You hear statistics about how there are around 30 million small businesses in the US or that 400,000 new businesses launch each year. While these facts give you a very rough ballpark of your competition, they don’t shed light on another pressing issue.
How much does it cost to start a business?
If you’re thinking of going into business for yourself, it’s a question you probably asked yourself. If so, keep reading while we explore some of the key factors that influence your cost of starting up.
The industry you select can radically alter your set up costs and the ongoing cost of running a business.
For example, the startup costs for a restaurant typically fall in the $50,000-$75,000 range. By contrast, a freelance writer can launch a barebones business with a cheap laptop and a WordPress-based website. That might run a budget-minded writer a few hundred dollars.
Since the costs vary so much between industries, there is no hard and fast number for launching a business.
Calculating for Your Business
While you can’t rely on finding a fixed cost for starting your business in an article somewhere, you can do some essential calculations. Things you must consider when determining your initial costs include:
Do you need a brick and mortar space? How much is a leased space in your region or city? Can you work from home at first?
Do you need specialized or industry-specific equipment? Do you need new equipment or can you get by with used equipment?
What license and insurance requirements do you face if any? What utility costs will you incur? Do you need employees and what will you pay them?
Answering these questions will help you establish how much money you’ll need before you launch.
Funding your new business can also prove complex. Some entrepreneurs prefer the bootstrap approach where they fund the business entirely out of pocket. This approach works best for businesses like freelancing, consulting, and some low-cost franchises.
For more expensive businesses with heavy equipment or labor costs, a business loan through a bank is one option. Banks will expect you to provide a fully fleshed-out business plan.
Some entrepreneurs turn to crowdfunding sites like Kickstarter, GoFundMe, iFundWomen, and IndieGoGo to secure startup capital.
You can also look for angel investors or venture capital. Competition for funding from these sources generally proves fierce, so have your business plan buttoned down tight.
Parting Thoughts on How Much Does it Cost to Start a Business
How much does it cost to start a business? It sounds like a straightforward question. Yet, it defies any cut-and-dried answers.
Everything from your industry to your location influences the overall costs. If you select a franchise instead of brainstorming a new business identity, that incurs costs. In the end, you must make some best-guess calculations that include local pricing and your overall needs.
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