The key to starting small is knowing your numbers and planning. Bootstrapping with personal savings required to trim costs and build flexibility. So, how much does it cost to start a small business? Well, it depends. To achieve rapid growth, a startup has to invest for the biggest return.

Content

– Key Small Business Costs Statistics 2025
– How Much Does It Cost to Start a Small Business?
– Online Business vs. Brick-and-Mortar – A Modern-Day Showdown
– What Employees Really Cost Your Business
– SMBs Cost Industry Averages

Key Small Business Costs Statistics 2025

– The average cost of starting a small business in 2025 is around $40,000 in the first year, according to Shopify.
– Startup costs can range from as low as $100 for an online business to as high as $750,000 for a full-service restaurant.
– Forming a business, like registering an LLC, costs between $50 and $500.
– A basic website built with a website builder can cost between $120 and $360 annually.
– Equipment costs vary widely, ranging from $10,000 to $130,000, depending on the type of business.
– The cost to hire and onboard one employee is typically between $4,000 and $20,000, excluding salary and benefits.
– Setting up a brick-and-mortar retail space costs about $147 per square foot.
– Marketing usually takes up around 7.7% of total revenue, and incorporation fees can range from $1,500 to $5,000.

How Much Does It Cost To Start A Small Business?

Starting a business involves knee-deep in spreadsheets and startup costs. We’re breaking down the real numbers behind launching a small business in a way that’s clear, honest, and hopefully, a little less overwhelming.

According to bankrate.com, your startup funding requirements could be as petite as $100 for an online business. And it can be as far extend as $750,000 for a restaurant, as per restaurantowner.com.

Some average costs of starting a small business in various expense categories so you can use realistic numbers.

There’s no one-size-fits-all number, but here’s a rough sketch:

The First-Year Price Tag

According to Shopify, small business owners spend around $40,000 in their first full year. That includes everything from licenses to marketing, from inventory to late-night coffee. But remember: it’s not just about the numbers; it’s about having the right plan to back them up. That’s where a business plan writing company can guide you the best.

Formation Fees: The Cheapest Line Item on the List

Forming your business by registering an LLC is one of the most affordable steps. The initial filing fees can range from $50 to $500, depending on your state and the structure. These fees include things like incorporation, licensing, and reporting. That’s a relatively small bite of the overall pie, which is great because other costs aren’t so forgiving.

Equipment: The Big-Ticket Item

Need gear to get going? From kitchen appliances for a bakery to a tech for a media company, equipment costs can range from $10,000 to $130,000. That’s a massive range, but it makes sense. A freelance designer needs a solid laptop and software; a landscaping business needs trucks, tools, and trailers.

Hot tip: Consider leasing or buying gently used to keep costs down.

Who’s Paying for All This?

If you’re a one-person show (what the Fed calls a “nonemployer startup”), chances are you’re footing the bill yourself. A whopping 77% of solo entrepreneurs dip into their own pockets to fund their business. Personal savings, credit cards, loans from friends and family: if it sounds familiar, you’re not alone.

The Biggest Financial Struggles

Launching is hard, but staying afloat is its challenge. The Federal Reserve found that the top financial headaches for non-employer startups are rising costs of goods, services, and wages. Plus, managing daily operating expenses and dealing with uneven cash flow are the massive financial hurdles.

Cost Breakdown of Hiring Help

Eventually, your business might grow, and you’ll need to hire help. Before you start posting job ads, keep this in mind: The average hourly pay for an administrative assistant is around $22. Whereas, adding a new employee to your payroll (just onboarding, training, equipment, etc.—not even counting salary and benefits) typically costs between $4,000 and $20,000. Hiring is an investment. It can level up your business, but it’s not cheap.

Website Costs

A website is non-negotiable in this tech era. Thankfully, it’s one of the more budget-friendly parts of starting up. Using a website builder, the average annual cost is just $120 to $360. Platforms like Wix and Shopify make it easy to get online without needing a coding degree or a giant budget.

Source: Shopify, Stripe, FreshBooks, Fed Small Business, Salary, WebsiteBuilderExpert, Indeed, Bankrate, Restaurantowner

Online Business Vs. Brick-and-Mortar – A Modern-Day Showdown

In today’s digitally driven world, entrepreneurs face a pivotal decision: launch a business online or invest in a traditional brick-and-mortar storefront. While both options offer unique advantages, the differences in setup costs, flexibility, and long-term scalability are striking and worth exploring before you dive in.

Breaking Down Small Business Website Costs

Building a professional website for your small business isn’t just a luxury anymore; it’s a necessity. But how much will it cost to get your digital storefront up and running?

Here’s a snapshot of the average investment required:

Website Development ranges between $1,000 to $48,000, depending on your goals, timeline, and complexity. Domain Name usually costs as little as $0.99 and up to $60+ per year, based on the popularity of the name. Expect to spend $10 to $200 per month on hosting services to keep your site accessible 24/7. An SSL Certificate is crucial for securing customer data; these cost anywhere from free to $1,500 annually. Custom design costs typically fall between $2,000 and $15,000 to reflect your brand and stand out.

Number of Pages Budget is set around $1,000 to $10,000+ depending on content volume. For features like shopping carts or booking systems’ advanced functionality, add another $5,000 to $10,000. To easily manage and update your content, expect to invest $3,000 to $10,000 on CMS Integration. In total, an online business can cost as little as $2,000 or climb north of $20,000, especially if you’re aiming for a robust, user-friendly e-commerce site.

The High Cost of Going Onsite

When it comes to real-world retail, opening a physical store involves far more than just signing a lease. Design, layout, and branding of a retail space come at a hefty price, averaging $147 per square foot. For a modest 500-square-foot space, that translates to $73,000, and that’s before stocking inventory, hiring staff, or covering ongoing utilities and rent. For long-term growth and funding, investing in strategic business plans can provide the detailed roadmaps and data-driven insights your venture needs to thrive in a competitive market.

Online business is often the smarter, more scalable choice to keep overhead low, test ideas quickly, and reach a global audience from day one. It allows for lower startup costs, flexible updates, and dynamic marketing opportunities. On the flip side, brick-and-mortar stores offer a tangible presence, foot traffic, and a hands-on customer experience, but they come with a higher upfront investment and ongoing expenses.

Source: Shopify, cushmanwakefield.com

What Employees Really Cost Your Business

Hiring help can supercharge your business, but it comes at a price. And we’re not just talking about the number on the paycheck.

According to insights from the Bureau of Labor Statistics, the real cost of employing someone (excluding government roles) ranges from $44.40 to $46.84 per hour. Multiply that by the standard 2,080 working hours in a year, and you’re looking at a yearly expense of about $92,000 to $97,000 per employee. That means having just five full-time team members could run your payroll bill up to $460,000 to $485,000 annually.

The U.S. Small Business Administration (SBA) offers another lens: it recommends budgeting 1.25 to 1.4 times an employee’s base salary to account for extras like benefits, taxes, insurance, and other hidden costs. So, if you’re paying someone $50,000 a year, the *true* cost to your business is $62,500 to $70,000. Planning for these numbers upfront helps businesses build smarter, scale efficiently, and avoid any surprise payroll pressure down the road.

Source: Bureau of Labor Statistics, U.S. Small Business Administration

SMBs Cost Industry Averages

Not all startups are built the same, especially when it comes to costs. The industry has a major say in how much cash an SMB needs to get things off the ground. From tools and inventory to marketing and day-to-day operations, startup expenses can vary wildly depending on your niche.

Here’s a quick breakdown of what it typically takes to get started in different industries:

Big flavor comes with a big price tag. That’s how food & restaurants cost leading average startup cost for kitchen equipment, permits, and staff. Tools, vehicles, insurance, and licensing quickly add up construction average cost. Retail online or in-store, stocking shelves and building your brand isn’t cheap. Arts has a low-budget entry with room for creativity, especially for solo artists. Lights, camera, budget! Entertainment industry averages include cost of gear, software, and space all come into play.

For entrepreneurs navigating cross-border opportunities, a specialized immigration business plan is a must-have document to meet visa requirements while laying out a strong, scalable business case. From serving up gourmet meals or painting the way into the market, knowing the average costs helps SMBs plan smarter and avoid sticker shock.

Source: StarterStory, RestaurantOwner

The Bottom Line

Starting a small business in 2025 required understanding the real insights behind it. The average small business owner spends around $40,000 in their first year. The Bureau of Labor Statistics puts the average cost per employee at $92,000–$97,000/year, factoring in wages, benefits, and taxes. Most entrepreneurs bootstrap in the beginning; 77% of solo business owners fund their ventures from personal savings.

As we can see, the startup costs could range from just $100 for a scrappy digital launch to a full-blown $750,000 investment for a restaurant with all the bells and whistles.