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How Much Money Do You Need to Start a Business?

Austin Chegini
14 Jun 2022

If you have an excellent business idea, you likely want to make it a reality as soon as possible. Also, the faster you act, the less you have to worry about competition or someone else capitalizing on your idea. 

But before you rush to open up shop, how much money do you need to start a business?

Since all businesses have unique demands, there is no definitive answer to this question. Depending on your goals, you might need anywhere from $100 to $100,000 to start your business.

Business set up costs

Below are rough estimates of how much money you’ll need to start specific businesses. 

  • Brick and mortar retail: $5,000 - $100,000 
  • Full-service restaurant: $100,000 - $750,000
  • Bar: $100,000 - $500,000
  • Online store: $50 - $5,000
  • Mobile service (car detailing, pressure washing, etc): $1,000 - $25,000
  • Home-based business: $100 - $500

It’s important to note business financing models like these cannot be calculated on fixed costs. Your actual start up cost will vary depending on a wide range of factors. Before committing to an expensive lease or signing any purchase orders, be sure to use the Small Business Administration’s break-even point calculator to see how much revenue you need to generate to justify your startup costs[1].

Common factors that affect business startup costs

For most businesses, the following items will have the largest impact on your cost of starting a business. 


The location of your business is extremely important. Not only do you need to be concerned about where you start your business, but you also need to ensure the space accommodates your needs. 

Unfortunately, you will likely pay higher rent for a commercial space that is in a good area and has all the features you need to get started. While you shouldn’t skimp out on crucial aspects, you might need to forgo some elements that could raise rent rates. For example, choosing a location with shared parking can often be cheaper than opting for a building with private parking.

Depending on your industry, working from home may have become so common that you could forego office space rental to save money, which will take a huge long term business expense out of the equation. However, this will also make running the business a very different experience so requires careful consideration.

How much should small business owners pay for real estate? 

The answer is found in your rent-to-revenue ratio. To find this number, divide rent/revenue. A healthy business will get a result between .02 and .2 (or 2% and 20%).

For retail businesses, you want this percentage to be close to 5%. For service businesses like accountants, this ratio can sit higher around 15%

No matter your industry, retail or hospitality, Epos Now's tills are tried and tested time-savers.

Benefit from:

  • Integrated card payment systems
  • Quick and easy product management
  • Flexible reports on everything from stock levels to staffing
  • Hundreds of apps to adapt your system to your business needs
  • Expert support to ensure you get the most out of your produce

Retail      Hospitality

Bakery Complete Solution Dollar

Inventory and raw materials

Do you plan to sell goods? If so, you will need to buy your inventory and stock your shelves. 

If you are a restaurant or other hospitality business, you will also need to purchase inventory to create your menu items as well as stocking the bar. 

Depending on the scale of your business, purchasing these items will have variable costs. For luxury stores that sell high-end fashion or specialty stores that offer expensive equipment, your cost per item will be especially high. By simply outfitting your store, you can quickly spend $100,000. 

In any event, you will need to crunch numbers carefully to decide how much inventory to purchase. Some factors to consider include:

  • Demand: Analyze your market to determine what your expected sales volume will be. 
  • Storage space: While you want to stock your shelves so your store doesn’t look empty, having too much inventory can end up costing you more. Likewise, having perishable items sitting in storage could increase your shrinkage costs. 
  • Liquid capital: Don’t invest all your cash into inventory. Make sure to have extra funds for other unexpected expenses which are sure to arise.
  • Profit margin: If you have high margins, you can get away with selling fewer items. If you have low profit margins, you will need to sell many items to stay in the black. 

Equipment and supplies

When calculating the cost of setting up a business, many neglect to factor in the tools likely needed to operate smoothly. For small stores, these items can be quite inexpensive. For large restaurants, this equipment could make up a significant portion of your business costs. 

Retail businesses may need:

Hospitality businesses may need:

Administrative affairs

Whether you work from home or have a giant store, your business will need to comply with local laws and process many behind-the-scenes tasks. No matter if you handle these administrative items yourself or hire someone to assist you, they will affect your bottom line. 

Make sure to account for the following items in your business plan when calculating your startup costs:

  • Licensing and permits
  • Business insurance costs
  • Payroll
  • Taxes
  • Utilities
  • Legal services
  • Office supplies
  • Software


The global economy keeps growing, and with it comes increased competition. No matter how good your products or services are, you need to market them to prevent someone else from taking away your customers. It’s no use calculating how much to start a business without sales and marketing expenses as the investment requires profit once the business is established.

Advertising costs could vary wildly depending on your business model. For example, a gas station likely doesn’t need to do much more than set up roadside displays. On the other hand, a restaurant located in a shopping plaza might need billboards, Google advertising, social media posts, and more. 

Although marketing comes at a cost, it does not have to be considered a loss. With the right approach, you can generate a positive return on ad spend that helps your business grow. 

No matter your trade, Epos Now can help you start a profitable business

When thinking about how much money to start a business, Epos Now provide flexible payment options to ensure the best business products are accessible.

With an Epos Now POS, running and managing a business has never been easier:

  • Create bespoke transaction setups on secure, speedy software to shave time off the sales process
  • Choose from hundreds of apps and integrable partner programs to run accounting, marketing and other back-of-house functions in a way that suits you
  • Access reports and manage prices and inventory on-site or off, night or day, through cloud technology
  • Purchase all the retail or hospitality hardware and software and receive expert advice and support around the clock to get the best out of your business

To find out more about Epos Now solutions, submit your details below and speak to a member of our expert team.

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