We've all thought about starting our own business, a small bakery, a lawn-care service, a tutoring side hustle, or even a YouTube channel. The first big question is always the same:
“How much will it cost to get started?”
Good news: you don’t have to guess.
You just need a simple plan and a clear list of what starting your business actually requires.
To show how you figure out your start-up costs, let's follow two real-world examples from start to finish:
Example A: A Small Online Baking Business (Home-Based)
Baking cupcakes, cookies, simple cakes
Selling through social media or local markets
Example B: A Lawn-Care Service
Mowing lawns, trimming bushes, basic yard cleanup
Serving neighborhoods nearby
1. Identify What You Need to Start
Before thinking about money, think about what your business needs to exist at all. This includes:
Equipment & Supplies
Online baking example: mixer, baking trays, ingredients, packaging
Lawn-care example: lawn mower, trimmer, gas, gloves
Tip: Write everything down — even small items add up.
Workspace or Location
Baking: Will you work from home? Do you need to rent a kitchen or storage space? You may need to rent a certified kitchen for certain products, depending on food laws.
Lawn care: Will you use your garage for lawn-care equipment? You may need a shed or garage space to store equipment.
Licenses or Permits
Every business has rules. Some require simple registrations, others need specific permits.
Home baking may need a “cottage food” permit.
Lawn care might only require a basic business license.
Branding & Marketing Costs
You don’t need a huge budget — small steps count:
Simple logo
Social media graphics
Flyers for your neighborhood
A very basic website (optional)
Transportation
If your business requires moving supplies or going to customers, include gas, maintenance, and mileage.
Lawn care will need transportation for equipment.
Baking may only need transport for deliveries or to markets.
Quiz
Imagine you want to start a simple art commission business. Which three things would you list as start-up costs? Choose all that apply:
2. Put Price Tags on Each Item
Now, take your list and estimate costs. Here’s how our example businesses might look:
Online Baking (Estimated)
Mixer: $60–$150
Baking trays: $15–$30
Ingredients (initial): $40–$80
Packaging: $20–$50
Permit: $10–$50
Marketing basics: $0–$30
Estimated total: $145–$390 to start
Lawn-Care Service (Estimated)
Lawn mower: $150–$300
Trimmer: $50–$120
Gas: $10–$30
Gloves/safety gear: $10–$25
Flyers/social media ads: $10–$20
Estimated total: $230–$495 to start
3. Consider Monthly or Ongoing Costs
Start-up costs are one-time. These will be the things you need to buy once, such as cash registers, shelves, or cooking equipment. Ongoing costs are necessary to keep the business running — things like rent for your location (if you need one), wifi, packaging needs (boxes, bubble wrap, labels), or product.
Knowing recurring costs helps you understand whether your business idea is realistic for your budget.
Let's look at our examples:
Online Baking
Ingredients refilled weekly
Packaging
Occasional permit renewal
Lawn Care
Gas
Repairing blades
Replacing tools
Quiz
Which of these items belongs in “ongoing monthly costs”?
4. Add a Small Emergency Buffer
Emergencies happen. You could run out of a product, an espresso machine can stop working, or an oven gets too old. It's always best to plan for the unexpected.
Most entrepreneurs set aside about 10% extra as a buffer.
If your lawn-care estimate is $300, adding 10% means $330 is a safer starting number.
5. Total Everything Up
Here's what your final start-up cost formula should look like:
one-time costs + first month’s operating costs + 10% buffer = your start-up budget
Let's see how we would calculate the start-up funds needed for our example businesses.
Online Baking Business Total
1. One-Time Costs
Mixer & baking trays: $120
Initial ingredients: $60
Packaging: $30
Home-business/cottage permit: $20
Simple logo/marketing materials: $20
Total one-time costs: $100 + $20 + $60 + $30 + $20 + $20 = $250
2. First Month’s Operating Costs
Things you’ll need to refill or use again during the first month:
Extra ingredients: $40
Extra packaging: $20
Total monthly costs: $40 + $20 = $60
3. 10% Emergency Buffer
Calculate 10% of your subtotal: $250 (one time) + $60 (monthly) = $310.
10% of $310 = $31
4. Final Start-Up Total
$250 (one-time) + $60 (first month) + $31 (buffer) = $341
Launching your online baking business would realistically cost around $340.
Lawn Care Service Total
1. One-Time Costs
Basic lawn mower: $200
Grass trimmer: $80
Gloves & safety gear: $15
Flyers or online ad setup: $15
Total one-time costs: $200 + $80 + $15 + $15 = $310
2. First Month’s Operating Costs
Things you'll need to pay for during the first month:
Gas: $20
Blade sharpening or minor maintenance: $10
Total monthly costs: $20 + $10 = $30
3. 10% Emergency Buffer
10% of your subtotal: $310 (one-time) + $30 (monthly) = $340
10% of $340 = $34
Final Start-Up Total
$310 (one-time) + $30 (monthly)+ $34 (buffer) = $374
Launching your lawn-care business would cost approximately $370.
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