Startup Cost Planning
Startup costs include one-time expenses (equipment, legal fees, licenses, initial inventory, website, branding) plus operating capital to cover monthly expenses until revenue covers costs. With $25,000 one-time and $5,000 monthly costs for 6 months runway, you need $55,000 total startup capital. Most businesses underestimate costs by 25-50%.
Operating capital (burn rate times months) keeps you afloat while building revenue. Six months minimum is recommended, 12-18 months is safer. Monthly burn includes rent, salaries, utilities, marketing, insurance, and supplies. Calculate conservatively - assume revenue takes longer and costs run higher than projected.
Fund startups through personal savings, loans, investors, or crowdfunding. Bootstrap by minimizing costs - work from home, use free tools, start part-time. Track actual vs projected costs weekly. Running out of capital is the top reason startups fail - always maintain cash runway and know your burn rate.
Quick Tips
- Always compare APR, not just interest rates
- Use the Rule of 72 to estimate doubling time
- Extra payments dramatically reduce total interest
Frequently Asked Questions
Varies dramatically by business type. Service businesses might need $10,000-50,000, retail $50,000-250,000, restaurants $100,000-500,000. Research your specific industry and add 50% buffer for unexpected costs.
6 months minimum, 12-18 months safer. Most businesses take longer than expected to reach profitability. Insufficient runway forces bad decisions under pressure or business failure just as you're gaining traction.
Yes, you need to live while building your business. If you can't afford to pay yourself initially, calculate how long you can survive without income and ensure you have runway for both business and personal needs.