that's customized to your goals.



Leave a Reply

Related Posts