Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 1 of 11 · Start
How Much Does It Cost to Start a Small Business?
Enough to open is not enough to stay open.
A napkin budget lists the truck, the trailer, and the mowers. It skips the insurance deposit, the licenses, and the six weeks between your first job and your first check. That gap sinks more first-year businesses than bad luck. Find your real number before you spend a dollar.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
How Much Does It Really Cost to Start a Small Business?
Textbook Definition
Startup costs are all the money a business must spend before it can pay for itself: long-term equipment, one-time startup expenses, and working capital to cover operating bills until customer payments arrive.
In Plain English
Add three buckets. What you buy once and use for years. The one-time costs of getting open. And cash in the bank to pay the bills until customers pay you. Most owners only budget the first one.
Your Real Startup Number
Equipment + Startup Expenses + Working Cash
Ridgeline Landscaping: $74,000
The third bucket is the one that matters most. Dr. Paul’s rule for a startup: hold three months of business bills as working cash, not counting your own paycheck. One month covers the gap to your first check. One covers a slow start. One covers the surprise, because there is always a surprise.
Show the Math
Ridgeline’s Real Startup Budget
Mike Ridgeline ran crews for nine years before starting his own landscaping company. His napkin said $56,000. Here is the budget after an hour with Dr. Paul.
| Uses of cash | Amount |
|---|---|
| Used truck | $32,000 |
| Enclosed trailer | $7,500 |
| Mowers, trimmers, blowers | $16,500 |
| Hand tools and small equipment | $1,500 |
| Equipment total | $57,500 |
| Insurance deposit, business filing, licenses | $3,200 |
| Website, logo, uniforms, first marketing | $2,800 |
| Software and phone setup | $500 |
| Startup expenses total | $6,500 |
| Working cash for the first months | $10,000 |
| Total needed to open and stay open | $74,000 |
Ridgeline Landscaping is a fictional business from the book.
The Method
How to Build a One-Page Startup Budget
You do not need software. A sheet of paper works. Every number needs a source: a quote, a listing, a bill, or a phone call.
List your equipment.
Everything you will buy that lasts more than a year. Write a real price from a quote or a listing next to each item, not a guess.
Run the forgotten-costs list.
Insurance, registration and licenses, deposits, first marketing, software and phone, small tools. Cross out a line on purpose, never by accident.
Add up your monthly bills.
Everything the business pays each month before you pay yourself: fuel, rent, insurance, loan payments, phone, supplies.
Multiply by three.
That is your working cash. Round it up. Round numbers are easier to protect.
Add the buckets, then subtract what you have.
The total is your real number. What is left after your savings is your gap. Filling it is the next job.
Used or New at Launch?
A new truck runs about $58,000. Mike’s used one cost $32,000. That $26,000 difference is more than two and a half times his entire working cash. Buy used when the equipment is proven, can be inspected, and the savings go straight into the cushion. Buy new only when a breakdown would cost customers you cannot replace.
Two Owners, Same Town
Mike vs. Dale: A Better Truck or a Business That Survives?
| Opening day | Mike | Dale |
|---|---|---|
| Truck | Used, $32,000 | New, $58,000 |
| Truck payment | Part of $1,100 total loans | $826 a month alone |
| Cash in the bank | $10,000 working cash | About $1,000 |
| June | Mowing, cushion intact | Buying fuel on a 24% credit card |
Both owners are fictional, from the book.
Dale has the nicer truck. Mike has a business that can survive a bad month. If you are short of the full number, shrink what you need before you borrow more: start smaller, rent before you buy, collect deposits, and keep some outside income. Never cut the working cash. For how much cash an open business should keep, see how much cash reserve a small business needs.
Owner Warning
What Do First-Time Owners Leave Off the Budget?
- The working cash bucket, completely.
- Insurance deposits and the first months paid up front.
- Licenses, permits, and registration fees.
- First marketing: website, logo, signs, a few hundred to tell people you exist.
- Small tools that never make the big list.
- Their own household bills while the business gets going.
From the Book
The Napkin vs. the Real Number
Chapter 1 · What It Really Costs to Start
Show the Math
The napkin said $56,000. The real number is $74,000. That’s 32% more, and most of the difference is the bucket Mike couldn’t see.
21 chapters, one business from napkin to Year 6, and the math at every step. It is all in the book.
Get the Book on Amazon →Need the Number for a Lender?
A bank will want this startup budget, plus projected statements that show when the business pays for itself. Dr. Paul writes business plans with full financial projections. See business plan writing services.
Beyond the Book
Ready to Run the Numbers for Real?
Learning the statements is step one. When it is your business on the line, start here.
Business Plan Templates
Skip the blank page. An industry business plan and financial model, ready to edit.
See the Templates →Business Plan Writing
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See Plan Writing →Business Consulting
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Startup Cost Questions
How much money do I need to start a small business?
How much working capital should a new business have?
What startup costs do people forget?
Should I buy new or used equipment to start a business?
Keep Going
Related Guides
This guide is part of the small business finance guide.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not legal, financial, tax, accounting, or lending advice. Tax rules change by place and by year. Ridgeline Landscaping and its figures are a fictional illustration from the book, not a projection for your business. For decisions about your own business, consult a qualified professional.