About Financial Costs for Starting a Small Business

By Ezmeralda Lee

  • Overview

    The financial costs for starting a small business will largely depend on the nature, size and area of operation of your intended business. Start-up costs will constitute a major part of the financial costs involved in your business. You need a sound financial plan that accounts for every cent, from start-up and initial operational costs to markups and sales forecasts, if you hope to break even or even make a reasonable profit, at the end of a year's operation.
  • Rental Costs

    The rental cost you will incur is one consideration. The approximate rental costs for an office space can range anywhere from $500 to $1500 per month, reserving approximately $150 to $200 extra per utility. In addition, insurance costs can range from about $700 up to $2,000 annually. You may be able to negotiate a multiyear lease with the landlord, in which case insurance can be absorbed in the base rent. For more specific and detailed information on real estate rentals, visit the National Tenant Rep or Regus websites.
  • Capital Equipment

    Another cost is for capital equipment leasing/financing. There are several reliable companies that offer capital equipment leasing/financing for various types of commercial businesses. However, the costs involved will depend on the nature of your business (product- or service-based) as well as the specific number and nature of capital equipment needed for your intended business. For more specific information and detailed estimates, visit the Liberty Capital Group or Axis Capital Inc. websites.


  • Furnishings

    Furniture and furnishings are another cost you will incur. You may find inexpensive items such as tables, chairs, bookshelves, cabinets and more at furniture resellers, bankruptcy auctions or house sales, in which case you will need to set aside approximately $500 to $1,000. Of course, new furniture and furnishings will cost a whole lot more, and depend on your specific choice in these items.
  • Business Tools

    A computer, printer and copier are essential for a small business. Although costs of computers will vary by brand and model, you'll find good bargains at discount electronic stores. Inexpensive, plain table copiers can be found in office supply stores, priced about $1,500 a piece. However, the cost per multifeatured copiers can range from approximately $3,000 to $10,000. A telephone and/or a fax system is another expense essential to your business. A simple one or two-line phone can cost approximately $70; a three-in-one (phone, fax and copier) starts around $75.
  • Licenses and Fees

    Another set of costs are the registration, license and professional fees that go along with opening a business. These will vary from business to business and state to state. However, (to give you a ball-park figure), reserve approximately $3,000. Contact the commercial registering authority or office in your state for more detailed information and costs.
  • Warning

    Do not start your business, however small it may be, unless you have invested enough money, effort and time for some in-depth test-market research. Find out who your core targets are, where they live, what their specific needs and wants are and how your product or service matches those needs and aspirations. Investing enough money for market research will give proper direction to your business from the very outset. Without it, your business will lack direction and may not achieve its objectives.
  • Expert Insight

    Well before you apply for a loan to meet start-up and initial operational expenses, consult a cost accountant, loan officer or even a friend running a successful small business. They are best qualified to review your financial plan and provide you with valuable input. It is also advisable to start small with a long-term vision to expand. For example, rent a smaller, inexpensive location for your office, hire part-time rather than full-time employees and negotiate strongly to obtain cheaper deals for office supplies, furniture, equipment and more. This will serve you in good stead, once your business is up and running.
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