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What are some typical start-up business costs?

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Quick Answer

Typical start-up costs depend on such factors as the size and type of the business and what assets and expenses are associated with it. For example, a franchise ran out of a home may need only $1,000 to $5,000 to begin operations, while a very small business may sometimes cost $3,000, notes the United States Small Business Administration. A start-up cost of $30,000 was about average when all types of businesses were considered, according to 2009 research from the Kauffman Foundation.

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Businesses that don't require investment in property usually require much less to get started and can reduce borrowing costs since there will be no additional lease, rent or mortgage payments, notes Investopedia. Some major groups of start-up expenses include research costs, advertising, equipment, employee costs, fees, supplies and borrowing costs (in the form of interest over a long period). Research costs are initially incurred, as the business owner has to find out if there is a demand for the products or services to verify feasibility.

Other specific costs may include placing ads online or in public places, setting up the company's website and buying computer software necessary for operations. There are also costs for registering the business with the state and getting incorporated. If the company sells products, then initial inventory will also be an initial expense, notes Entrepreneur.

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