Business Startup Costs: What to Expect & How to Budget in 2025

Launching a business is exciting — but the price tag can surprise even the most prepared entrepreneurs. From equipment to permits to rent, the dollars add up quickly.

Take Alexander Osuna, who opened Monkey Dog Coffee in Clovis, CA, with just under $100,000. “We were trying to do as much ourselves as possible,” he said, describing how he handled much of the buildout with a friend to avoid major contracting costs. 

That lean approach, paired with careful budgeting, helped his coffee shop open its doors and stay profitable in the critical first year. Stories like Osuna’s highlight why it’s so important to understand startup costs before diving in.

From one-time expenses like licenses and equipment to ongoing costs like rent and payroll, every dollar you plan for brings you closer to turning your idea into a thriving business. This guide will help you break down those costs and build a budget you can feel confident about.

Key takeaways

• Startup costs vary widely, but every business needs to plan for both one-time and ongoing expenses.

• Common one-time costs include licenses, permits, renovations, equipment, and branding.

• Ongoing costs often cover rent, payroll, inventory restocking, software subscriptions, and insurance.

• Estimating costs means listing every expense, researching realistic prices, and adding a buffer for surprises.

• A clear startup budget gives you confidence, helps secure funding, and sets your business up for smoother growth.

How much is the average business startup cost?

There’s no single number that applies to every new business — startup costs can vary dramatically depending on your industry, size, and location. A home-based consulting service, for example, may only require a laptop and software subscriptions, while a restaurant or retail store often faces higher expenses for renovations, equipment, and inventory.

What all businesses have in common is the need to cover both one-time costs (like permits or build-out) and ongoing working capital (such as rent, payroll, and utilities). Factoring in both types of expenses gives you a more realistic picture of what it takes to open your doors.

Even if you can’t predict every detail, understanding the typical ballpark range helps you plan smarter. With a clear estimate, you’ll know whether personal savings are enough to get started, or if you’ll need additional funding through loans, investors, or grants.

What business startup costs can you expect?

While every business is different, most entrepreneurs face two main types of startup costs: one-time expenses that get you up and running, and ongoing costs that keep operations running smoothly. Planning for both helps you create a realistic budget.

One-time costs

These are the expenses you’ll usually pay once at the beginning:

• Licenses and permits: Fees to register your business and secure the approvals you need to operate legally in your industry.

• Renovations or build-out: Construction, design, or modifications to make your space customer-ready and compliant with local codes.

• Equipment and furniture: From kitchen appliances and shelving to computers and office desks, these upfront purchases are often some of the largest startup investments.

• Branding and initial marketing materials: Logo design, signage, a website, and printed materials to establish your business identity and spread the word.

Working capital for ongoing costs

Business experts recommend entering into a new business with enough working capital to cover the first three months of operations. These are recurring expenses you’ll need to cover month after month:

• Rent and utilities: The monthly costs of keeping your physical location open, including electricity, internet, and water.

• Payroll and benefits: Wages for employees, plus benefits like healthcare, training, or paid time off.

• Inventory restocking: Regular purchases to keep shelves, kitchens, or service kits stocked and ready for customers.

• Subscriptions and software: Tools like POS systems, accounting software, or payroll platforms that streamline operations.

• Insurance and professional services: Ongoing coverage and expert support, such as liability insurance, bookkeeping, or legal guidance.

How to estimate your business startup costs

Every business has different needs, but a clear process can help you estimate your startup costs with more accuracy. Breaking things down into categories and numbers makes your plan concrete — and helps you avoid being blindsided by surprise expenses.

• Make a detailed list of expenses: Start by writing down every one-time and ongoing cost you can think of, from big-ticket items like equipment to smaller needs like business cards.

• Research vendor quotes and local averages: Call suppliers, compare software subscriptions, and look into what businesses in your area typically pay for rent or utilities.

• Separate one-time from ongoing: Keeping these categories distinct helps you see your upfront investment versus the working capital you’ll need to keep operating.

• Add a buffer for unexpected costs: Renovations run long, equipment needs repairs, or permits cost more than expected — plan for a cushion so surprises don’t derail your launch.

• Build a simple spreadsheet: Track your estimates in one place. This will become the foundation for your startup budget and make it easier to update as your plans evolve.

By following these steps, you’ll create a realistic picture of your startup costs. That estimate not only guides your budgeting, but also gives you a clear number to bring to lenders or investors if you need outside funding.

Budget today, profit tomorrow

Startup costs can feel intimidating, but breaking them into one-time expenses and ongoing working capital makes them far more manageable. By listing out your needs, researching realistic prices, and building in a buffer, you’ll avoid surprises and set a solid financial foundation.

Remember, your startup budget isn’t just paperwork — it’s a roadmap. With a clear view of your expenses, you can secure funding more confidently, launch with less stress, and focus your energy on growing your business.