Estimating Startup Costs - Are You Missing Anything?

Startup Costs Estimation Tips

Part 13 of Acey Gaspard’s Guide to Starting a Small Business – Made Simple

Correctly estimating your startup costs can help you launch with confidence. Estimating wrong can leave you walking away from a good idea or running out of money halfway through. It’s worth slowing down and doing this part properly.

In this part of the guide, we’ll walk through a simple, practical way to estimate what it will really cost to open your doors and keep them open in the early months.

Why Getting Startup Costs Right Matters

When You Estimate Too High

If your estimate is too high, you might decide your idea is impossible when it’s actually realistic.

For example, your numbers may make it look like you need a huge loan that you could never qualify for, or that your business will never cover its costs. You could give up and go back to your day job, even though a more accurate estimate would show that the business could work with a leaner setup or a different approach.

When You Estimate Too Low

If your estimate is too low, you risk running out of cash after you’ve already committed. You could be three-quarters of the way to opening and discover there’s no money left for the final permits, equipment, or first few months of bills.

At that point, you may have a pile of new debt, no working business, and no easy way to fix it. That’s what we want to avoid.

How to Think About Startup Costs

To keep things simple, think about your numbers in three parts:

One-time startup costs: The money you spend to get set up and open your doors.
Ongoing monthly costs: The bills you’ll pay after you open, month after month.
Working capital and buffer: Extra money to keep you going while the business ramps up and to handle surprises.

Once you see these three parts clearly, your numbers become easier to manage and easier to explain to a lender, investor, or partner.

A Simple Step-by-Step Process

Step 1: Define Your Business and Your Startup Window

Start by getting clear on what you’re building.

What type of business are you starting?
Will you work from home, a shop, an office, or a mobile unit?
Will you sell products, services, or both?

Then define your “startup window” — for example, the money you need to:

Set up and legally open your business, and
Cover the first 3–6 months of operating costs while sales are still building.

Step 2: List What You Need to Open

The next step is to figure out what your specific business needs to start operating. If you don’t know what’s required, it’s impossible to estimate costs accurately.

Use questions like these to build your list:

What equipment do I need to do the work?
What licenses, permits, or registrations are required?
Do I need inventory or supplies on hand before opening?
Do I need a vehicle, tools, or specialized machinery?
What do I need for a basic office setup (computer, phone, software, etc.)?
What do I need for a basic marketing push to let people know I’m open?

You can get ideas by looking at similar businesses, talking to owners, and reviewing startup checklists for your industry. The more complete your list, the better your estimate will be.

Step 3: Separate Needs from Nice-to-Haves

There’s a big difference between what you need to open and what you’d like to have. In the startup phase, your job is to stay lean without being cheap in the wrong places.

There are pros and cons to getting the “best of the best.” Top-tier products and services can offer better performance and all the bells and whistles, but they also carry a higher price tag. You always want to ask, “Will this purchase help me make or save more money?”

Let’s look at a simple example.

You’re buying an all-in-one printer for your office. You could spend a few thousand dollars on a color laser printer that produces high-quality photo prints at high speed, or you could buy a basic black-and-white laser printer for under $300.

Both can print. The question is which one your business truly needs.

You might think, “With color, I could print flyers and brochures in-house.” That’s true, but how often will you really do that? It might be cheaper and easier to send those jobs out to a local print shop when needed and keep a basic printer for everyday use.

Now, let’s flip the example.

Your business depends on printing. You’ll be printing contracts, detailed reports, or high-volume documents every day. To save money upfront, you buy a low-cost printer for $350 instead of the $1,250 model that’s built for heavy use. You tell yourself it’s “only temporary.”

After a couple of months, the cheaper printer can’t keep up. It breaks down, wastes time, and eventually needs to be replaced. You then buy the $1,250 printer you needed in the first place. You’ve now spent $1,600 instead of $1,250.

The lesson: spend more where reliability and performance directly affect your work and your customer experience. Spend less where the extra features don’t add much value.

Step 4: Research Real Numbers, Not Guesses

A list of items is a good start, but it isn’t enough. You need actual prices.

For each item on your list:

Search online to get ballpark figures.
Call suppliers, landlords, and service providers for quotes.
Ask other business owners what they pay for similar items.
Look at more than one option so you aren’t basing your estimate on a single price.

Try not to make up numbers off the top of your head. Real quotes make your estimate more accurate and more believable.

Step 5: Don’t Forget Professional and “Hidden” Costs

Some of the most important startup costs are easy to forget because they’re not physical items. Make sure you consider things like:

Business registration, name search, and other government fees
Licenses and permits
Legal help for contracts or leases
Accounting and bookkeeping setup
Insurance
Security deposits for rent, utilities, or equipment

These don’t feel as exciting as equipment or décor, but they are just as critical to getting your business open and keeping it legal.

Step 6: Estimate Your Monthly Operating Costs

Startup costs don’t stop at opening day. You also need to know what it will cost to run your business each month once you’re open.

List all the ongoing expenses you’ll need to cover, such as:

Rent or mortgage
Utilities (electricity, heat, water, phone, Internet)
Insurance
Loan payments and interest
Wages and benefits
Marketing and advertising
Subscriptions and association fees
Bank and merchant account fees
Bookkeeping and accounting
Your own income/salary

These numbers help you understand how much cash you’ll need each month and how much revenue the business must generate just to break even.

Step 7: Add a Financial Buffer

In real life, things rarely go exactly as planned. Costs run higher. Opening dates move. Equipment needs upgrading sooner than expected.

Consider building a financial buffer into your plan. Many owners set aside an extra percentage of their startup budget to handle surprises. For example, you might add 10%, 15%, or even 20% to your total estimated startup costs.

You can keep this money in a separate account so you’re not tempted to spend it on non-essentials. It’s there if you truly need it.

Step 8: Get a Second Opinion

Once you’ve built your list and filled in your numbers, it’s smart to have a professional look it over.

In most cases, you’ll need an accountant for your business anyway. Why not consult with one before you open your doors? An accountant can:

Spot missing items you may have overlooked
Flag unrealistic numbers
Help you think about taxes, cash flow, and working capital

Paying for a few hours of expert advice now can save you from costly mistakes later.

Step 9: Test Your Numbers Against Your Business Model

Finally, step back and ask, “Do these numbers make sense with how this business will actually run?”

Questions to consider:

Given my prices and realistic sales, can this business comfortably cover these costs?
If I had a slow start for a few months, would I still be okay?
Does anything need to change—location, size, equipment, pricing, or timing—to make the numbers work?

If the numbers don’t add up, that doesn’t always mean your idea is bad. It may simply mean you need to adjust your approach before you commit.

Sample Startup Cost List

Use the sample lists below as a starting point. Not every item will apply to your business, and you may have items that aren’t listed here. Add, remove, or adjust as needed.

You can print this section or copy it into a spreadsheet. Write down an estimated amount next to each item that applies to you.

Business Startup Costs (Before You Open)

$_______ Registration and legal fees (registrations, legal help, trademarks, name searches, etc.)

$_______ Special equipment, tools, and machinery

$_______ Initial merchandise or inventory

$_______ Computer(s) and basic software

$_______ Phone and communication equipment

$_______ All-in-one printer or other office machines

$_______ Office supplies

$_______ Office desk

$_______ Office furniture and seating

$_______ Décor and renovation

$_______ Business sign

$_______ Shelving and storage

$_______ Product displays

$_______ Branded stationery and printed materials

$_______ Advertising and promotion (flyers, ads, announcements, basic website, etc.)

$_______ Grand opening costs (event, ads, giveaways, invitations, etc.)

$_______ Licenses and permits

$_______ Bonds and retainers (for landlords, utilities, or professionals)

$_______ Initial operating expenses before revenue (rent, utilities, wages, etc.)

$_______ Other

Ongoing Business Operating Costs (After You Open)

In addition to startup costs, estimate the monthly costs you’ll need to cover once your business is running.

$_______ Merchant account fees

$_______ Bank fees

$_______ Rent or mortgage

$_______ Insurance

$_______ Property tax (if applicable)

$_______ Utilities (electricity, heat, water, phone, Internet)

$_______ Monthly subscriptions and association fees

$_______ Loan repayment and interest

$_______ Wages

$_______ Employee benefits

$_______ Marketing and advertising

$_______ Your income/salary

$_______ Bookkeeping and accounting

$_______ Special license or renewal fees

$_______ Emergency fund contribution (a “rainy day” amount you set aside regularly)

$_______ Other

$_______ Total monthly operating costs

Once you’ve listed your startup costs and your monthly operating expenses, you’ll have a clearer picture of how much money you need to start and run your business.

Bringing It All Together

Estimating startup costs takes time, but it’s time well spent. A clear, realistic estimate:

Helps you decide if your business idea is feasible
Makes conversations with lenders and investors easier
Reduces the risk of running out of money at the worst possible time

Use this guide to build your first draft. Then refine your numbers, get a second opinion, and adjust your plan before you commit. That way, when you do move forward, you’ll know exactly what it will take to open your doors and keep them open.

Back to the table of contents of Acey Gaspard’s Guide to Starting a Small Business