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How to Calculate Startup Costs for Small Businesses

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When you’re writing your business plan , you’ll need an accurate estimate of what it will cost for you to start your business so you can decide how to manage your funding and expenses.

Accurately estimating your startup costs can be tricky, but this guide will help you understand your initial costs and how you can plan for them.

First we’ll look at some of the most common startup expenses to get you started:

Common business expenses

The first step is to make a list of all the purchases you’ll need to make in order to start operating.

Categorize your list into expenses that are one-time purchases and those that will be ongoing payments, since both will factor into your calculations.

Here are some of the most common expenses in both categories:

One-time expenses

Necessary equipment like a cash registers, machinery, or vehicles

Incorporation fees

Permits and licenses, such as city, county, and state licensing, or those related to your specific industry

Computer or technology equipment

Down payment for your office or store

Initial business cards

Initial inventory

Initial office supplies

Technology, such as computers, tablets, or printers

Office or business furniture

Ongoing expenses

Business taxes

Your rent or mortgage payment

Accounting services

Legal services

Business insurance

Payroll and employee benefits

Your salary and benefits

Operating expenses, such as bags in retail

Office supplies, such as pens and paper

Website hosting and maintenance

Travel if your business will require it, including gas

Utilities like electric, gas, water, phone, and internet

Marketing materials

Ongoing inventory

Ongoing office supplies

Loan or credit payments

Next, you’ll also need to determine which of your ongoing expenses are fixed costs, and which are variable costs. Fixed expenses you can plan for exactly, but for variable expenses, your costs will change each time.

Here are some common expenses in each category:

Fixed expenses

Lease or mortgage

Administrative costs

Variable expenses

When planning for your startup, you need to only consider items that are essential in the beginning, rather than optional items you can invest in later when your business revenue can help offset the cost.

Don’t forget to research additional necessary expenses in your industry. Other professionals in your field or websites about your type of business can help you determine what is essential.

>> MORE: Best budgeting software for businesses

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How to calculate startup costs for your small business

Use your list from above to complete the next steps:

1. Research

After you’ve made a list of your expenses, it’s time to research. You’ll need to estimate the cost of each item on your list for an accurate estimate.

When researching, don’t forget to do some bargain hunting. You’ll want to minimize expenses as much as possible without sacrificing quality for big-ticket items. This will mean that your research will include equipment capabilities, reviews, maintenance costs, and warranties.

Your one-time expenses and fixed ongoing expenses should have specific costs you can estimate fairly accurately.

For variable ongoing expenses, you may have to do some extra research and make some broad guesses. For example, you won’t know what your ongoing inventory costs will be until you’re operational, but if you factor in a bit of cushion on these expenses, you can ensure you’ll have enough funding to cover these expenses.

2. Expense totals

You’ll need to total your one-time expenses, so that you know exactly what just opening the business will cost, but that isn’t all. You’ll also need to factor in several months’ worth of ongoing expenses.

While your business will be able to cover these expenses once it is operational, it may take time before it can generate enough sales to cover these costs, much less make a profit.

Generally speaking, it’s a smart idea to count on covering six-12 months of business expenses up front while your business is growing. While you can factor sales growth and business revenue into the payment for these costs to lessen the upfront burden, it’s generally safer to make calculations on the assumption that your business won’t be able to contribute, since you won’t be able to accurately forecast sales until you’re operational.

You may also find that some expenses will increase as your business grows, such as marketing, inventory, or payroll, so you’ll want to factor in some extra cushion for growing needs.

4. Total startup costs

Once you have all these figures, you can total your expenses to estimate your startup costs fairly accurately.

Yes, it’s probably a large number, especially if you plan to factor in a cushion for the first few months to a year of operation, but there are many funding options for new business owners.

Once your business begins operating or you begin making purchases for your business, you may find additional needs you left out of your estimates or that some expenses are lower than you planned. You’ll need to keep adjusting your plan as you learn more through the process of starting your business.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

Average cost of starting a small business

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Launching a small business almost always involves an initial investment. How much startup funding you need depends on many factors, such as your industry, the products or services or the store location. The cheapest businesses to start may cost as little as $12,000 initially, but other businesses like restaurants can run from $400,000 or more.

The best way to determine your startup costs is to list all expected expenses and the dollar amount for each item. Let’s drill down into the exact dollar amounts to start your business and the types of costs you may encounter.

Key small business cost statistics

• On average, small business owners spend $40,000 in their first full year. ( Shopify )
• The least expensive cost is the incorporation fee, which is around $145, while the most expensive can be equipment, typically $11,000 to $125,000. ( Forbes Advisor )
• 76% of startups without employees used personal funds to finance their business ( Fed Small Business )
• The top financial challenges for nonemployer startups are inflation as well as meeting operating expenses. ( Fed Small Business )
• Average hourly pay for an administrative assistant is $22. ( Salary )
• Average cost to build a website is $200 and costs $50 monthly for maintenance. ( WebsiteBuilderExpert )
• Average cost of adding a new employee to your payroll usually ranges from $4,000 to $20,000. These costs don’t factor in the employee’s salary and benefits. ( Indeed )

How much does it cost to start a small business?

Industry averages can help give you a general idea of how much you can expect to spend when starting a small business. As your business grows, you’ll need to be strategic about keeping costs low and opting for the most affordable materials.

By keeping costs low, you’ll see the biggest returns on your investment from business products and services. Your actual costs will vary depending on:

• Size of your business
• Physical or online location
• Number of employees
• Cost of inventory needed
• Cost to produce goods, such a labor and raw materials

Online business vs. brick-and-mortar stores

Your location can also influence small business costs. The 2021 Business Cost Index by Approve found Texas, Oklahoma, and Kentucky are the three cheapest states to run a business. California, New Jersey, and Vermont are the most expensive.

Employee payroll or contractor services

Employees are another big expenditure. According to the Bureau of Labor Statistics , the average non-government employee costs your business $41.03 to $43.26 per hour.

Given that there are 2,080 working hours in a year, the average employee may cost you roughly $85,000 to $90,000 per year, based on the Bureau of Labor Statistics wage. So if you have five employees, you’ll have to project for $425,000 to $450,000 in costs.

Another way to calculate total employee costs is to budget for their salary, employee benefits and taxes. The Small Business Administration suggests estimating employee costs to be 1.25 to 1.4 times their salary. Using that information, an employee with a $50,000 annual salary would cost you between $62,500 and $70,000.

Average cost by industry

Your average startup costs will vary greatly depending on the field or industry you’re hoping to tap into. Your industry will determine your entire business model, your inventory needs, your marketing strategy and your costs to produce your goods or services. Here’s a closer look at a few industry averages:

Types of costs for your small business

While it’s possible to fund your business with little-to-no upfront costs , you will likely encounter many expenses along the way. You’ll want to gauge whether your costs are essential to running your business or an expense that you can hold off until the business is established.

Essential costs vs. optional costs

Although there are some expenses you can do without or delay, others are unavoidable right from the start. In general, they include expenses such as:

Common essential costs

Common optional costs.

• New, rather than used or leased, equipment
• Extra office space
• Luxurious business trips and entertaining
• Social media influencers
• A CPA when you can use accounting software instead
• Excess inventory

Fixed costs vs. variable costs

You will find that some of your expenses won’t change from month to month. Others will vary, coming up once or occasionally throughout the year. To ensure that you have enough funds to cover all of your necessary fixed and variable costs, plan ahead.

Common fixed costs

• Insurance premiums
• Property tax
• Essential workers salaries
• Internet and cell phone bills
• Loan payments

Common variable costs

• Packaging and shipping
• Raw materials
• Commissions
• Credit card payments and interest
• Consultants

Average small business costs

Whether you’re starting from scratch or expanding your business, you want to get detailed about the business costs and amount you expect to spend. Having an organized business budget can help you plan for these costs and account for any revenue changes that come your way. Here’s a look at how much you can expect to spend on your fixed and variable costs.

Average fixed costs

When adding up business costs, don’t forget depreciation, which is the value that your physical business assets lose over time due to age or use. You want to include this cost because it affects your business’s overall net worth when comparing its assets versus liabilities .

Average variable costs

How to save on costs and fund your startup

Businesses can save on startup costs by paring back business expenses to free up extra revenue, or they may opt for a business loan .

Consider trimming your overhead to make your start-up costs manageable. Starting an online business is one way to reduce or eliminate office space and insurance costs and save a little extra while you’re getting your business off the ground. Yet any business can take a hard look at business expenses and cut costs that aren’t necessary to the business’s immediate success.

Business owners can also apply for a startup loan that provides the on-hand cash needed to make products or expand operations. Many business owners take advantage of low-interest Small Business Administration (SBA) loan s or business loans that come from a traditional bank or online lender.

Finally, consider applying for a business credit card to help you cover your costs. Business credit cards typically have fewer eligibility requirements, focusing on your personal credit score when you apply. A business credit card also gives you the benefit of no interest charges if you pay in full regularly. You will get charged interest if you make the minimum payment or go past the payment due date.

Frequently asked questions

How do you calculate start-up costs, what do i need before starting to spend money on a start-up business, what are additional considerations, how do i start a small business.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

“ How Much Does It Cost To Start a Business? (Research). ” Shopify. Accessed on October 20, 2023.

“ Business Startup Costs: How To Calculate And Budget. ” Forbes Advisor. Accessed on October 20, 2023.

“ 2023 Report on Nonemployer Firms: Finding from the 2022 Small Business Credit Survey. ” Fed Small Business. Accessed on October 20, 2023.

“ Administrative Assistant II Salary in the United States. ” Salary.com. Accessed on October 20, 2023.

“ How Much Does a Website Cost in 2023? ” WebsiteBuilderExpert. Accessed on October 20, 2023.

“ What Is the Cost of Hiring New Employees? ” Indeed. Accessed on October 20, 2023.

“ The Cost of Building an Ecommerce Website: 2023 Guide. ” Shopify. Accessed on October 20, 2023.

“ The 2021 Business Cost Index. ” Tipalti Approve. Accessed on October 20, 2023.

“ Employer Costs For Employee Compensation—June 2023. ” Bureau of Labor Statistics. Accessed on October 20, 2023.

“ How Much Does an Employee Cost You? ” U.S. Small Business Administration. Accessed on October 20, 2023.

“ How Much Does it Cost to Open a Restaurant? ” Restaurant Owner.com. Accessed on October 20, 2023.

“ How Much Does It Cost To Start A Construction Company? (In 2023). ” Starter Story. Accessed on October 20, 2023.

“ How Much Does It Cost To Open a Retail Store? ” Korona POS. Accessed on October 20, 2023.

“ How Much Does It Cost To Start An Art Business? (In 2023). ” Starter Story. Accessed on October 20, 2023.

“ How Much Does It Cost To Start An Entertainment Information Business? (In 2023). ” Starter Story. Accessed on October 20, 2023.

“ How much do small businesses pay in taxes? ” Nationwide. Accessed on October 20, 2023.

“ How much does small business insurance cost? ” Insureon. Accessed on October 20, 2023.

“ How to Create a Marketing Budget for a Small Business. ” Salesforce. Accessed on October 20, 2023.

“ What are the general costs of incorporating? ” Legal Zoom. Accessed on October 20, 2023.

“ How Much Do Y’all Spend on Packaging Materials Per Order? ” Esty Community. Accessed on October 20, 2023.

“ Average Electric Bill For Businesses In the US. ” Integrity Energy. Accessed on October 20, 2023.

“ Flat Rate Shipping — UPS Simple Rate. ” UPS. Accessed on October 20, 2023.

“ 9 Sales Commissions Structures (With Formulas and Examples). ” Indeed. Accessed on October 20, 2023.

“ The Average Cost Per Month for Office Supplies. ” Hearst Newspapers. Accessed on October 20, 2023.

“ Daily business tourism expenses in the United States 2018–2021. ” Lopez, Ana M. Accessed on October 20, 2023.

“ Small Business Development Centers. ” U.S. Small Business Administration. Accessed on October 20, 2023.

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Small Business Startup Costs Explained 

3 min. read

Updated March 4, 2024

What will it cost to start your business ? 

While every business is unique, there’s a common approach to helping you figure out what it’s going to take to get your business off the ground and sustain it as sales ramp up.

And, knowing the startup costs for your new business is critical before you launch. Underestimating the funds required could leave you without enough cash in the bank and heading towards failure before you even get started.

Read this guide and learn to calculate, manage, and minimize your startup costs. 

• What are startup costs?

Startup costs are what a business spends to get up and running before generating revenue. 

Starting costs vary based on business type but often include expenses like lease payments, permits, and market research. They can also include asset purchases such as vehicles, real estate, and equipment. Crucially, starting costs also include the money that you need to have in the bank to cover expenses as your business launches until your sales have grown enough to cover those expenses.

• Startup cost examples

Starting costs typically include expenses that occur before you start selling and major purchases, otherwise know as assets.

Startup expenses

• Permits and licenses
• Incorporation fees
• Logo design
• Website design
• Brochure and business card printing
• Down payment on rental property

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• Cash to cover operations until sales can cover expenses
• Improvements to your chosen location
• Vehicles used for business operations
• Intangible assets like trademarks, copyrights, and patents.
• Why calculate startup costs?

Knowing your initial costs and expenses improves your chances of launching successfully . It helps you:

Avoid unnecessary risks:

You can avoid unexpected financial pitfalls and make informed decisions by understanding potential expenses.

Start your financial plan :

It helps you budget and determine if you have adequate funds to launch and operate until you’re profitable.

Convince investors :

A detailed breakdown of startup costs can make your business more appealing to investors, as you’ll demonstrate thorough planning and financial acumen.

Improve decisions: 

With a clear view of costs, you can make decisions about pricing , scaling, and other critical areas more confidently.

• What are your startup costs?

Starting costs vary from business to business. So, how do you know your costs and, more importantly, how much money you need to cover them? 

Check out the following resources to answer those questions.

How to calculate your startup costs

Accurately estimate startup costs by accounting for expenses, assets, and cash.

3 Steps to Figure Out How Much Money You Need to Start a Business

How much cash will it take to start your business? Your total cash must go beyond startup costs and ensure you’re prepared to cover emergencies and initial growth.

How Much Should You Personally Cover for Startup Costs?

Before covering any business expenses, consider the impact on your personal finances. What’s the right amount? How will you pay yourself back? And are the rewards worth the risk?

• Tips for managing startup costs

Follow these steps to minimize unnecessary expenses and prioritize the right things.

How to reduce your startup costs

Keep your startup expenses in check and save money through proper planning, tracking, and exploring possible tax deductions.

Hidden startup costs you may overlook

It’s challenging to account for everything. Don’t let overlooked fees and expenses immediately throw off your budget.

What you won’t regret spending money on as a business owner

There is such a thing as being too frugal. But where should you invest more money? While it depends on your business, you can start with these recommendations from a seasoned entrepreneur.

Get the rest of your business finances in order

Knowing what it costs to start your business will make it far easier to get your finances in order.

Check out the rest of our startup financial resources to better understand your path to profitability.

• Create your financial plan
• Set up accounting and payroll
• Prepare for funding

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A quick and easy way to list out your expenses and explore how they fit into your overall business.

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Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

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How to Calculate Business Startup Costs

Starting a business from scratch takes a lot out of you, even before you begin operating—whether it’s about selecting a revenue model, securing startup funding, or estimating startup costs.

I already knew it was challenging for entrepreneurs to calculate the startup costs accurately.

However, when I turned up to my computer, researching this article, I discovered so many challenges new business owners face while estimating startup costs that I had overlooked or didn’t pay much attention to earlier.

Thousands of startups close down every single year. 38% of them fail solely because they underestimated their startup costs and ran out of cash. You can’t ignore something like that, can you?

That said, I’m ready to pour my research into the article to help you calculate your business startup costs .

So, you’re ready to begin? Let’s dive right in.

Key Takeaways

• Startup costs are the expenses a startup must bear in the process of starting a new business, while operational costs are the expenses that are incurred during daily operations.
• Different types of business structures, such as sole proprietorships, partnerships, and corporations, have different costs.
• Business insurance, formation fees, licensing and permits, and marketing are some of the most common business startup costs.
• A modern financial forecasting tool is the most efficient method for calculating startup costs.

How much does it cost to start a business?

Startup costs for a small business depend on various factors like business model, location, industry, and scale of operations. Although it’s tough to estimate precisely, Guidant Financial’s 2023 survey reported that the average cost of starting a small business falls between $50K and $1 million .

You must consider the industry, business category, working capital requirements, and other common expenses associated with the business for the accurate estimation of startup costs.

Let’s kickstart this guide by discussing the common startup expenses to consider while starting a new venture.

Common Business Startup Costs to Consider

It is a typical list of expected business startup costs with rough cost estimates you must plan for while starting a new business. Your actual startup costs will entirely depend on your business category and the industry you serve.

Following are some of the most common startup costs to consider:

1. Equipment and tools

It’s no surprise we’re starting the list with equipment and tools. There’s no way a business can operate without the necessary equipment. The equipment costs may range from $10,000 to $120,000 . However, these costs will entirely depend on the business type and equipment requirements.

For instance, starting a food truck would require financing a food truck and expensive kitchen equipment, while starting a small daycare would only require purchasing a few play area equipment.

Here are the average equipment costs for some of the popular business types:

• Restaurant and food trucks: $24,000 to $120,000+
• Small Bakery: $6,000 to $8,000
• Clothing line: $2,000 to $15,000+
• Construction: $10,000 to $50,000
• Law firm: $5,000 to $25,000+
• Barbershop: $1,000 to $2,000

2. Incorporation fees

The first thing you should do is choose a business entity when you plan to form a new business. The most common and preferred business structure types include sole proprietorship, partnership, corporation, and LLC.

The business incorporation or filing fees can range from $50 to $725 in the United States depending on your industry, the state you operate in, and the business structure you choose.

However, the average incorporation fee is $300 in the majority of the states in the US. You may contact your secretary of state’s website to learn more about the filing fees or process for the articles of incorporation or articles of organization.

3. Business licensing and permits

Operating any small business requires specific licenses and permits depending on the industry compliance and regulations. For instance, a trucking company requires a USDOT number, heavy vehicle use tax, and others, while a restaurant may need licenses like food safety and liquor licenses to operate.

Similar to different filing fees for other business structures, the business licensing and permit fees vary depending on the business industry and regulatory compliance. You can expect to spend between $1,000 to $5,000 for your licensing and permitting requirements.

4. Office or retail space

If you’re starting a small business that can be operated from home like a home bakery or an online clothing store, you may not have to worry about office space costs.

But if it’s not the case, paying for an office or a retail space would make up a sizable portion of your fixed expenses, no matter whether you rent or buy the place.

Based on our research, you should spend around $100 to $1200 per employee monthly on your workspace.

However, the actual office space expense will entirely depend on your location and the type of space you’re using.

5. Legal and professional fees

Professional and legal fees may sound like an additional expense while starting up with limited resources, but it’s essential to ensure compliance with regulations and maintain accurate financial records.

You may choose legal assistance for business licensing, EIN registration, and legal paperwork, a business consultant for market research and strategic planning, and an accountant for bookkeeping and tax planning.

You can hire these professional consultants on an hourly basis; their services typically cost around $40 to $150 per hour.  You should spend around $2,000 to $10,000 per year on professional and legal fees.

6. Inventory

Retail, wholesale, distribution, and manufacturing—if your small business falls under any of the mentioned categories, you need an inventory to operate your business. Finding the ideal inventory size to carry can be challenging when entering a new marketplace.

You want to attract more and more customers and make sales in your early days. However, you can’t also risk having too much inventory since it can increase spoilage.

Consider allocating 15% to 25% of your budget to inventory, depending on your industry. You will eventually learn more about inventory management once your business starts operating and making sales.

7. Marketing and advertising

Although it’s an optional expense, marketing is something worth investing in. Your marketing expenses may include physical materials like sign boards, banners, hoarding, paid social media advertising and search ads, or money paid to marketing agencies or consultants.

It is suggested to keep your advertising and promotion costs under 10% of your budget. If you’re working on a really tight budget, there’s no need to spend big bucks on marketing or hire fancy consultants or agencies.

With social media being a free marketing platform, over 47% of small business owners run their marketing efforts themselves, and you can do it, too.

8. Website development

A business website is like an online office where customers can contact you, learn more about your offerings, and seek assistance.

When building a website, make sure it looks professional, is easy to navigate, and displays the relevant information about your product and service offerings, as well as the contact information.

You can either develop a business website using website builders like Wix and Squarespace or hire a developer to do it for you.

Creating a website can range between $1,000 to $10,000 when you hire a developer, whereas you can do it on your own with website builders by spending around 40 dollars a month.

9. Business Insurance

Like you have a house, car, and health insurance, you need business insurance to ensure your business remains intact in troublesome and inevitable times, be it a natural disaster or a customer filing a lawsuit against your business.

The level of security and type of business insurance your business will require depends entirely on your business, industry, and the number of employees you have. For instance, a big-scale manufacturing company with over a thousand employees would require much stronger insurance compared to a home bakery.

Some of the must-have business insurance types include:

• General liability insurance—for all online, offline, and home-based businesses.
• Worker’s compensation insurance—for businesses with 1 or more employees.
• Professional liability insurance—for businesses offering consulting services.

You must expect to spend approximately $500 to $1500 annually on business insurance.

10. Payroll

Payroll is undoubtedly one of the major business expenses most businesses incur. However, there’s no denying how crucial it is to hire quality employees to make your business thrive.

Of course, payroll expenses are employee salaries, but there’s more to it. Your payroll expenses may also include:

• Incentive or bonus
• Commissions
• Paid time off
• Overtime pay
• Travel allowance
• Other benefits

Most businesses spend around 20% to 50% of their monthly budget on payroll. It can be more or less for your business depending on your business and the number of employees you have.

11. Office furniture and supplies

Those planning to have a traditional nine-to-five corporate workplace, be ready to spend some severe bucks on office furniture and office supplies.

When you operate from a corporate workspace, you need a desk, chair, telephone extension, computer, computer programs like accounting software, and, of course, a coffee machine or two.

The cost of furniture and supplies depends solely on your employee strength and the size of the office. However, it’s recommended to keep your furniture and supply costs to 10% of your total startup costs.

12. Utilities

No matter whether you plan to rent or purchase a workspace, you are bound to pay utility bills that include electricity, gas, water, internet, and phone bills for your office.

Unlike other fixed costs, it’s hard to estimate utility expenses, but the average cost of utilities for commercial buildings is $2.10 per square foot , according to a report by Iota Communications .

Besides the electricity, internet, and phone bills, the utility expenses may also incur the HVAC unit installation costs. This heating and cooling system will add a few additional thousand dollars to your startup expenses.

13. Business taxes

How much you’d spend on business taxes will depend on your business entity, tax-deductible expenses, and revenue. Since it’s hard to predict your revenue, estimating the exact amount to allocate for tax preparation may feel a bit challenging.

Under US federal law, corporations pay a flat 21% corporate income tax . If you’re a pass-through entity(a legal entity that passes all its income on to the owners), the business income or losses will pass through to your personal taxes.

However, you, as a pass-through entity, can claim a 20% deduction on income before paying taxes.

 14. Other expenses

Since you’ve reached this section, you must already have a clear understanding of all the expected startup costs, whether they are one-time or recurring expenses.

Here, we will discuss the other costs most small business owners tend to miss or overlook while estimating the startup costs— research expenses and borrowing costs .

Capital is required for starting a business, and equity financing and debt financing are considered to be the most preferred ways to acquire the initial working capital.

Equity financing, however, does not apply to most small businesses since it requires stock issuance. So, securing a small business loan seems to be the most likely source of debt financing for small business owners.

Research expenses, on the other hand, are the expenses incurred even before you started operating, spent on conducting a careful industry analysis and market research.

When calculating your startup costs, make sure to include these two as well.

Since we have already discussed common business expenses, let’s move on discussing calculating the startup costs.

How to Calculate the Costs of Starting a Business

There are various ways to calculate the cost of starting a business. Still, drafting a business plan remains the best way to estimate startup costs.

The financial forecasting section of your plan provides three to five-year projections of revenue, profit, and expense.

The other resources for estimating startup costs include using Upmetrics’ startup costs worksheet or calculator . These resources will help you estimate the initial investment required and determine how much capital or financing you’ll need.

Know that many of the common business expenses we discussed earlier are recurring, with some of them being one-time expenses.

Be sure to categorize them and calculate the recurring expenses on a monthly, quarterly, and annual basis. In contrast, consider expenses like incorporation fees and equipment financing one-time costs.

Sounds like a lot to digest? Get a business planning software like Upmetrics and calculate startup costs in minutes with AI-powered financial forecasting .

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Calculating Startup Costs for Your Small Business

Does your business fall under one of these categories? Excellent. We have startup cost guides for all the business categories listed below. Get a cost estimate for starting the business you plan to launch.

How to Reduce Your Business Startup Costs

Starting a business means being prepared to bear some non-negotiable expenses; there’s no other way around. However, sound research and thoughtful planning can help you save on high-ticket purchases—ultimately reducing your startup costs.

For instance, hiring professional business plan writers can be expensive for a business owner on a tight budget to create a business plan, so they can opt for a business planning software like Upmetrics to draft a business plan at a much lesser cost.

It was just an example, here are a few tips to help you reduce your business startup costs.

1. Create a business plan

It doesn’t make sense. Isn’t it another business expense? How will it reduce costs? Some of you must be having this line of questioning in your mind, but let us clear it up for you.

Brainstorming and listing all the important business costs, and estimating your total startup costs is challenging. Missing out on some critical expenses tends to happen. However, creating a comprehensive business plan makes things easier.

An AI-powered tool like Upmetrics makes sure you don’t miss out on any critical information and helps you properly estimate your startup costs.

Remember, accurate estimation of startup costs is your first step to reducing them.

2. Start small

You don’t need everything or a perfect business setup when you are not making any sales, forget about the business profits. Start small with limited resources and grow your business as it grows financially.

For instance, instead of having a big fancy office for your startup, start with a remote team or a co-working space until you raise capital or gather the necessary resources.

One way of doing that would be listing all the major high-ticket expenses and researching competitive alternatives for them.

3. Lease instead of purchasing

Of course, having your own office or a retail space feels good, but not at the cost of more than 70% of your budget for starting a business. Prefer leasing the place instead of purchasing.

It will leave you with enough working capital or cash to efficiently manage your business operations and handle the other non-negotiable costs.

Furthermore, there’s no guarantee your storefront will find success at the very first location; you may have to relocate if things don’t work out. The further process will be more straightforward with leasing, whereas the same won’t be the case when you own the place.

4. Buy used equipment, tools, or furniture

Since you’re looking for ways to reduce costs and save money, there’s no way for you to have brand-new business equipment, tools, and furniture. You can look for used equipment, tools, and furniture on online selling sites like eBay and Etsy.

Be sure to thoroughly check the equipment before purchasing to avoid any future restoration or repair costs.

5. Funding and business credit card

Now that you have a long list of capital expenditures, you will need financing or funding to manage all these costs. You can’t simply do it all on your own, can you?

It won’t reduce the startup costs but will help you get resources to manage them. Your funding options include debt and equity financing. You may apply for a business loan, reach out to angel investors, or apply for business grants to secure the initial investment for your business.

With limited debt financing options, it could be tough to get through. Applying for a business credit card can be a more accessible alternative to a business loan. You can easily qualify for it while also gaining a higher credit limit than your personal credit card.

Make sure you’re not totally relying on it or taking out more than you can repay. This can negatively impact your credit score, making it harder for you to secure business loans in the future.

And, the final section leads us to our conclusion!

And there you have it. We hope now you have a better understanding of startup cost calculation. What’s next? It’s time to estimate the actual costs of starting a business, be it a bakery, restaurant, or hot shot trucking, and start budgeting.

Get your hands on the modern and AI-powered business planning solution, Upmetrics—and create precise startup cost projections in minutes, just like that.

Frequently Asked Questions

What is the average cost to start a small business.

It is a question with a broad scope for the answer since you can start a business with an initial investment of $100, $1,000, and up to a million dollars or even more. However, the startup and first-year operational expenses fall somewhere between $30,000 to $40,000.

How do you calculate startup costs?

The most easy-to-use method to calculate startup costs is to create a business plan. It’s easier than ever to calculate your startup costs using a tool like Upmetrics. 

Simply head to the financial forecasting feature, get AI suggestions to list your startup and organizational costs, add remaining costs, and let it make the automated calculations for you.

What are business startup costs?

Business startup costs are expenses incurred when starting a new business. These can be your marketing costs, payroll expenses, or any other costs involved. These can either be recurring or one-time costs. 

For instance, your advertising costs are recurring, whereas incorporation fees are a one-time expense. Although there can be some common startup expenses, the value or costs for them may not be the same for two different businesses.

What is the difference between startup costs and operational expenses?

Startup costs are the expenses small businesses incur when starting a new business, whereas operational expenses are those incurred during normal day-to-day business operations. 

For instance, equipment financing can be considered a startup cost, whereas inventory or marketing costs can be your operational expenses.

What are the examples of start-up costs?

The following can be considered as a few examples of startup costs:

• Equipment costs
• Inventory expenses
• Business licenses and permits
• Marketing and advertising expenses
• Payroll expenses
• And others.

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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Understanding Common Business Startup Costs

Additional startup cost considerations, the bottom line.

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• How to Start a Business

How to Estimate Business Startup Costs and What It Covers

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• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details CURRENT ARTICLE
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
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• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
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Starting a business involves much more than just setting up an office or choosing furnishings. It demands careful financial planning and precise accounting, particularly in the initial stages.

Many new businesses make the mistake of not properly estimating and budgeting for startup costs, relying too much on a sudden influx of customers. This approach often leads to poor results and even the business's failure . A solid financial plan is key not only for managing startup costs but also for building a foundation for your venture's future growth.

Key Takeaways

• Startup costs are expenses incurred while establishing a new business. They can be divided into two categories: pre-opening and post-opening. 
• Pre-opening startup costs include a business plan, advertising, employee training, professional services, and setting up books and records.
• After the business opens, costs shift toward advertising, promotional activities, and employee salaries.
• Different types of business structures—like sole proprietorships, partnerships, and corporations—each have unique startup costs. Understanding these variations is crucial as you plan your budget and financial strategy.

Startup costs are the expenses a new business faces during its creation. Unfortunately, starting a business with no money is challenging and not an option for most businesses, which will require capital to start operations. Each business is unique and thus incurs different types of startup costs depending on its nature of operations.

For example, online businesses, such as e-commerce websites, often have lower initial capital requirements than brick-and-mortar businesses, such as restaurants. This difference in startup costs may stem from online businesses needing less physical space, fewer furnishings, and often fewer staff compared to brick-and-mortar operations.

Despite these differences, several expenses are common across most types of businesses. These typically include costs related to legal or attorney fees, licensing, initial inventory, market research, and marketing efforts to launch the brand.

Keep detailed records of all your startup expenses from the beginning. This not only helps with budgeting and planning but also ensure you can take full advantage of any tax deductions available for startup costs.

The Business Plan

Creating a business plan is crucial for starting a business as it provides a detailed roadmap and prompts careful consideration of various startup costs. Underestimating these expenses can lead to an inflated expectation of net profit, which can be detrimental for a small business owner. Hiring a consulting firm or a business plan writer to assist with creating a business plan can cost between $1,000 and $5,000 or more. The final price often depends on the complexity and length of the plan.

Research Expenses

Before launching a business, it's crucial to thoroughly research the industry and target consumer demographics. Some business owners opt to hire market research firms for this purpose.

Hiring a market research firm is essential for companies wanting to excel in competitive markets. These firms offer key insights into customer preferences and industry trends, using both qualitative and quantitative data to inform strategies ranging from product development to marketing. Their analysis helps businesses make informed decisions and identifies potential risks and opportunities.

For business owners who choose to follow this route, the expense of hiring these experts must be included in the business plan.

Borrowing Costs

Starting up any kind of business requires an infusion of capital. There are two ways to acquire capital for a business: equity financing and debt financing. Equity financing usually entails the issuance of stock, meaning the company offers shares of its ownership to investors in exchange for funds. However, this doesn't apply to most small businesses, which are proprietorships and don't issue stock.

For small business owners, the most likely source of financing is debt in the form of a small business loan . Business owners can often get loans from banks, savings institutions, and the U.S. Small Business Administration (SBA). Like any other loan, SBA business loans come with principal and interest payments that need to be carefully planned for when starting a business, as failing to make these payments can result in severe consequences.

Insurance, License, and Permit Fees

Many businesses are expected to submit to health inspections and authorizations to obtain certain business licenses and permits. Some businesses might require basic licenses while others need industry-specific permits.

Carrying insurance to cover your employees, customers, business assets, and yourself can help protect your personal assets from any liabilities  that may arise. 

Technological Expenses

Technological expenses include the cost of a website, information systems, and software, including accounting and point of sale (POS) software , for a business. Some small business owners choose to outsource these functions to other companies to save on payroll and benefits.

Equipment and Supplies

Every business needs equipment and basic supplies, which are crucial components of startup costs. When planning these expenses, you must decide whether to lease or buy the equipment. 

The state of your finances will play a major part in this decision. Even with sufficient funds to purchase equipment outright, it might be more practical to lease initially, with the option to buy later, especially if other unavoidable expenses arise. However, it's important to remember that, regardless of the cash position , leasing isn't always the most beneficial option depending on the type of equipment and the lease terms.

Advertising and Promotion

A new company or startup business is unlikely to succeed without promoting itself. However, promoting a business entails much more than placing ads in a local newspaper.

It also includes marketing —everything a company does to attract clients to the business. Marketing has become such a science that any advantage is beneficial, so external dedicated marketing companies are most often hired.

Employee Expenses

Businesses planning to hire employees must plan for wages, salaries, and benefits, also known as the cost of labor . This includes not only direct payments but also any additional benefits that contribute to employee compensation packages, including health insurance, retirement plans, and bonuses.

Failure to adequately compensate employees can result in low morale, mutiny, and bad publicity, all of which can tarnish a company's reputation and be disastrous for the business.

Set aside some extra money for any overlooked or unexpected expenses. Most companies fail because they lack the cash to deal with unexpected problems during the business season.

It's important to note that the startup costs for a sole proprietorship differ from the startup costs for a partnership or corporation. Some additional costs a partnership might incur include the legal cost of drafting a partnership agreement and state registration fees.

Other costs that may apply more to a corporation include fees for filing articles of incorporation, bylaws, and terms of original stock certificates.

What Are Business Startup Costs?

Startup costs are the expenses required to create a new business. Once the business is operational, these costs can be broadly categorized into pre-opening and ongoing or operating expenses . Pre-opening costs may include expenses for developing a business plan, market research, securing a location, and initial marketing. Ongoing costs typically involve operational expenses like employee salaries, utilities, and inventory replenishment.

What Business Startup Costs are Tax Deductible?

Tax-deductible startup costs generally include essential expenses for establishing a new business, such as market research, opening advertisements, and employee training salaries. The IRS allows new businesses to write off startup expenses of $10,000 in startup costs and $5,000 in organizational costs in the year the business begins. However, total startup costs must be $60,000 or less and organizational costs must be $50,000 or less. If the costs exceed the maximums, the remaining has to be amortized.

How Do I Calculate Business Startup Costs?

To calculate your startup costs, first identify all necessary expenses like office space, equipment, licenses, permits, salaries, and marketing. Estimate each expense by researching online and consulting with mentors or similar businesses. You can then organize these costs into one-time and monthly categories, then calculate a total to understand your capital needs. Calculating your expected startup costs can help you secure funding, attract investors, and launch your business successfully.

Understanding and planning for startup costs is crucial for any new business. These costs include pre-opening expenses, like market research and business plans, and post-opening expenses, such as marketing and employee salaries. Every business has unique costs, but common expenses often involve legal fees, permits, equipment, and technology.

Accurately estimating your startup costs is key for any new founder. Realistic figures can help secure funding from investors or banks and ensure smooth operations. Keeping detailed records from the start can also help you in financial planning and maximizing tax benefits.

Internal Revenue Service. " Why Should I Keep Records? "

PlanBuildr Business Plan Software. " How Much Does a Business Plan Cost? "

U.S. Small Business Administration. " Fund Your Business ."

Internal Revenue Service. " Publication 583, Starting a Business and Keeping Records ." Pages 9-10.

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Cost Breakdown: How Much Does It Cost For A Business Plan

When considering the investment required for a business plan, many are surprised to learn that costs can range anywhere from a few hundred dollars to several thousand. On average, small business owners might spend roughly $1,500 to $3,000 for a detailed plan. Yet, the complexity and scope of the business dramatically affect this estimate, requiring a nuanced approach to budgeting.

Historically, the cost of business planning has evolved alongside the sophistication of market research and analytics tools. A Deloitte survey found that 70% of businesses today utilize professional services for business planning, emphasizing the importance of expertise and precision. Choosing between self-preparation and professional consultancy can decisively impact both cost and outcome.

How Much Does It Cost for a Business Plan

The cost of a business plan can greatly vary depending on several factors. On average, small business owners might spend between $1,500 and $3,000. This range can be influenced by the complexity of the plan and the level of detail required. Some may spend as little as a few hundred dollars, especially if they use pre-made templates. High-end bespoke business plans can even cost up to $10,000 or more.

Several key factors affect these costs. One significant factor is the size and type of the business. Startups might need more detailed plans than established companies. Additionally, the industry sector can influence the cost due to specific market research needs. The choice between hiring a professional service or creating the plan independently also plays a role.

Using professional services for business plans typically offers higher quality and expertise. These services conduct thorough market analysis and financial forecasting . However, this expertise comes at a price, often ranging from $2,000 to $6,000. Some professionals charge by the hour, which can accumulate quickly. Alternatively, DIY methods can save money but might lack detailed insights.

Many small business owners try to balance cost and quality. They might start with a basic template and add custom elements. Utilizing online resources and software tools can also help keep costs low. It’s essential to allocate enough budget to cover essential components. Investing in a good business plan can pave the way for a successful business venture.

Average Costs of a Business Plan: Based on Business Size and Type

The cost of a business plan can differ greatly based on the size of the business. For a small business or startup, a basic plan might cost between $1,500 and $3,000. These plans usually include essential elements like market analysis and financial projections . Medium-sized businesses, requiring more detail and strategy, might spend anywhere from $3,000 to $5,000. Plans for larger enterprises can surpass $10,000 due to complex requirements and extensive research.

The type of business also significantly influences the cost. Retail businesses often need detailed market analysis and location studies, which can drive prices higher. Technology startups, requiring extensive technical and financial details, might find themselves at the higher end of the cost spectrum. Conversely, service-based businesses might spend less if their operational and market environment is straightforward. Real estate and manufacturing sectors will likely fall somewhere in between.

A custom business plan for a manufacturing business might cost more due to additional needs like supply chain assessment and production forecasts. On the other hand, an online retail business might incur lower costs if it leverages e-commerce platforms and existing sales data. To better visualize this, consider the following table illustrating the average cost ranges for different business types:

Choosing the right service provider is crucial to aligning costs with business needs. Many firms offer tiered pricing based on the level of detail required. It’s wise to get multiple quotes and assess the scope of services included. Remember, investing in a well-crafted business plan can significantly influence your business’s success and attract potential investors.

Factors Affecting the Cost of a Business Plan

Several factors influence the cost of a business plan. One of the most significant factors is the complexity of the business. For instance, a straightforward local business might require less detailed analysis than a tech startup. The amount of research needed also impacts the cost. More detailed market and competitive analyses will drive up the price.

The experience and expertise of the plan’s creator are crucial. Hiring a seasoned consultant or firm generally costs more but can provide valuable insights. On the other hand, using a less experienced freelancer or doing the plan yourself can reduce costs. The choice of the writer is often a trade-off between expense and the quality of the final product. Additionally, the length of the business plan itself can add to the cost.

The geographic location of the business also plays a role. Firms in major cities may charge more due to higher operational costs. Conversely, remote or online services might offer competitive rates. Companies in specific industries, like financial services or healthcare, may need specialized knowledge, increasing costs further.

Customization level is another factor. A highly tailored plan, specific to unique business needs, will cost more than a generic template. Elements like detailed financial projections, marketing strategies, and growth plans add to the overall cost. Customization ensures the plan aligns closely with business goals but requires more time and effort. This often results in higher fees.

The Balance between Cost and Quality in Business Planning

Finding the right balance between cost and quality in business planning can be tricky. It’s crucial to ensure that the plan is comprehensive enough to attract investors and guide the business. However, overspending on the plan can strain your budget. The key is to invest wisely, getting the best value for your money. This often involves comparing different services or templates.

Hiring a reputable consultant can increase the quality of your business plan. Experienced consultants bring valuable insights and detailed market analyses. Though higher in cost, the potential benefits often outweigh the expense. On the other hand, opting for a cheaper DIY approach may save money but could lead to a less effective plan. Thus, balancing these factors is essential for success.

Using professional services for essential components like financial projections can add value to a basic plan. You can mix custom and pre-made elements to create an effective plan without overspending. Resources like online templates and business plan software can also be useful. By combining these resources, you achieve a good balance of cost and quality.

Evaluating the specific needs of your business helps in determining the right balance. A startup may require a more detailed plan than an established business. Conducting a cost-benefit analysis can be beneficial. Weigh the potential gains against the expenses to make an informed decision. This approach ensures that you don’t sacrifice quality for lower costs.

Gaining insights from multiple experts can help fine-tune the balance. Engaging with various consultants or reviewing multiple templates provides a broader perspective. This allows you to identify the best features from each. Implementing these features strategically maximizes both quality and value. An informed approach can lead to a successful business plan that doesn’t break the bank.

DIY vs. Professional Services: A Cost Comparison

Creating a business plan yourself (DIY) can save a lot of money initially. Using online templates and resources, it might cost you around $100 or even less. However, the quality might not be as high, and critical details could be missed. On the other hand, hiring professional services ensures a comprehensive plan. The cost for this can range from $2,000 to as much as $10,000 depending on the complexity.

Professional services offer several advantages over DIY approaches. They provide in-depth market research, financial analysis, and strategic planning insights. This expertise can significantly enhance the effectiveness of your business plan. But this level of expertise comes at a premium. You are essentially paying for the consultant’s time, experience, and resources.

Comparing the two options reveals distinct pros and cons. DIY methods are cheaper but require significant time and effort. They are suitable for straightforward business models. In contrast, professional services deliver high-quality, personalized plans but are costly. This makes them more suitable for businesses needing detailed planning and analysis.

To help visualize these differences, consider the following table:

Ultimately, the choice depends on your business’s specific needs and budget. Small startups might get by with a DIY plan. However, more complex businesses or those seeking investment might benefit from professional services. Weighing the costs and benefits will help you make the best decision for your situation.

Investment in a Business Plan: Why It’s More Than Just Money

Investing in a business plan involves more than just spending money. It requires time, effort, and dedication to detail. Spending money on research and expert advice can save headaches down the line. Additionally, it helps you understand your business vision better. The benefits of a well-crafted business plan extend far beyond the initial financial outlay.

Time spent on a business plan is an investment in itself. Thorough planning ensures that you are prepared for possible challenges. This preparation can save time and resources in the long run. It’s not just about making quick decisions but about making informed ones. Every hour spent planning is an hour saved from potential future issues.

A detailed business plan can also attract investors and lenders. These stakeholders look for well-thought-out strategies and clear financial projections. Their confidence in your plan can lead to easier funding opportunities. An investment in a good business plan shows your seriousness and commitment. This can make all the difference in securing necessary funds for growth.

Moreover, a business plan serves as a roadmap for your business journey. It helps in setting clear goals and milestones. A well-laid-out plan can guide daily operations and long-term strategies. This direction keeps the business aligned with its core objectives. Thus, investing in a business plan is about setting a strong foundation for your business.

Tips to Minimize Costs without Compromising the Quality of a Business Plan

Minimizing costs while maintaining quality in a business plan is achievable with strategic planning. One effective way is to use free or low-cost business plan templates available online. These templates offer a structured starting point, saving you time and money. Enhance these templates by adding customized elements specific to your business needs. This mix ensures you have a solid plan without high expenses.

Leverage affordable business plan software for professional-quality results at a fraction of the cost. Many software options include tools for financial projections, market analysis, and custom graphics. Even with basic computer skills, you can produce a polished and comprehensive document. Compare different software features to find one that best suits your requirements. Utilizing such tools helps maintain quality while keeping costs low.

Consulting educational resources like books and online courses can also reduce expenses. These resources often provide in-depth insights into crafting effective business plans. While it requires more effort on your part, the knowledge gained is valuable long-term. Library memberships, YouTube channels, or online learning platforms can be excellent sources of information at minimal cost.

Outsourcing specific parts of the business plan can be cost-effective as well. For example, hire freelancers for financial projections or marketing strategies, rather than engaging an expensive full-service firm. Websites like Upwork or Fiverr offer access to talented freelancers at competitive rates. By selectively outsourcing tasks, you control costs without sacrificing overall plan quality.

Another tip is to collaborate with local small business development centers or mentors from programs like SCORE. These professionals often provide free advice and feedback on your business plan drafts. Networking with other entrepreneurs can also offer valuable insights at little to no cost. Leveraging community resources ensures a high-quality plan without breaking the bank.

A table summarizing these cost-saving tips:

Frequently Asked Questions

Creating a business plan involves many considerations, especially regarding costs. Here are some common questions answered to help clarify the process and expenses involved.

1. What factors affect the cost of a business plan?

The complexity of your business is a major factor. A simple business might need less detailed analysis than a tech startup, which requires in-depth research and projections.

Your choice of professional services or DIY methods also impacts costs. Hiring an experienced consultant may be more expensive but can add valuable insights, while DIY approaches save money but might lack detail.

2. How does industry type influence the cost of a business plan?

The industry type significantly affects cost due to varying needs for data and analysis. For example, retail businesses often require extensive market research and location studies.

Technology startups may need comprehensive technical and financial details, leading to higher expenses. Service-based businesses could incur lower costs due to simpler operational models.

3. Is it cheaper to write my own business plan or hire someone?

Writing your own business plan is generally cheaper and can cost under $100 if you use templates and online resources. However, creating a detailed and effective plan requires time and effort on your part.

Hiring a professional service ensures high quality but comes at higher prices ranging from $2,000 to $10,000+. The decision depends on your skills, budget, and the complexity of your needs.

4. Can free resources impact the quality of my business plan?

Free resources like templates and educational courses can help reduce costs while still providing structure and guidance. They enable you to produce an effective plan without spending much money.

However, relying solely on free resources might limit access to specialized expertise or tailored advice available through paid services. Balancing free tools with selective investment in crucial areas can maintain quality without overspending.

5. How important is customization in influencing the cost of a business plan?

A highly customized business plan that addresses specific goals will typically cost more due to the additional time required for detailed tailoring. Customized plans often include personalized financial projections and marketing strategies specific to your niche.

This level of detail makes the plan more relevant and valuable for securing investments or guiding operations but involves higher fees compared to generic templates or basic plans.

Investing in a business plan is more than just an expense; it’s a strategic move for future success. Balancing cost and quality requires considering various factors like expertise, industry, and customization needs. By combining the right resources and professional help, you can craft a plan that aligns perfectly with your business goals.

In the end, the value of a well-drafted business plan far outweighs its costs. It not only attracts investors but also provides a roadmap for growth. With thoughtful planning and smart spending, you set a solid foundation for your business to thrive.

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When starting a business, you must answer an important question: How much money do you need? Here’s what you need to know about funding your startup.

Table of Contents

Starting a business may be an exciting process, but it costs money. When determining business startup costs, it’s important to be realistic. Things like office space, legal fees, payroll, business credit cards and other organizational expenses can really add up.

If you’re thinking about launching a new business, you should understand the startup costs you might encounter. Here’s how much cash you will likely need to start your company.

How much money it costs to start a business

It’s possible to start a business with a small initial investment (as little as $100) depending on what it is. For example, if you’re starting an online shop or freelancing service, you likely won’t have many upfront costs. 

However, other businesses, like brick-and-mortar shops or those with W-2 employees, could cost thousands of dollars (even hundreds of thousands) for location, inventory, payroll, equipment, rent and more. [Read related article: Best Payroll Services ]

According to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000.

While every type of business has its own financing needs, experts have some tips to help you figure out how much cash you’ll require. Drew Gerber, CEO of the PR firm Wasabi Publicity, estimates that an entrepreneur will need six months’ worth of fixed costs on hand at startup.

“Have a plan to cover your expenses in the first month,” he said. “Identify your customers before you open the door so you can have a way to start covering those expenses.”

Editor’s note: Need a loan for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

When planning your costs, don’t underestimate the expenses, and remember that they can rise as the business grows, Gerber said. It’s easy to overlook costs when you’re thinking about the big picture, but you should be more precise when planning for your fixed expenses, he added.

Indeed, underestimating costs can decimate your company, said Cynthia McCahon, founder and CEO of business plan software company Enloop.

“One of the main reasons most small businesses fail is that they simply run out of cash,” she said. “ Writing a business plan without basing your forecasts on reality often leads to an unfortunate, and often unnecessary, business failure. Without the benefit of experience or actual historical financials, it’s easy to overestimate a new company’s revenue and underestimate costs.”

How to plan for startup costs

1. start small..

You most likely have high expectations for your company. However, blind optimism may cause you to invest too much money too quickly. At the very beginning, it’s smart to keep an open mind and prepare for issues that may arise later.

McCahon said business owners should start with a bit of healthy skepticism.

“A prospective business owner should start planning a small business by simply understanding the potential of the business idea,” she said. “What this means is not assuming your idea will be successful.”

The best approach is to test your idea in a small, inexpensive way that gives you a good indication of whether customers need your product and how much they’re willing to pay for it, McCahon said. If the test seems successful, then you can start planning your business based on what you learned. [Read related article: Small Business Financing Options That Bypass Traditional Banks ]

2. Understand what types of costs you’ll have.

The SBA states that there are various types of expenses to consider when starting your business. You need to differentiate between these costs to properly manage your business’s cash flow for the short and long term, said Eyal Shinar, former CEO of cash flow management company Fundbox. Here are a few types of costs for new business owners to consider. [Read related article: The Small Business Owner’s Guide to Getting an SBA Loan ]

One-time vs. ongoing costs

One-time expenses will be relevant mostly in the startup process, such as the expenses for incorporating a company. If there’s a month when you must make a one-time equipment purchase, your money going out will likely be greater than the money coming in, Shinar said. 

This means your cash flow will be disrupted that month, and you will need to make up for it the following month.

Ongoing costs, by contrast, are paid on a regular basis and include expenses such as utilities. These generally do not fluctuate as much from month to month.

Essential vs. optional costs

Essential costs are expenses that are absolutely necessary for the company’s growth and development. Optional purchases should be made only if the budget allows.

“If you have an optional and nonurgent cost, it may be best to wait until you have enough cash reserves for that purchase,” Shinar said.

Fixed vs. variable costs

Fixed expenses, such as rent, are consistent from month to month, whereas variable expenses depend on the direct sale of products or services. This is a reason that comparing the best credit card processing providers is so important. Processing rates are a variable cost that you’ll want to regularly review to ensure you’re getting the best deal. Shinar noted that fixed costs may eat up a high percentage of revenue in the early days, but as you scale up, their relative burden will become negligible. [Read related article: Direct Costs vs. Indirect Costs ]

Most common startup expenses

It’s important to understand the different types of costs you’ll have as a new business. Theoretically, it’s good to take note of what costs are fixed, variable, essential and optional. But let’s get concrete. Here’s a short list of costs you’ll likely have as a new business:

• Web hosting and other website costs
• Rental space for an office
• Office furniture
• Basic supplies
• Basic technology
• License or permit fees
• Advertising or promotions
• Business plan costs

Typical costs for startups

The following table estimates basic fixed costs for a hypothetical startup company with five employees. Variable costs will depend on each business’s situation and are not included in this table.

3. Project your cash flow.

Another critical aspect of a startup’s financial planning is to project the business’s cash flow. William Brigham, director of the New York Small Business Development Center in Albany, advises new business owners to project their cash flow for at least the first three months of the business’s life. He said to add up not only fixed costs, but also the estimated costs of goods and best- and worst-case revenues.

“If you borrow money, make sure you know not only how much you borrowed, but also the interest you owe,” Brigham said. “Calculating these costs puts a floor on the revenues needed to keep the business viable and provides a good picture of the cash necessary to start it up.”

This is an essential step in maintaining your business’s financial health. Without being realistic about your cash flow and debt, you won’t be able to get your business off the ground, especially as other costs begin to build.

Gerber recommends starting a business without borrowing at all, if possible. He said that borrowing puts a lot of pressure on any business and its owners, as it leaves less room for error. Do your best to explore all of your funding options. If borrowing is your only option, work closely with your lender to ensure your business is financially able to handle the commitment. Keep in mind that when it comes to small businesses, personal assets are also often on the line.

Once you get your business going, Shinar recommends using Freshbooks [See our FreshBooks review ] or Quickbooks accounting software [See our QuickBooks review ] , which can connect directly to your bank account to track your expenses throughout each month and during tax season. [Looking for accounting software for your small business? Check out our best picks for small business accounting software .]

4. Figure out your financing methods.

Once you’ve determined your costs and projected your cash flow, you’ll need to consider how to pursue financing. How you obtain funds will affect the future of your business for years to come. Personal savings, loans from family and friends, government and bank loans , and government grants are just a few potential funding sources. Many companies use a combination of different sources. [Check out our reviews of the best small business loans .]

According to Herndon Davis, mortgage loan officer and real estate agent at Mortgage Real Estate Services, most startups are self-funded. However, there are other options.

“Additional funding can come through establishing business credit and different lines of credit through piggybacking scenarios,” Davis said. “There are also small business loans and angel investors willing to step in at certain stages. At this point, your startup should show established clients/customers, growth since inception, a unique positioning in the marketplace and a clear business plan on how to grow with the additional funding.”

How much cash will you need?

As you’ve learned above, the money you’ll need to start your business depends on various factors. Opening a brick-and-mortar store with expensive rent requiring high-quality equipment might cost hundreds of thousands more than offering freelance services online with no initial investment. Before pursuing your business, analyze your potential costs and determine whether you’re financially ready and committed to the journey of entrepreneurship you desire.

Matt D’Angelo contributed to this article. Source interviews were conducted for a previous version of this article.

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How Much Does a Business Plan Cost?

A complete business plan helps you to identify your business goals and how you plan on reaching them. Whether you are a new business owner or an experienced entrepreneur, writing a comprehensive business plan can help you start, grow, and/or attract investors to fund your business.  

How Much Does It Cost to Write a Business Plan ?

Business plan pricing depends on what route you take to create it. However, there are a few essential elements that are common to all business plans:

• Executive Summary
• Business Description
• Market Analysis
• Customer Analysis
• Competitive Analysis
• Marketing Strategy
• Operations Plan
• Management Team
• Financial Plan

There are several ways to approach writing a successful business plan, but the cost of each way varies widely. The cost of a business plan can be a significant investment, but it’s an essential tool for any business. Below we provide some tips for what to consider and the costs for the various methods of completing your own business plan.  

Considerations When Writing Your Own Business Plans

There are several things to consider when writing your own plan. Depending on whether you’re in need of funding and how much, the costs for your business plan will be different.

Take into account:

• How long will your business plan be?
• How many hours does it take to complete the business plan?
• What kind of language is used in the business plan?
• Who will use the business plan?
• Who will fund your business?
• How much are you looking to raise or if you need funding at all?

According to our business consultants’ surveys of investor requirements, a 15- to 25-page business plan is the ideal length. Adding more pages may cause your time-constrained investor to skim portions of the plan, even if they are interested, which might result in important information being overlooked. However, fewer pages may lead potential investors to believe that the firm has not been thoroughly thought out or simply doesn’t have enough information for them to make an investment decision.  

Business Plan Template Costs

There are a variety of business plan templates online that you can purchase for a one-time fee. These templates range in price but usually start at around $100. Remember, a bargain business plan template may not include all the information that you need, so it’s important to understand what is included with the template you purchase.

Many of these templates also come with instructions to help you fill in the template and make changes as needed. However, if there is something you want to be changed on the template, it may take time and money to have it done.

Be sure to do your research and find the right template for your business. The wrong template could set you back even further and change the face of your business entirely. If you purchase a professional business plan template, make sure it’s from a reputable business plan company with business plan writing skills   in a variety of industries.

The business plan template should be easily editable and customized for your specific business needs and industry trends.

If you do not want to pay for a template, there are companies that will charge by the page and some that offer free resources . However, these templates may not have been professional business plans written for your exact type of business.  

Experienced Consultants & Business Plan Writers Cost

Hiring a business plan writer or professional writing service will help you get a comprehensive business plan written just for your business. A professional business plan consultant will help you identify your goals and how your company will reach these goals. A business plan consultant fee usually costs more but can be worth it if you do not have the time or resources to complete the business plan yourself.

A business plan writer can be found through online directories, but be sure to do your research prior to engaging in business with them. Be sure to ask for references and read reviews before hiring a business plan writing service.

If you choose to hire a business plan consultant, the complexity and length of the plan will determine how much is a business plan. Generally, a consulting firm or private consultants charge between $1,000 and $5,000 to have a comprehensive business plan written . However, a lengthy and complex plan can easily start at a few thousand dollars and stretch into the tens of thousands of dollars based on the needs of the business.

Some experienced business plan writing services also offer package deals that include additional services, such as market research, a marketing plan, and realistic financial projections.

Business Plan Software Costs

There are business plan software applications that can be used for free or have a monthly subscription cost, which may work better for your needs depending on what you need in a business plan. These apps provide templates and make writing a business plan and business planning easier. They help organize the information you enter into the app and will sometimes offer advice on how to do things like financial projections for your business plan .

The information that you put into the application can be used for several different types of business plan needs. These apps are great for startups and small businesses looking to raise capital or secure funding.

Each app or software varies in what it offers. Some are more customizable than others, some have more options for presenting your business plan, and some even offer investment opportunities. With just your business idea, the business planning software can help you write your own business plan quickly and easily. 

Write Your Own Business Plan from Scratch

If you do not want to purchase a template or use software, the easiest and most cost-effective way is to write a business plan from scratch. This route takes time and effort to complete but can be done by anyone willing to put in the work.

When writing your business plan documents, remember that they should be as detailed as possible. This document is your guide to starting and running your business. The more complete it is, the better off you’ll be.

There are a variety of free resources available online to help you write a business plan, including articles, templates, and even video courses.

When writing a business plan from scratch, it’s important to consider all of your business aspects. This includes your business concept or business model , management, production, market research , sales strategies , customer service, operations, human resources, financial projections , and more.

Try to be as thorough as possible when writing the plan. While the task may seem daunting at first, you’ll find that putting together a business plan is not so bad once you get started. After all, if you can dream it, you can write it.

The cost of writing a b usiness plan is dependent on the purpose, type, and length of the business plan. The amount of time it takes to complete a  business plan , the language used, and who will be using the document also play a factor in the cost. You can find templates for a one-time fee or pay by the page, hire a business plan writing service or a business plan writer , contact a consulting firm , or use software/apps to create your business plan. Whichever option you choose, make sure you do your research, conduct an in-depth business plan review, and find the best resource to meet the goals for your business.  

• Business Planning
• Venture Funding

Business Startup Costs: The Ultimate Guide (2024)

More people are thinking about starting a business than ever before. In fact, nearly 5.4 million businesses were started in 2021, so how much does it cost to start a business?

The answer is different for every business, but many small business owners spend less than $5,000 on startup costs. We’ve talked to a ton of small business owners about how to start a business and we’re going to share what we’ve learned from them.

We’ll break down the business startup costs into upfront costs, one-time costs, and recurring expenses for each type of business. Let’s look at how we classified each type of cost.

Typical business startup costs

We’ve broken down the startup costs into fixed costs and variable costs. We’ll discuss each below.

Fixed Costs

Fixed costs are business costs that do not change as sales increase. The following items are common startup costs that are fixed costs:

• Office Space (Recurring) : This includes both rent and utilities. Most small business owners start with home office space and deduct the percentage of space from their taxes as a small business cost.
• Legal Fees (Upfront) : These are recurring costs that you have to pay to run a business legally, which usually include business formation, business licensing, and other professional fees to comply with regulations.
• Software Costs (Upfront and Ongoing) : These business startup costs include payment processors, websites, CRM, accounting software, and more. You can find some that would be one-time costs, but most are recurring charges.
• Equipment Costs (Upfront) : This includes machinery, vehicles, and other costs to meet the mission critical aspects of the business.
• Insurance Costs (Upfront and Ongoing) : If your business requires insurance, make sure to keep it continuous. If it doesn’t, you may want to consider it anyway.

As time goes on, some businesses may find that a few fixed costs only remain fixed up to a certain volume. After that, they might see a drastic increase to add more volume and then it will become a fixed cost again. Adding a second service truck is one of the typical costs that work like this.

The other type of small business startup costs are variable costs, which we’ll discuss next.

Variable Costs

There are business costs that vary based on the volume the business does. These startup costs are called variable costs. Common startup costs in this category include:

• Shipping Costs (Variable Expense): Shipping costs are included in variable costs because you only pay for them if you order materials or ship products to a customer.
• Marketing Costs (Ongoing Costs) : The Small Business Administration suggests spending approximately 8% of desired revenue on marketing. The advertising costs seem to be one of the defining factors as to whether a business succeeds long term.
• Material Costs (Varies): The time and materials that go into offering a product or service will affect your revenue.
• Supplies and Packaging Costs: Items you use for running the business must be considered early in the game. This startup cost may include computers, cleaning supplies, business cards, packaging for products, and other items that help your business.
• Wages: Most wages will vary with the amount of business you have. You have to pay employees for their time regardless, but you’ll schedule less hours when you have less business.
• Unexpected Costs: You should always leave a little wiggle room for unforeseen events. I’d suggest at least a 10% slush fund for unexpected startup costs and operating costs.
• Other Costs: This is a catch all for spending you can forecast, but are not sure which cost categories to include them in.

Now that you know the costs we’ll be analyzing, let’s look at the average start-up costs for businesses.

How much does it cost to start a business?

I broke down the average costs of starting a business into four different classifications:

• Low Cost: start a business with a shoestring budget and figure out the ongoing expenses along the way.
• Average Cost: start a business with the money to cover the first year of organizational expenses.
• High Cost: business owners interested in the startup costs to guarantee they stay in business for five years.
• Franchise: business owners who want to buy a franchise.

H ow much does it cost to start a small business?

According to the Small Business Administration , one out of every four businesses start with less than $5,000, and over half of small businesses have startup costs of under $25,000. But the median is just over $24,000, and the weighted average would be between $72,000 and $276,000. 

How much does it cost to start an online business?

Online businesses are normally some of the lowest in cost to start. You can start most of them for under $1,000 without any educational expenses.They require a computer, internet, business licensing, and some software. Businesses in this category might include:

• E-commerce stores
• Graphic design
• YouTube content creators
• Virtual assistants
• Marketing agencies
• Software developers

When people ask “how much does it cost to start a business online?” search results will normally provide answers about ecommerce stores. We’ll discuss those next.

How much does it cost to start a t-shirt business?

T-shirt companies are fairly easy to start. For example, you can start with a $30 Shopify, some design software, and a print-on-demand provider. If you really want to make money on it, you have to get good at SEO and marketing, which will increase your costs.

Check out our interview with the owner of Urbanity to learn more:

How much does it cost to start a landscaping business?

We’ve interviewed multiple business owners who have started landscaping companies. It’s one of the easiest types of businesses to start. You can even start a business for as little as $300. 

The table below shows the breakdown of the business expenses a small business owner should expect when starting a landscaping business.

Check out our most recent YouTube video with a small business owner who started Plan-It Vision with only $300:

How much does it cost to start an eyelash business?

An eyelash business is one of the most commonly searched small businesses. To get started, you may need to go to cosmetology school. Many states require school , but some do not.  If you haven’t already gone to cosmetology school, starting a small business will cost more than $20,000. 

Most eyelash small businesses run as a combination of brick and mortar business and traveling to their client’s location. We’ve provided you with estimates of how much to expect startup expenses to cost based on the assumption you haven’t already gone to cosmetology school.

Subtract $20,000 from any of these numbers if you have already gone to school. I included legal fees and insurance costs in the low cost startup funding because you don’t want your new business to be slapped with a major fine for operating illegally.

H ow much does it cost to start a cleaning business?

Cleaning businesses are great for startups. You can even start your own business for as low as $300 if you just buy the cleaning supplies. Almost all the costs are variable expenses. 

However, you should get the business license and the insurance as soon as possible if you decide to get them after you get started. The ultra low cost way assumes you rent any equipment after booking a job that needs equipment.

Check out our interview with Christopher Mondragon below or sign up for our cleaning business course that covers pricing, business credit, Chris’s marketing scripts, and automation templates:

H ow much does it cost to start a jewelry business?

Many people enjoy doing arts and crafts like making jewelry. You can start a business out of this fun hobby for less than $100 and build your business as you grow. Premade findings are typically more economical, but creativity is often the joy of this type of business owner, so you might want to make your own pieces.

If you are trying to make gold and silver jewelry, you can expect the cost to be much higher. A troy ounce of gold varies based on market conditions, but has been between $1,000 and $2,000 over the last 15 years. It will only make about five to 16 rings, and you still have to have the tools to melt it. 

H ow much does it cost to start a storage unit business?

The answer to this isn’t particularly clear cut. If you are wanting to buy storage units that are selling people’s stuff to recoup the costs, you should plan to bring at least $500 to the auction. Then, hope you find a gem and recoup your investment.

If you are talking about building storage units and renting them out, you’ll need to:

• Buy land (acres range from $1,600 to millions, with an average of $12K over the continental U.S.
• Build storage space for $25 to $45 per square foot.
• Run the property for $2 to $4 per square foot of operating expenses. 

Check out Love to Know’s blog for more detailed information.

H ow much does it cost to start a food truck business?

You might be able to start a food truck for as low as $10K, but I’d expect to spend more like $20K to get started. You’ll probably need around $156K to make it through the first year and around $670,000 to make it through the first five years.

If you figure out a winning recipe, it can lead to a million dollar business, though.

Check out our video below to find out how Saied Samaiel makes more than $600K per year with his food truck:

H ow much does it cost to start a dropshipping business?

The cost of starting a dropshipping business can vary dramatically because you may have to design a product and purchase inventory. If you are using print-on-demand with dropshipping, it is often fairly cheap. 

Expect to spend at least $80 getting started, but if you are sourcing materials and manufacturing, it could be more than $30,000 to make your products. Through the course of a year, you might spend up to $180,000.

Check out our interview with Casey about how he created and dropships Shed Defender:

How much does it cost to start a candle business?

You can start a candle business for less than $200. The materials and a Shopify account are all you need to get started. The numbers below are from our interview with Jazmin who started the company in 2020 and is making more than $150K per year.

Check out our interview below:

How much does it cost to start a towing business?

A towing business can be started for under $10,000. It has special licensing requirements that raise the cost and most people don’t own a tow truck. You can typically make around $100,000 per truck––if you do it right. 

Check out our interview with a towing company business owner to learn more:

How much does it cost to start a painting business?

You should expect to spend $5,000+ to start a painting business because you’ll need a contractor’s license in most states to start a painting business. Contractors’ licenses have financial requirements that make them more expensive. States may require:

• Background checks
• Surety bonds
• Multiple years of experience 
• Licensing exams

How much does it cost to start a detailing business?

You can start a mobile detailing business for as little as $300, but you should probably expect the annual costs to approach $53K to really grow. That includes licensing, insurance, a vehicle, upgrading your website, and spending $2K per month on marketing. Check out the breakdown below:

H ow much does it cost to start a trucking business?

Trucking businesses will normally cost around $10,000 to start in-state or $20,000 for interstate operations, but you can expect to spend $100K to $250K per year to run a trucking business. 

Make sure the truck you buy is less than 10 years old because most companies require a newer vehicle when hiring you to haul their products.

Check out our interview with Mikael Sant. He averages $75K a month running Sant Lines LLC:

How much does it cost to start a taxi business?

Taxis are a dying business in most places. The business structure is antiquated. You have to register with your city’s transit authority, hire dispatch, and buy a bunch of taxis. We’ve provided an estimate for starting with five taxis running 24 hours a day.

If you already have a car, you can start driving for Uber or Lyft. All you have to do is get a business license, pass a background check, and have a current car inspection. You can run a successful business fairly easily. The startup costs for this kind of business is around $300.

How much does it cost to start a laundromat business?

Starting a laundromat can cost nearly $1 million to get started and about twice that over the first five years. The building, equipment, and utilities are most of the cost.

Check out our interview with Justin Pike of Ferndale Laundry:

How much does it cost to start a photography business?

You can start a photography business for as little as $500, which includes the price of the camera, a website, online photo gallery, and Adobe Photography Suite.

If you want to upgrade to a higher end business with better equipment and a good marketing budget, you should expect to spend around $45,000 the first year. It’s even higher if you want a good studio, however.

Check out our interview with a couple that started their own photography company:

How much does it cost to start a handyman business?

Most places require handymen to be licensed contractors, so you can get started for as low as $2,750 without risking violating laws, but you can expect to spend around $40,000 during the first year if you really want to do it right.

Check out our interview with Caleb to find out how he makes $125K per truck:

How much does it cost to start a soap business?

Soap businesses are fairly inexpensive to start. You could start making soap for under $100 and build from there. Successful business owners will spend nearly $70K in their first year of business to make around $200K. Check out the TruIC blog for the steps to start a soap business.

Small Business Owners Funding Resources

Now that you know the costs associated with starting a business, check out some of our resources for finding funding. 

• Business Credit : Check out our preferred lending partners to get small business loans or a business credit card.
• Business Hub : Learn how to start a business entity, get insurance, and estimate a company’s revenue in our hub .
• Small Business Administration : Get information from the SBA on grants, loans, and local business resources.
• Evaluate Funding Options : Whether you are using a personal savings account or looking for alternative funding methods, check out our funding blog .

What Type of Business Will You Start?

We’ve covered the typical expenses associated with the costs of starting a business. Now it’s time to examine your personal expenses and cash flow to cover the filing fee and other business costs.

Make sure to follow our YouTube channel and blog for more great information on how to start a business.

Which business do you think is a worthwhile investment? How will you manage the financial implications of starting a new business? 

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How Much Does a Business Plan Cost?

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on December 11, 2023

Are you dreading writing a business plan and feeling unqualified to do it yourself? If so, that’s totally normal. Writing a business plan is hard work! That’s why first-time business owners, not to mention experienced entrepreneurs, often hire professionals to do the job for them.  

The price of a business plan varies depending on a variety of factors, and this guide lays out all your options for creating the kind of excellent business plan your new venture deserves. 

Search online and you’ll quickly find business plan templates and software to guide you through the process. The main advantage of crafting your own business plan is that you’ll learn a great deal about your business as you do the work, including operations, management, financials, marketing and more.  

And that knowledge could prove to be the difference between success and failure. But if you do go this route, it’s wise to have a knowledgeable person review the plan for you and make sure it’s all good. If you’re not a writer, you also might want to have an editor go over it as well. 

This option will likely cost between $0 and $400, for travel, printing and materials. 

• Freelancers

Finding freelancers to write a business plan is another option. You can find them online and you’ll pay anywhere from $200 to $2,000, depending on the length and depth of the plan. At the lower end of that scale, you’ll do the vast majority of research and preparation, which you’ll then hand over to the freelancer to put it all together into a well written plan. 

At the higher end of that price range, you should be able to find freelancers who will do the research and deliver something like a professional business plan. But if you’re looking for venture capital, this is probably not the wisest route. 

• Consultants

A professional business plan firm or consultancy is likely to do a great job, but it will cost you a pretty penny – perhaps $10,000 or more. But you’ll also get a great deal of guidance when it comes to market research , strategy, and financials. You’ll work closely with the pros to structure and develop the plan and learn from their professional expertise. 

This route will give you a plan that you can present to any investor or lender, underscoring your seriousness and strongly making your business case. If you can’t afford this option, you could go the DIY route and have a professional review it and make recommendations, which would cost much less. 

• Which Option Should You Choose?

If you don’t expect to look for funding, the DIY route is a smart move as you’ll gain so much valuable knowledge. If you plan to apply for a business loan, you may want to go with a high-end freelancer, as you should end up with a relatively polished business plan that will suffice for lenders.

If you hope to attract investor capital, professional assistance is the best way to go. It will be costly, but it should turn out to be a worthwhile investment. 

Before you make your decision, be sure to look into what’s available in terms of local resources. You might have a small business development center in your area that can provide useful guidance or even review your business plan for free. 

Whichever route you choose, just be sure to do a business plan! You’ll need that roadmap to guide you; it could be the difference between failure and success. 

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• Category: Small Business Energy Savings
• Published: February 25, 2021
• Updated: June 5, 2024

How to Estimate Utility Costs for a Small Business

Managing business utilities and costs can be critical to maximizing your profit margin. Because utilities make up such a large portion of your overhead, how you manage expenses will impact your bottom line. Being able to predict your business utility bill and benchmarking against the typical utilities expense for a small business will help you in budgeting and business planning.

Whether your business is a startup or you’ve been in operation for years, it’s a good idea to get a handle on the average cost of utilities per month for your small business. The information will help you make decisions that improve energy efficiency throughout the year.

What is a business utility bill?

A business utility bill is a monthly statement of what your business owes to each utility—typically electricity, gas, water, sewage, trash and recycling, as well as communications and connectivity services like phone and internet. Each utility bills your business separately. Most business utility bills include your company name, a contact person, the address and your account number.

The typical business utility bill provides a measurement of service usage and your rate. It might show the current month and compare it to previous months. A business utility bill for electricity , for example, will indicate the kilowatt hours (kWh) your business used along with details on your rate.

You can usually go to the utility’s website or customer portal for a deeper dive into your small business’s utility usage, rates, terms and more.

What are some examples of business utilities?

To be effective with your budgeting, look at business utility examples and compare them to your specific situation. Some are energy-related, but not all. Small business utilities examples include the following:

• Electricity and natural gas. To keep the lights on, run computers and equipment and heat and cool your facility, you need electricity and possibly also natural gas service. Power is often the biggest expense of all business utilities. If your business is located in a state with a deregulated energy market , you can choose among providers and plans to find the best options for your small business.
• Water and sewer. For sanitation, washing up, drinking and cooking, water service is essential. While your business may have access to well water, most connect to municipal water services. Sewer service goes hand-in-hand with water service, as most businesses don’t use septic tanks.
• Garbage pickup. Trash hauling is another of the essential business utilities. Most businesses need regular service for pickup of paper and kitchen waste. You may need specialized service if your business produces bulky or potentially toxic waste.
• Internet. Nearly every business today needs to connect to the web. Many software products are now services in the cloud and email is an essential business communications tool. Access to websites and customer systems are also necessary.
• Phone. Your business may do just fine with cell phones, but many still need landlines with extensions to different people and departments with a key service unit (KSU), or to multiple locations via a private brand exchange (PBX). One alternative to landlines is a Voice over Internet Protocol (VoIP) or IP telephony service. In addition to connectivity, some phone utilities offer voicemail and other communications add-ons.

Understanding the average cost of utilities for a small business

The average utilities cost per month for a small business in a commercial building is $2.14 per square foot, according to the 2018 Office Experience Exchange Report . This is around $125-$1,605 per month in utilities, for 700-9,000 square feet of office space.

As of March 2024, the average cost of electricity in the U.S. for the commercial sector was 12.76 cents per kWH, up from 12.48 cents last year. The average commercial gas price in February 2024 was $10.06 per thousand cubic feet, which is a decrease from $11.97 last year. Your small business utility bill will depend on a number of factors, such as:

• Your location.
• The size of your space.
• The age and number of your appliances.
• The climate in your area.
• The building’s age and energy efficiency.
• Your industry and operational needs.

Lighting and HVAC systems tend to be the biggest power use factors for most small businesses. How much utilities cost for a business like yours will depend on your industry and the specific nature of your work. For instance, energy expenses for major appliances will be higher for a restaurant than a retailer, and a florist is bound to use more water than an accounting firm.

How to calculate utilities expense for a small business

In planning expenses for the coming year, you’ll need to know how to calculate the cost figures for each type of utility. Creating a utility cost calculator for your business is easier and more accurate if you’ve been operating for at least a year, because you’ll be able to use historical data specific to your business. Still, with some research, you can build a utilities estimator for a startup that will help with forecasting and planning. After you’ve been operating for a few months, you can adjust by using your own business utility bill data as input.

The following steps outline exactly how to do this.

1. Gather all your business utility bills

If you have an established business, gather your business utility bills together. Billing periods for each utility may differ. Electricity bills tend to come monthly, while water and sewer bills may be issued quarterly. Ideally, you’ll want at least a year’s worth so that you can capture the seasonal changes in cost. Having two years of bills for business utilities is even better, as it allows you to compare the same month or quarter versus a year ago.

Here’s a round-up of common business utilities to gather:

• Electricity bill. Your business electricity bill will include details about your rate, usage, fees and program details. Keep in mind that your usage may vary month-to-month and by time of day. It may be a good time to think about different options when it comes to plans, if your business is served in a deregulated, competitive market .
• Gas bill. In some areas, your electric and gas services are billed together, but are itemized separately on your bill. In other areas, you get two standalone bills.
• Business water bill. Your water bill is typically separate from other utility bills. Depending on where you live and local regulations, you might see different rate structures like a uniform rate every month, or seasonal rates that encourage conservation during certain months to curtail water usage during drought. Your water bill depends on your type of small business. An office-oriented company uses much less water than a food processing company, for example.
• Internet bill. Your internet bill covers the cost of your business’ connectivity to the web and may include various services, such as a unique email domain. Some companies bundle cable television, phone service and even security services along with your internet service.
• Phone bill for your business. If you don’t bundle phone service with your internet bill, you may get a standalone bill for your phone services and any add-ons.
• Trash and recycling bill. Small businesses’ trash and recycling can include common office trash but also bulky items, valuable metals and toxic materials that include an additional waste disposal surcharge.

What if you’re about to launch a business and don’t have utility bills yet?

If you’re still working on your business plan, you can put together a utility cost calculator by square foot, using publicly available average utility costs by type of utility and business.

You may be able to get cost estimates from utilities before you set up service. Some utilities, like garbage pick up, phone and internet, offer a standard package regardless of office size. Electricity and gas can generally be estimated by square footage. The former building owner or your real estate agent can potentially provide historical business utilities costs, as well.

Another option is to create a utility calculator by zip code, using publicly available data. For example, you can use utility averages by state from this Forbes article, but keep in mind that business energy rates can differ from residential rates. Constellation can give you energy rate comparisons via our website, when you enter your zip code .

2. Add your utility expenses together to find your total cost

Add all your bills, or estimated bills, for your chosen period of time. Special software can help with these calculations, but even basic spreadsheet apps can be effective. Beyond just arriving at a grand total of utility costs, you can also compare monthly, quarterly or seasonal totals to look for patterns.

For instance, if you’re interested in what the business utility costs may be for October as compared to January, you may notice a big difference in how much you are likely to spend on heating.

3. Compare your total utility expenses to your overall costs for the period

Once you’re satisfied with the quality of the data from the utility cost calculator for your business, the next step is to compare the grand total to your overall costs over the same period of time.

Your expense total will be the sum of your total utility expenses plus any remaining business costs, like office space, equipment, vehicles and fuel, payroll, advertising, insurance and other supplies and services.

Comparing those totals can put your utility expenses—especially your energy usage—in perspective. And if you’ve also created monthly, quarterly or seasonal subtotals of overall business costs, you can see the changing impact of your utility expenses over time and budget accordingly.

How to project energy costs vs. total operating expenses, before starting a new business

The U.S. Small Business Administration has several resources that can assist you in projecting operating expenses. Some figures, such as rent, insurance or fees for licenses or permits, will be fairly easy to obtain and plug into your calculations. For other, less cut-and-dry costs, such as payroll or marketing, it can help to reach out to similar businesses for input. Once you have your projected total operating expenses, you can examine how your startup’s projected utility costs stack up against them.

How to calculate your business’ utilities percentage

When examining the cost of utilities for your small business, the calculation should also show it as a percentage of overall costs. You can calculate the percentage of overall costs that are attributed to utilities using a simple online percentage calculator .

If you prefer to make this calculation yourself, follow these simple steps:

• Divide the utility costs by overall costs. You will get a decimal amount of less than 1.
• Multiply that decimal amount by 100 to get the percentage. You can round off as necessary.

For example, if your utility costs for last year were $30,000, and your total operating expenses were $300,000, then 10% of your total operating costs go toward utilities.

You’ve estimated the utility costs for your business—now what?

Congratulations! You now have a good idea of the impact your utility expenses have on your small business. This is valuable information to have as you budget for the coming year, specifically quarter-by-quarter and month-by-month.

You can also dig into that data to look for potential savings. For example, as you break down your energy price , you may realize that your energy plan isn’t working for you as well as it could, and decide to change your energy procurement strategy . Perhaps you’ve been making some common energy-wasting mistakes , like using older, inefficient lighting and appliances. Or you may see how changing your business hours or better preparing for winter and summer temperature extremes could reduce costs.

Why should you track your small business’ utility costs?

Knowing how to calculate the utilities for your business is useful for the purposes of annual planning. But actively tracking how much you spend on utilities, especially energy-related expenses, can also be valuable. There are many benefits of calculating utility costs regularly:

• Make your business more nimble. The sooner you know about changing costs, the sooner you can try to address them. For instance, if you see a spike in the number of kWh your business used in last month’s bill, you might be able to pinpoint the reason and take cost-cutting measures.
• Spur innovation. When you think about a challenge more often, solutions will come to mind more quickly. Many small business owners turn to smart technology to help with automation or monitoring their energy usage .
• Avoid paying for errors. Mistakes happen; even utilities make them on occasion. Paying attention to irregularities in your statements can help you get them corrected immediately and avoid potentially overpaying.
• React more quickly to rate hikes. If you’re just paying your bills without studying them, you may miss price changes that mean paying more money over a longer period of time than if you made an early decision to go with a more affordable competitor.

Once you know how to estimate the utility costs for your business, try to make it a regular habit. That information gives you valuable insight into your operating expenses in both the short and long terms.

The more you know about your costs, the more power you have to keep them under control—like reducing your business’s energy consumption —and ensure that you consistently turn a profit.

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More and more small businesses are upgrading their properties with smart, energy-efficient landscaping. Sustainability and energy efficiency have become important considerations when it comes to creating and maintaining outdoor spaces at a business.

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Incorporate these energy efficiency tips into your spring cleaning business practices to help your team transition from winter to warmer weather. Taking the time to clean, repair and freshen up is a great way to ensure your business runs well, ultimately saving you money and energy.

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How Much Does A Business Plan Writing Cost?

If you’re considering finding financing for your next business venture, a business plan is a crucial part of the application process. It will show potential lenders that you’ve done all the research and planning needed to make sure it’s successful, so they can rest assured knowing their investment in this new venture has good odds of turning into gold!

A business plan will cost you an average of $2,500, depending on the size of your company and the industry you’re in.  If you plan on writing your own business plan, there is software that can assist you for $20/month up to $300/month, depending on the software features and the amount of assistance you need.

You can choose to use a business plan writer that will cost you anywhere from $1,000 to $3,000 depending on their expertise and how in-depth you need your business plan to be.

Another option is to use a consultant company to create your business plan. The price for this will be from $5,000 to $15,000, depending on how many layers your organization will have and the amount of groundwork required to execute your plan.

Average Cost of Business Plan Consultants

How Much Does Business Software Cost?

There is a couple of free business plan software that makes it easy to write a business plan. However, while this tool is quite detailed and has the instructions on how to fill out the plans, they are quite basic in design.

If you want a business plan software that has a professionally designed layout and color charts for financials, you can buy the software. Many business plan software packages include teaching components and several template pages in case you get stuck on a section. The package may also include features that calculate growth and sales projections based on real figures. A business plan software such as Palo Alto Software offers a variety of features and offers a monthly fee of $20 per month.

This software allows you to write over 500 sample business plans and over 9,000 industry profiles that to support your plan. The software not only helps compile data, research, and write the actual business plans; they also offer a dashboard for monitoring your business health. You can also track financial data, along with your sales goals and budget, so that you can make the necessary adjustments.

Should You Write It Yourself? 

The cheapest way to get a business plan is to compose it yourself. Maybe you think you don’t need a consultant or software for writing a business plan. If you are looking to seek a capital investment of less than $200,000, you may want to consider writing the business plan yourself after reading some books or taking a class, or getting coaching from someone who has written successful business plans.

You should consider taking a business planning class through Small Business Association (SBA) or SCORE. Even if you decide not to write your own plan, you can get a much better idea of what you want out of a business plan and what to expect.

One of the most important jobs of an entrepreneur is time management and performing the task they are best skilled for. Many businesses decide to use software or hire a consultant to do their business plans, mostly because they can’t afford the learning curve to be able to create an in-depth business plan that will meet the needs of investors or lenders.

Some of the reasons to consider hiring a business plan consultant include:

• Business planning is completed much faster with a professional who knows the process. Every entrepreneur’s intention is to get plans completed, but several months later, they still haven’t done the work. Business planning work should be a high priority, but it’s quite difficult to get to it when you have a more pressing matter at hand. The sooner you complete the plan, the sooner you can start getting funds for your business. Overall, the price of hiring a consultant may be small.
• With a professional business plan consultant, your project will be completed in a way investors and lenders will respect. Business consultants understand how finance people look at plans and what they would love to see and what to play down to get the funding your business needs.
• Business consultants offer objectivity that will allow for unbiased projections and expectations for your business. They will be much more objective in the process, which will less likely make it that your business will have problems after receiving funding.

However, if you are looking to keep start-up costs as low as possible and ready to do some of the initial leg work, you can opt for a business plan software. The reason to use a business plan software include:

• Well-made business plan software can use the raw substance of your ideas and organize them into a standard plan template.
• Business software offers the ability to customize the appearance of your plan and use terms particular to your business.
• Business plan software breaks down highly complex processes in steps that are easy to understand.
• The software can do a better job at protecting your data than you would on your own because most business software has a cybersecurity firm that manages all of their client’s data.

All the options listed above are good, but if you are trying to decide on the best, you have to determine your need for the business plan and the amount you can afford to spend on the plan. Of course, you don’t have to choose just one of these options.

Why Use A Writing Service?

There are many reasons why people decide to outsource their business plan to a writing company or consultant, including lack of time or writing skills. 

It can also be a way to help your company get started the right way by getting the knowledge and insight from someone that has been in business for years.

If you are unsure what path is right for you, the following information will be sure to help! We will explore what goes into a business plan and how much it costs to create one. Let’s get started!

If your business plan looks as if it is going to be more complex, you may want to hire a business consultant professional consultant to do the job for you. The business consultants will be able to ask you questions about your business and guide your thinking so that you can create a comprehensive and well-detailed business plan that best meets your needs.

For instance, Ground Floor Partners, professional business growth consultants, quote their charges for business consultancies as ranging from $5,000 to $20,000, depending on the complexity of the business project.

These figures are usually based on their hourly rate, and some other special services may be included. Companies like Thumbtack also match entrepreneurs with business plan professionals, and the average rate for a business plan consultancy service ranges from $70 to $120 per hour. They will not only write the business plans but also review plans and make recommendations based on the completed work.

Software That Helps Write a Business Plan

There are also many apps and software that can assist you with writing a business plan on your own. Apps such as Business Plan Pro For Windows can help you write professional business plans for low monthly charges!

These apps will run you anywhere from $20 per month to $300 per month.  

The cost of the app will largely depend on the level of assistance you need and the software features. Apps can be a great way to help you create an effective business plan without needing to hire a professional, but they’re not 100% done for you.

Apps have disadvantages as well. One drawback is that you have to sign up for a subscription most of the time, which isn’t necessarily saving you much more than just hiring someone to create your business plan.

Another is that some apps are restricted by geographical location or do not offer free trials for their products.   

Also, if you are looking for detailed guidance with your business plan creation, then you might be better off hiring a professional service.

If you’re unsure of your future goals and aren’t sure how you want to operate your business yet, then hiring a professional may be in your best interest.

There are also many other benefits to hiring a professional, such as having someone that can hold you accountable for your goals, writing a clear and concise plan, and seeing the bigger picture.

Why Do I Need A Business Plan?

A business plan lays out the foundation of a company and acts as a road map for its future. Businesses often develop a general or high-level business plan early on during their start-up phase.

They may also create more detailed plans that include supplemental information such as marketing strategies and sales forecasts depending on how funding is needed and the stage of company growth.

To effectively plan for the future of a business, companies typically research their market and competitors while identifying objectives and goals.

A company may also use past performance to determine industry trends. The information collected is then formulated into a practical blueprint for growth that can be used to make informed decisions in day-to-day operations and long-term strategies.

Now that you know how you want to create a business plan, let’s discuss what you can use a business plan for. A business plan can be used in many different ways by different people.

One of the most common uses is when trying to apply for a loan, but that’s not all a business plan can come in handy for. Business plans are also good to have when seeking out new clients. It shows them how much time and effort you have put into your business and how successful you hope it will become.

When To Write A Business Plan

If you are thinking of starting a new business or if you are going to be applying for a business loan, an excellent place to start would be the creation of a business plan.

If you are applying for a loan, you must have a solid business plan according to the bank’s requirements.

Most banks require that any new business have access to at least three years of financial information to establish credit.

Once you have established this track record, you will be able to take out loans and venture capital when starting new businesses or expanding your company.

It is also essential to have a business plan if you want to go into business with somebody.

You can draft a partnership agreement that may include future plans for the business or salary for each business owner. A business plan should also be a requirement if you are looking to expand your company overseas.

You can use your business plan to attract investors overseas and provide them with information about what they will be gaining from the deal. This plan will also give you a route to follow to turn your business dream into a reality.

Types of Business Plans

There are different types of business plans that you can draft depending on the goal you want to achieve.

A business plan will typically be broken down into two or three different types: a startup plan, a long-term strategic plan, and a marketing plan. Here is one way to break them down:

Startup Plan

The first plan that a new business will draft. This plan is a high-level overview of a company and how it intends to run.

This type of plan may include details about your objectives, goals, significant milestones, sources of funding for the business, and your marketing strategy.

This type can be created by the individual founder(s) or outsourced to a business plan writing service to draft the plan for you.

Long-Term Strategic Plan

In this case, companies need to have a solid foundation to work from.

This plan is more detailed than the startup plan and will usually be created by a consulting firm. 

It focuses on how a company can grow and what it needs to do to meet its objectives.

This type of plan will often outline deadlines, budgets, product or service roll-out strategies, staffing levels required for each department, and revenue projections.

Marketing Plan

The marketing plan is more of a supplemental document that is used to complement the business plan.

Companies typically use this type of document when looking for funding or trying to sell their product/service.

This document will often include market trends, sales strategies, advertising and promotions plans, pricing strategies, and marketing campaigns.

Depending on the types of funding being sought out, a company may decide a consultant or professional writing service is their best option to have a better chance at securing funding.

What Should Be In My Business Plan?

If you are wondering what should be in a business plan, several components make one complete.  We will outline what elements your business plan will need to contain to be a complete and actionable plan.

Executive Summary

The first thing that is included in your business plan is the executive summary. This part of your business plan serves as its introductory statement, so you want it to be catchy enough for someone to read on.

One effective technique for an executive summary is using a customer story or success story.  This helps establish yourself as more credible because investors like companies that have proven success.

Product Or Service

This is probably the most important and most time-consuming aspect of your business plan. You need to demonstrate that you have a product or service that people will actually want and pay for.   

If your product or service does not solve a problem, no one will use it. Make sure you list what problems your company solves clearly and concisely so potential investors know exactly why they should do business with you.

Market Analysis & Financial Plan

Next, you will go into more detail on how much money you will make off of this venture within the next few years.  You must put together both an income statement and a cash flow projection for this portion of your business plan.   

In addition to the financial plan, you should also include how much money you need to start and run your business for a certain amount of time.   

Capacity And Order Quantities

This heading will discuss the number of units that can be produced or supplied by your factory or other sources, as well as the number of customers you can serve.   

By going into detail about your capacity and order quantities, potential investors and buyers will be able to know what type of revenue they could potentially expect from your company in a given amount of time.

The next aspect that should be included in your business plan is an effective marketing strategy. Your marketing plan is essentially your sales strategy, so this section needs to be strong for you to get the amount of revenue you want out of your business venture.   

You should also include information like how much money you will spend on marketing tools and where that money will come from.  

Physical Location And Facilities

This section will discuss what type of physical location or facilities your company will need to operate effectively and how much it will cost you.

If you do not have the necessary space or facilities for running your business already, you will need to explore options like buying or leasing commercial office space.

Management Team

The next aspect of your business plan is an overview of how capable your team is. If you are new to running a business or lack depth in certain areas, it may be wise to hire a management team. If this is the case, make sure to include what types of skills your managers have.

Financial Responsibility

This part will give a quick rundown on who is responsible for all of your finances and how you plan on dividing responsibilities between yourself and your employees.  

Be as transparent as possible and show how much everyone is expected to contribute financially to the venture.   

The next part of your business plan discusses the long-term goals or benefits you expect this business will bring you and your partners.  

Do not forget to include your vision of where your company will be in five years, as well as how it will positively affect your life. 

Start Your Dream Business

As you can see, creating a business plan does not have to be complicated or expensive. You may use an app, website, or consulting company to create your plan and do not need to do everything yourself.

However, if you are looking for the best results, it is wise that you hire either a business plan writer or consulting company. They have the experience and knowledge needed to create a professional and successful business plan.

In addition, they will be able to create a well-organized and complete plan while you work on building your dream company!

Brent McOlson is not your typical small business owner. He's a seasoned entrepreneur and a true maestro in the intricate world of business operations. With a remarkable career spanning over two decades, Brent has amassed a treasure trove of experience and expertise that has been instrumental in the success... Read More

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How Much Do Business Plan Writers Cost?

When you’re starting or growing a business, it’s important to have a clear plan in place. Writing a business plan can help you outline your goals and sales strategies, and it can be a valuable tool when seeking funding from potential investors such as venture capitalists or a bank loan. 

If you don’t have time to write your own business plan, or if you need help getting started, professional business plan writing services can be a great option. But, how much do these services cost? And is it worth the investment? Let’s take a closer look.

How Much Should I Pay For a Business Plan Writing Service?

Professional business plan writers and consultants generally charge between $2,000 and $25,000. However, the cost largely depends on the required quality of your plan, the complexity of your business plan, and the length of the document. Professional business plans for very small companies may only require a few thousand dollars to be written, while more complex business plans for larger, growing companies can easily cost over ten thousand dollars.

There are also private consultants who will write or edit your business plan on an hourly fee basis. Fees can range from $50 to $300 per hour or more, depending on the consultant and the complexity of your business plan.

Whoever you choose to get started with your business plan, be sure to consider what’s included in your service. At the very least, you should expect:

• Comprehensive business plan including an executive summary, market analysis, marketing plan, financial plan with 3-5 years of financial projections, and other essential components required by potential investors
• Customization based on your business model and specific to your business needs
• Well-researched business plan based on relevant industry information and a thorough competitive analysis

There are several companies out there that offer complete business plan writing services. However, the quality of their work can vary dramatically. If you’re considering hiring outside help to write your business plan, choose carefully.

It’s important to remember that you get what you pay for when it comes to these types of services. If you go with a cheap plan writer, you run the risk of ending up with a low-quality business plan. If your business plan isn’t strong and professional-looking, it may be harder for you to get funding or attract investors.

Looking for a Business Plan Writer?

You’ve come to the right place!  Since Growthink was founded in 1999, we have provided business plan writing services for thousands of clients including startups, small business owners, nonprofit organizations and mid to large-sized companies. 

We understand that writing a business plan can be a time-consuming process for many entrepreneurs.  Hiring a business plan writer will allow you to quickly and expertly create a custom business plan.

 Expert Team of Business Plan Writers

 Fully Customized Business Plans

 Market & Competitor Research

 Complete Financial Projections

 Strategic Consulting For Growth & Funding

Get Started Now!

Call us at (800) 216-3710 or complete the form below and one of our business plan writers will reach out to you to schedule a time to speak about your business plan needs.

You can learn more about our business plan consulting services here

What Factors Impact Business Plan Pricing?

Some things that impact business planning services pricing include:

• Length – Longer, more complex business plans will cost more than shorter business plans.
• Company Size – A business plan for a large or complicated company can be more expensive to write.
• Level of Expertise – Smaller companies may opt to hire less experienced writers who charge lower prices, while larger, well-established companies choose to work with high-quality professionals who charge higher rates. You can’t expect a less experienced writer to help you achieve your goals (funding, growth) for your business plan.
• Turnaround Time – Generally, shorter turnaround times mean increased prices. Typically it will take 3-4 weeks to write a quality business plan.
• Additional Services – Some companies offer additional services, such as business plan presentation and pitch deck editing and support. These can cost extra.

To really get your business off the ground, it’s important to have a business plan in place that has been written by someone with the expertise to put together a successful business plan. A professional business plan consultant is an excellent investment for increasing your chances of securing the funds you need to start and/or grow your business. However, it’s important to do your research and choose carefully when you’re ready to hire.

Who Can I Hire To Write My Business Plan?

When choosing a business plan writer or consulting firm, it’s important to look for a company with significant business experience and proven expertise in business plan development. Look for companies that have been around for at least five years and do business plan writing on a regular basis. They should also be able to provide references from other companies that they’ve worked with.

A Business Plan Writing Company or Consultant

When hiring a business plan writing service , you’ll have two primary options. You can opt to work with a single writer or a dedicated team of experts who will be responsible for the entire project. The price of the service may vary depending on which option you choose.

A business plan writer typically costs less than an entire team, but it’s important to keep in mind that you may have less control over the outcome. The upside is that your business plan will be written by an expert with a deep understanding of the writing process.

When choosing this route, you should ask for references and examples of previous work. Before hiring any business plan writer, be sure they have the proper credentials and experience to meet your needs. You should also ask about any fees associated with revisions or updates.

Many businesses choose to work with a business plan consulting firm that offers a collaborative team of experts. This type of company will give you the best of both worlds. You’ll be able to utilize the knowledge and expertise of all the experts involved in the project, while still retaining control over the direction and vision of your business plan.

If you’re trying to determine how much it will cost to work with a business plan writing service, take some time to explore all of your options before making a final decision. You should consider both pricing models as well as the qualifications offered by the various service providers in your area. Doing so will ensure you find the most qualified choice for your business planning needs.

You Can Write It Yourself

If you are a newer entrepreneur or business owner or you are trying to save money, there are several free resources available online to help you write your business plan. The Small Business Administration (SBA) and your local Chamber of Commerce offer business plan services, workshops, or courses that can help you get started. Using a business plan template is a great way to quickly and easily complete your plan, especially if you are unfamiliar with the business planning process.

Some business owners are comfortable writing business plans without any outside help. This option offers you complete control over the process, but it typically takes more time than you have to spare. For that reason, not writing your own plan is usually recommended for experienced business owners, even those with plenty of business plan writing experience.

In most cases, experienced business owners who write their own business plans will have a better idea of what elements are needed and how they should be presented. However, it can still take considerable time to compile all the necessary information into a cohesive business plan that meets your audience’s needs. And it’s one thing to write a business plan; it’s another to write a business plan that gets investors or lenders to write you a large funding check.

A Combination of Business Planning Services

If your budget doesn’t allow you to hire a comprehensive business plan service, combining outside services with writing your own business plan may be the best option. This approach gives you complete control over the process, while still allowing you to benefit from an expert business plan writer’s advice. It is also a great option for entrepreneurs who don’t have time to write their plan but aren’t quite ready to hire someone else to do it either.

Other business services that could help you include:

• Market Research – Conducting thorough market research can help you determine which business opportunities are viable. Experienced consultants can help you identify your target customer so you can design the right marketing strategy to reach them.
• Copywriting Assistance – Many entrepreneurs have a great product or idea, but lack the writing skills needed to effectively advertise it in their business plans or online marketing materials. A business plan copywriter can help you create a compelling marketing message that resonates with your target audience.
• Startup / Growth Opportunities – If you’re thinking about starting a business or expanding your established business, it’s important to consider all of the potential opportunities before diving into something that may not be feasible for your current situation. A business plan consultant can help you identify what makes your business idea unique and how you can capitalize on those opportunities.
• Business Plan Review – Once you’ve completed your business plan, it’s important to have it reviewed by an expert. They can identify any gaps or mistakes in logic that could affect how potential lenders or investors perceive your business idea.

As with any decision affecting your company’s future, you should take the time to explore all of your options before committing to a specific service provider. The goal is not only to find the best fit for your budget and needs but also to find a business plan consulting service that can meet your expectations and deliver quality content on time and within budget.

Is It Worth It To Use a Professional Business Plan Writing Service?

As with anything else, you’ll get what you pay for. If you are short on time or don’t have the writing skills required to write a business plan, it may be worth considering a professional writing service. These services can help you complete the necessary research and planning to get a comprehensive business plan written for your company.

How Growthink Can Help Your Business

Since 1999, Growthink has developed thousands of business plans for entrepreneurs and business owners to start and/or grow their businesses. From small business owners to Fortune 500 companies, we have provided a variety of business plan services to meet the needs of each client.

Our business planning services include:

• Business Plan Consultants – Our experienced business plan consulting team has helped numerous businesses from small businesses to multi-million dollar corporations identify new opportunities and develop their business plans using existing information where possible, or by conducting new research as needed.
• Business Plan Writing Services – Our business plan writers are experienced professionals who are committed to providing you with a business plan that delivers results. Depending on your needs, our business writers can either help you complete the research and writing process, or write your business plan for you from start to finish.
• Done For You Market Research – Our market research team can conduct independent market research for your business through access to several market research databases. Utilize this research to help you write a business plan that is more in-depth and gives you a distinct advantage over competitors in your industry.
• Private Placement Memorandums – Growthink’s experienced business consultants can help you prepare a private placement memorandum (PPM) that is tailored to the unique needs of your business. PPMs are used to help businesses raise capital from accredited investors.
• Growthink’s Ultimate Business Plan Template – Our simple business plan template is available in MS Word and when completed can be sent to investors and lenders in Adobe PDF format. Use this business plan template to help you focus your business concept on the information that is most relevant for lenders and investors, while also providing a flexible foundation for future growth.
• Business Plan Writing Help Center – We have a wide variety of free resources for business planning on our website. Use our selection of 200+ business plan examples to help you write a business plan specific to your industry or learn more from our selection of business planning and funding articles.

No matter what product or service you choose, we wish you success in your business venture

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How Much Does It Cost to Write a Business Plan?

Published Aug.27, 2020

Updated Apr.23, 2024

By: Shawn Jensen

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Experienced and aspiring entrepreneurs often ask about the business plan cost  plantation , “ how much does a professional business plan cost ?” Well, the answer is not as cut and dry as you would think. The business plan writing services cost  varies greatly depending on the type of program you are seeking. Some plans are quite straightforward and require no more than a single financial worksheet.

On the other hand, how much does a professional business plan writing services cost  can of more than fifty pages and have financial projections for several years? It would be best to decide the type of program your organization needs to determine the business plan writing services cost .

You may come across tons of people who write their business plans without assistance. They do so to save money and to ensure the program matches their preferred timeline. However, acquiring expert help could be an excellent long-term investment. Why? Because people skilled in creating business plans know the ins, outs, and technicalities of making a foolproof professional business plan cost, ensuring it contains all the necessary details and depth to execute your program the right way.

What Does the Price Depend on?

You might be asking yourself, “what does the cost of a business plan ?”. As mentioned earlier, the business plan cost liest varies significantly depending on who is writing it. Every business needs a comprehensive plan to get started. Almost every program differs in detail, length, style, dimension, and industry – these are essential elements that make up a cost of a business plan .

For example, a staffing agency generally requires thorough recruitment strategies in their business plans, especially when compared to a single operator and owner businesses like financial planning. Individual variations play a critical role in determining a plan’s price. The more details, research, and time a program requires, the higher its price could get. Let us look at some other factors that impact a business plan’s price:

• Are you planning to choose a service provider ( auditor, lawyer, tax accountant) or a professional business plan consultant to create your program? Of course, the fee will be higher if the consultant has more skills and experience.
• Quality requirements also play a massive role in deciding the plan’s price a semi-professional business plan writing services cost  less than a seasoned pro.
• When deciding the price, business plan writing services cost factor in the program’s difficulty level (location, capitalization, turnaround plans, continuation type of organizational activities, etc.) when deciding the price.
• Some entrepreneurs request special requirements (specific evaluation procedures, additional items, etc.) in their business plan. These aspects increase the program’s price.
• Your business plan cost could be higher if you ask for additional consultation (marketing consulting, calculation consulting, coaching the founders, etc.)

Typical Cost of a Business Plan

As discussed earlier, how much does a professional business plan costs differ between the degrees of difficulty and length and service providers? However, if you are snooping for typical rates, it would help to know that these prices could be as low as $500 and as high as $15,000. Some agencies and solo plan creators even charge higher, especially if your business program is complex.

Hiring a traditional consulting service to write your company’s business plan cost   would be the best choice and make the most sense. Why? Because while hiring someone to create a business plan might be business plan cost ly, it will benefit your company in the long run. With your operations and procedures aligned, your organization will become a profit-generating machine, thanks to a well thought out and professionally made plan.

Remember, consultation and the scope of your work play a critical role in determining a plan’s price, so it would be best to keep these elements in mind before hiring someone to write the plan. Some consultants also charge fees by the hour, and you’d be shocked to learn that the business plans for some corporations can business plan writing services cost  anywhere between twenty-five to fifty thousand dollars.

However, if you are a small business owner, there is no need to worry as you will find a service or consultant within the budget of your business plan preparation fees.

Formatting of Professional Business Plan

Fortunately, there is no wrong or right way to create a business plan. The needs of your business take center stage no matter how your format your company’s plan. Most business programs fall into the following categories:

Traditional Plans

These business plan types are quite popular. They utilize a standard structure encouraging you to provide details about essential sections of your organization. The most traditional business plan cost of a business plan  contains dozens of detailed pages and require more time to prepare.

A traditional business plan might be suitable if you want to focus on details and create a comprehensive program. You don’t have to stick to a particular outline when creating a traditional business plan. However, it would be best if you discuss the following elements:

• Executive summary (include a mission statement, service or product details, information about the company and its employees)
• Description of the company
• Market analysis (discuss the target market and industry outlook with authentic stats and research)
• Management and organization (explain your business’s legal structure and the people responsible for running it)
• Product or service line
• Sales and marketing (talk about how your strategies will achieve sales goals and how you will market your product)
• Request for funding (outline your organization’s funding requirements by explaining why you need it and how you will return it)
• Financial projections (use this section to convince readers that your company will succeed financially)
• Appendix (provide requested documents and materials like permits, legal documents, patents, licenses, letters of reference, product pictures, credit history, etc.)

Lean Startup Plans

Lean startup plans are not as common as traditional business plans. However, their structure is also pretty standard. They only summarize the most critical points of your program and require minimal preparation time (an hour or two maximum.) Some lean startup plans even end within one page.

People looking to start or explain their business quickly should use these plans. They are incredibly flexible and can describe your company’s value proposition, finances, customers, and infrastructure through straightforward charts. Here is a list of things you must incorporate in your lean startup plan:

• Partnerships
• Key activities
• Resources (assets, intellectual property, staff)
• Value proposition
• Relationship with customers
• Customer segments (describe your specific target audience)
• Communication channels
• Cost structure
• Revenue streams ( how you plan to make money)

Are you an aspiring entrepreneur looking for professional business plan writing services cost ? Look no further than OGS Capital ! We have been developing business plans for large and small organizations for a while, providing strategic guidance and advice to improve profitability. Get in touch with us, and our highly experienced team will help create a unique plan tailored for your business’s goals and aspirations.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Business Advisor

How much does a business consultant cost: consulting fees and pricing structure.

Consulting fees and pricing can be structured in several ways. But like most businesses offering services, the number one challenge is pricing their offers.

Having closed my first consulting contract back in 2008 before launching several 7-figure businesses (along my business advisory ), I’ve consulted over 400 clients and worked with 50+ consultants across the portfolio of companies I manage with my agency and within my investment companies.

Pricing products is easier than pricing services because, with products, you can easily trace the production costs. However, with services, determining the value of what constitutes your services — time, staff, expertise  — is highly subjective. 

This is why different consultants employ different techniques to ensure they price their services appropriately. In the process, consultants consider every factor necessary to ensure they do not overcharge or undercharge. Otherwise, the risk of losing clients over pricing remains a constant possibility.

So – how much do consultants make?

Different Consulting Fees and Pricing Structures

According to a study conducted by Consulting Success , the following statistics show how most consultants structure the pricing for their consulting services.

• 31.37% of consultants use a project-based rate to price their projects.
• 23.38% of them use hourly billing
• 17.30% use value-based fees
• 15.40% use monthly retainers
• 12.55% of consultants charge daily

Two factors come into play when consultants determine the value of their advice or service and set their fee structures and these are the following:

• What is the cost associated with the service that would make it worthwhile for the consultant?
• What are clients willing to pay for the advice (forecasted ROI)?

Some of the highest-charging consulting firms include the following:

• McKinsey & Company
• Boston Consulting Group
• Bain & Company
• Strategy&
• Roland Berger
• A.T. Kearney

Most of these consulting firms consider their fee structure as a vital competitive asset that they rarely reveal to non-clients which makes it difficult to benchmark rates of other consultants.

And companies like McKinsey charge anywhere between $300 and $800 per hour (broadly) while most projects start at $500K or over. Individual consultants would charge a multiple for smaller projects (let alone one-off calls) if these are allowed in their contracts.

The largest group of consultants that comprise the market are the self-employed or independent ones and they usually charge depending on what they feel they are worth especially since there is usually no ceiling to their rates, particularly for those in the private sector.

1. Hourly or Daily Rate

Charging by the hour is a time-based arrangement. You only charge by the number of hours worked. 

How do consultants determine their hourly rate?

Often, when consultants charge by the hour, they base their pay on how much they were getting from the company they used to work for or still work for on an hourly basis, with a little markup.

According to SBA , the hourly rate is taken from dividing the former salary by 52 work weeks and then dividing that number by 40 or the number of regular work hours in a week.

Next, consultants must check with their competitors to ensure that the markup does not go beyond 25-30 percent.

New consultants undercharge to build a portfolio so you would expect to get great deals from working with one. Although the fees could vary primarily depending on the location among other factors.

The daily rate is basically derived from a consultant’s hourly rate multiplied by the number of hours per day that a consultant is expected to be available for work.

Most consultants prefer to charge this way since clients are usually used to hiring services on a daily basis to avoid limitations on the scope of work which usually happens if you charge by the hour.

Clients are often more comfortable with an hourly or daily rate because they could assess every now and then the need for consulting services without the complications of most long-term agreements.

I am available for WordPress consulting and business growth strategies via Clarity so you can schedule a 15-minute call to unblock the challenges you’ve been struggling with.

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2. Project-Based

High-level consultants usually charge per project due to the demands of the job that includes strategic planning and management advisory. This is a common strategy if you start as an independent consultant.

The rate is determined by estimating how much time will be spent on a project. Most projects require several stages such as the following:

• implementation

Clients may not have active participation in all of those stages but they are certainly part of the consultant’s job thus necessary in estimating project costs. A reliable consultant will assure you that there will be no hidden charges from start to finish.

3. Monthly Retainer

There are cases wherein a consultant’s services are needed on an ongoing basis. In such cases, a retainer agreement is more appropriate.

Some examples of consultants who render services on a recurring basis are legal consultants, IT consultants, and even financial consultants. You pay a retainer fee in advance to ensure that your consultant will be available anytime you need advisory or assistance.

Hiring consultants on a monthly retainer guarantees that you have help whenever you need it, especially if you are working with high-value consulting firms.

I offer an advisory retainer priced at $1,800/mo available on the Community page . If you’re just starting with your career as a business consultant, I’ve crafted a 4-week email course to help you land your first 3 consultancy clients .

Retainer fees are normally calculated the same as project rates, but putting a consultant on a monthly retainer may get you a discounted rate. Monthly retainers guarantee a consultant a regular income stream without spending on additional sales and marketing costs for securing a project with you. 

You can take advantage of this kind of deal once you have tested a consultant after a month or two, or once you have already covered the entire scope of the project. That said, some consultants are only available for retainer arrangements – given the fact there is the initial investment in exploring the business and its needs, a long-term commitment may be necessary.

How Much Should I Pay a Business Consultant?

As a rule of thumb, some consultants simply take the hourly wage (plus benefits) that they would earn when working on salary for someone else and double or in most cases triple that amount. So for example, if you want to hire a business strategist who makes $150 per hour for longer-term projects, he would charge you between $300 – $1,000 per hour for their services.

Higher profile coaches and strategists can be found on networks like Intro. Sahil Bloom can be booked for $5,000/hour if you’re determined to work with him.

Of course, there are different ways to price the arrangement. One-off calls are often more expensive since there’s back-and-forth and the total amount isn’t too exciting for most consultants. So hourly calls at $500 or so aren’t rare either, even for less skilled consultants.

The reason why many of them charge within the $250 – $500 hourly range is the prospect of expanding a call into a long-term contract, thus the discounted rate. I’ve met a handful of VPs and C-level executives making $500K – $1M+ a year and offering calls for $200/hr as an opportunity for strategic networking and business relationships.

The best option you have is to pay based on the value that the consultant brings your business, not just the time he spares or the materials he gives you. 

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Would you pay a flat fee of $50,000 per month? Imagine that this consultant helps you bring 10% more new sales leads and nurtures a profit increase of $500,000. Then paying that price is absolutely a win-win scenario. But if at the same time, you are paying $3,000 per month for 10 consulting hours and brainstorming sessions with no beneficial outcome, then this is not the value you are looking for.

This is why fractional CXOs often charge monthly retainers instead – distributing their time in the most meaningful way to the business.

Finding the right fit for your business might be extremely hard as navigating through the consulting landscape is very challenging when you don’t have a reliable reference or enough budget for a top industry guru. Check out my lengthy guide on how to find and evaluate a consultant that would help you scale your business.

Factors in Determining Consulting Fees and Pricing Structures

I have discussed pricing with 40+ other business consultants in my network and what I’ve gathered is an estimation based on the following factors :

• Market averages . How much do other consultants charge on average?
• Expected duration of a consulting project. Comparing one-off calls vs. monthly packages or longer sessions lasting for several days at a time.
• Projected business value . What is the consultant’s expected ROI based on the target audience of the consultant? SMB consultants often charge less because the impact is higher as a percentage but lower as a total amount.
• Business package perks . Are there other opportunities you can leverage as part of your deal with a consultant? Brand recognition or connections help a lot.
• Own self-worth . What would the consultant’s efforts result in had he spent the same time on other business/other activities? The best consultants run their own businesses or present at keynote talks worth $50K and more.
• Industry expertise . How well does a consultant understand a specific industry/niche where you are struggling with?

Let’s discuss further each of these factors in the following sections.

A. Market Rates

The market rate refers to the market’s average price or what the customers usually pay for certain products or services. While this does not serve as a mandatory ceiling on your prices, determining the market rate is crucial in structuring consulting fees. 

Across my network, the average consulting fee is between $150 and $1,000 per hour.

The lower amounts usually suggest longer iterations, i.e. booking at least several days for a coaching plan, a training course, or a monthly consulting retainer.

Or working with small businesses in a consulting and implementation capacity, i.e. marketing campaigns, helping out with recruitment, general high-end strategy.

For example, I charge $600/hr for one-off consulting sessions and $300/hr for monthly plans or larger packages. As a fractional CXO, this could go as low as $180/hr for ongoing engagements that also retain DevriX as a vendor. This offers extended value for me where my consultancy and my agency play together, optimize for efficiency, and hedge the risk across both businesses.

B. Consulting Engagement

As indicated above, the type of relationship would dictate the rate since the longer the plan, the larger the final amount, the less time spent on discovery or presales, and better financial planning in the long run.

Some of my peers sell one-time consulting calls and then upsell their other services through their agencies or partners.

Others have a minimum cap of “one day” or some other arbitrary amount of work they feel as a minimum requirement to get a job done. This may include other factors like commuting or conducting video training for in-house departments.

According to The B2B Marketer, there are usually two types of consulting engagement and these are the Project and Service.

The project type of consulting engagement is usually non-recurring, while the service type is recurring.

C. Projected ROI

The services the consultants render are tied to some expectations in terms of return on investment.

If a consultant charges X/hr for implementation work, it’s getting harder to keep a premium rate that is comparable to the work of a senior developer/ marketer /recruiter.

Professional business consultants often focus on strategy and direction, navigating the work of larger departments, analyzing metrics and the existing roadmap, identifying monetization or automation opportunities, and supporting the retention rates of the business.

Working “at scale” and impacting a larger number of people or directly supporting the revenue goals of a business tends to generate a lot more, which justifies a high consulting rate too.

D. Business Plan Benefits

Although this is not set in stone, high-priced consultants often provide external opportunities and benefits that low-cost consultants charge extra (or simply don’t offer).

For instance, I had a couple of calls with a VC charging $600/hr. He introduced me to a large startup community with valuable peers I still network with occasionally.

Another consultant in Australia charging $500/hr gave me access to his coaching community and his blueprints. We’re still using some of them for our lead generation initiatives.

Sometimes, it could be an invite to a mastermind, a business event they host (or a conference), a private Slack community, a free promotion at events, and a lot of other factors included in a larger package.

Low-pricing consultants often lack these kinds of added benefits so clients will end up looking for their own community or investing more in networking through their initiatives that have not been proven to work yet. 

If you think a consultant has something to offer other than his expert counsel that is of great value, consider this in deciding on which consultant to work with.

E. Own Self-Worth

This is especially valid for consultants who don’t offer full-time consulting (at least charged by the hour) but run agencies, a course program, invest in other businesses, etc.

So unless they expect to convert consulting clients to leads, spending the time on coaching takes a while: scheduling calls, preparing for meetings, generating reports, managing emails , etc. This aggregated time can be invested in their businesses instead, which would generate additional ROI or direct revenue.

This revenue comparison also aligns with the hourly rate they decide on.

If an agency business generates $5M in revenue, this is about $420K/mo or $20K per business day. Spending too much time on side consulting activities can jeopardize long-term clients or decrease the loyalty in leadership from key team players. A consultant commands a reasonable rate to justify the time spent on consulting.

We at DevriX provide a lot of consulting and support, which means we need overlap among team members collaborating together, meetings within the team (Slack or Hangouts), deployments for clients, launching new versions, maintenance, and uptime monitoring and the like. 

Since we serve clients across 17 different time zones in a team of 50+ people, that’s important.

We were a lot more flexible with a team of 10 people, but working with enterprise-grade projects and web platforms serving hundreds of millions of monthly page views requires commitment and availability, and a lot of teamwork. We consider these factors since we don’t want to compromise our company in the long run.

F. Industry Expertise

Niche industry expertise can be truly invaluable when choosing a business consultant to partner up with.

For instance, while I work with businesses on marketing , tech, recruitment, management, and general business strategy, I get frequent inquiries from SaaS businesses or enterprises eager to enter the WordPress space.

I’ve been running an expert team building high-scale WordPress projects for a decade and I’m closely familiar with the market , its leadership, top companies and vendors, plugin and theme developers, the evolution of the platform, how businesses can succeed, media outlets open to PR opportunities and a lot more.

Some of my unique skills that are rare and my clients ask about are:

• Scaling digital publishers . My agency has successfully scaled over a dozen publishers past 100 million monthly sessions. We excel in profitable ad layouts, increasing reader engagement, and scaling paid ads.
• Data-driven platforms . My engineering background led to consulting and development engagements with 3 banks, 2 telecoms, large automotive and airline manufacturers, and other high-scale businesses. I’ve helped design and architect data layers, big data warehouses, ETLs, and recurring automation and deployment processes at scale.
• Agency operations . Running and consulting agencies since 2008 has taught me a ton about structuring teams, streamlining lead generation, designing value propositions, crafting retainer plans, hiring and onboarding, and measuring efficiency.
• Fractional CXO . I’ve worked in fractional CTO, CMO, COO roles in different organizations – building and organizing teams, automating processes, creating roadmaps and workflows for improved efficiency and transparency.
• International hiring and outsourcing . I’ve hired over 700 employees over the years, several hundred contractors and freelancers, and over a hundred agencies worldwide. I’ve helped European businesses incorporate in Bulgaria for a 10% flat tax rate and explore US LLCs with doola and their tax packages.
• Efficient content marketing . As a Semrush partner , I’ve ranked DevriX on page one for the most competitive WordPress terms, this blog for “business advisor” and other consulting keywords, and developed content repurposing strategies at scale for publishers and B2B vendors.

My in-depth expertise in this field, combined with my speaking background at WordCamps can be a lot more valuable for businesses who don’t understand the space. Several hours of my time would tap into over a decade of my work almost full-time in this environment, and this can literally save months in R&D for a business navigating the space.

Is Negotiating Fees Reasonable?

I do believe in value-based pricing. And revealing the value of a project (or a fix) upfront works significantly well for several reasons:

• It lets you gauge quickly whether it’s a hit or miss.
• It indicates how important that project is in general. Low-priority projects may cause delays and abandonment; top priorities may be too stressful (yet rewarding).
• You already have a rough ballpark in your head – if it’s the same (or lower), you’re in a good place.
• It prevents the tedious process of discussing requirements in-depth in a discovery phase. Or at least this is taken as a given (if the budget is right).

That said, consultants are valued professionals – and their terms are usually clear.

Underpricing a consulting fee for a one-off project (or a couple of calls) sends the wrong message and may affect the quality of service even if you receive a discounted fee.

With long-term projects, however, there may be some room for negotiation .

Some of my clients allocate annual budgets and plan their consulting sessions accordingly. Arranging an annual contract with a fixed number of hours per month is a good justification to introduce a discount for the work. Moreover, in case of larger contracts (such as training courses or the like), buying a bulk of hours at a lower rate may also be an option.

The Bottom Line

The consulting industry is growing rapidly and there are loads of small business consultants and small niche firms that work fast and can work directly with growing businesses. 

Some businesses hit a plateau at some point and need external advice to keep scaling.

With hundreds of millions of businesses out there, commonalities are discovered in different segments – service vs. product businesses, small vs. large corporations, on-site vs. distributed businesses, and various industries. What works for a 20-person tech shop won’t for Target or Walmart.

Smaller businesses still try to uncover the most profitable and repeatable channels that generate revenue – think of business development and lead generation . 

Large corporations tend to hire niche consultants for areas of expertise outside their own comfort zone. Think of integrating a specific technology or implementing an innovative marketing channel. Digital transformation is a big aspect for many who have primarily positioned themselves locally, including print and billboards as marketing instruments.

Moreover, the best athletes in the world and many Fortune 500’s CEOs work with coaches and mentors.

Make sure you know the problems your business faces before hiring a consultant. Have a budget, and realize that a great advisor can scale your business and change your life but a bad one can simply lose your time and money.

And if you need a personalized consulting session, here’s how it works .

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How Much Does It Cost to Start a Food Truck

By Homebase Team

Food trucks have become a popular alternative to traditional restaurants, offering flexibility and lower startup costs. But how much does it really cost to get one rolling? The answer varies, but it’s important to have a clear idea before diving in.

Let’s break down the average cost of starting a food truck in 2024.

What is the Average Cost of a Food Truck in 2024?

You’re probably dreaming about the freedom and creativity a food truck can offer, but the first thing on your mind is likely the cost. Urban areas with high demand may have higher permit fees and parking costs compared to smaller towns. The type of menu you plan to offer also impacts costs. A truck serving gourmet dishes will likely require more expensive equipment and ingredients than one offering simple street food.

On average, you can expect to spend at least $100,000 to start a food truck. This estimate includes the cost of the truck, kitchen equipment, permits, and initial inventory. While it’s possible to start with less, having a budget of $100,000 ensures you cover all necessary expenses and have a buffer for unexpected costs. For a detailed breakdown of similar startup expenses, check out the cost to open a restaurant .

Factors That Impact Food Truck Startup Costs

Buying vs renting a food truck.

One of the first decisions you’ll face is whether to buy or rent your truck. This choice significantly impacts your initial investment and ongoing expenses.

New food trucks range from $50,000 to $175,000. These trucks come equipped with the latest kitchen appliances and often include warranties. Opting for a new truck means fewer immediate repairs and maintenance issues, but it also requires a larger upfront investment.

Used food trucks average between $40,000 to $80,000. While more affordable, used trucks may need some refurbishing or additional equipment. Inspect any used truck thoroughly to avoid unexpected repair costs. Buying used can be a cost-effective way to enter the market, especially if you’re handy with repairs.

Renting a food truck long-term costs around $2,000 to $3,000 per month. This option reduces the initial investment but adds to your monthly expenses. Renting can be a good choice if you want to test the market before committing to a purchase or if you prefer not to deal with the long-term maintenance of owning a truck.

Licenses and Permits Required

Navigating various regulatory requirements can feel overwhelming, but it’s crucial to operate legally and avoid fines. You’ll need several licenses and permits to operate legally.

A food service license is mandatory and ensures your business complies with local health and safety regulations. This license covers food handling, storage, and preparation standards.

Health permits are also required. These permits involve inspections by health department officials to verify that your truck meets sanitation and food safety standards. Regular inspections will occur to maintain compliance.

Parking permits are necessary for operating in specific locations. These permits allow you to park your truck in designated areas, often with time restrictions. The cost and availability of parking permits vary by city.

On average, food truck operators spend about $28,276 on regulatory requirements in the first year. This figure includes costs for obtaining and renewing licenses and permits, as well as any necessary inspections and compliance measures. For a comprehensive guide on navigating these requirements, check out licenses and permits required .

Kitchen Equipment and Supplies

Equipping your food truck with the right kitchen equipment and supplies is another significant expense. The type of food you plan to serve will dictate your specific needs, but some common items are essential for most food trucks.

Appliances like griddles, fryers, and refrigerators are crucial for food preparation and storage. These larger items can be costly, but they are necessary for efficient operations. Depending on your menu, you might also need specialized equipment like ovens, steam tables, or coffee machines.

Smaller items like prep equipment, janitorial supplies, and cookware are just as important. Prep equipment includes cutting boards, knives, and mixing bowls, while janitorial supplies cover cleaning products and tools to maintain hygiene standards. Cookware such as pots, pans, and utensils are needed for daily cooking tasks.

A POS system and WiFi router are essential for accepting payments and managing transactions. A reliable POS system streamlines sales, tracks inventory, and provides valuable business insights. An onboard WiFi router ensures your payment system stays connected, even in areas with poor cellular reception. Learn more about choosing the best POS system .

Ongoing Operating Expenses for Food Trucks

The thrill of running your own food truck also comes with the reality of ongoing expenses. Each week, you’ll need to purchase fresh ingredients to prepare your menu items. The cost of these ingredients will vary based on your menu and the volume of customers you serve. Keeping track of your inventory and managing food waste efficiently can help control these costs.

Food and Fuel Costs

Running a food truck involves regular expenses for food and fuel. Each week, you’ll need to purchase fresh ingredients to prepare your menu items. The cost of these ingredients will vary based on your menu and the volume of customers you serve. Keeping track of your inventory and managing food waste efficiently can help control these costs.

Fuel is another significant expense. Your truck requires gasoline to move from one location to another, and you’ll also need propane or other fuel sources for cooking equipment. The price of fuel can fluctuate, so it’s important to budget accordingly and monitor fuel usage to avoid unexpected costs.

Staffing and Labor

Hiring staff for your food truck is necessary to ensure smooth operations. The number of employees you need will depend on your hours of operation and the complexity of your menu. Common roles include cooks, servers, and cashiers.

Wages for food truck employees can vary based on location and experience. It’s important to comply with local labor laws and pay your staff fairly. Additionally, consider the cost of benefits and any overtime pay that may be required during busy periods. Efficient scheduling and clear communication with your team can help manage labor costs effectively. For tips on hiring, check out these interview questions .

Parking and Storage Fees

Finding a place to park your food truck overnight is another ongoing expense. Many cities require food trucks to park in designated commissary lots when not in operation. These lots provide a secure place to store your truck and often include facilities for cleaning and maintenance.

The cost of parking at a commissary lot can vary widely. In cities like New York, fees can be quite high, while smaller towns may offer more affordable options. It’s important to research parking regulations in your area and factor these fees into your budget. Consistent parking arrangements help ensure your truck is ready for operation each day.

Maintenance, Repairs, and Insurance

Maintaining your food truck and its equipment is vital for uninterrupted service. Routine maintenance includes regular oil changes, tire rotations, and inspections to ensure everything runs smoothly. Keeping up with maintenance helps prevent costly breakdowns and extends the life of your truck.

Repairs are inevitable, whether it’s fixing a malfunctioning appliance or addressing mechanical issues with the truck itself. Setting aside funds for unexpected repairs ensures you can handle these expenses without disrupting your business.

Insurance is another necessary expense. You’ll need an annual insurance policy that covers both your truck and your business operations. This policy should include coverage for liability, property damage, and worker’s compensation if you have employees. Insurance provides financial protection in case of accidents, theft, or other unforeseen events.

Onboard employees, track their time, and pay them — all in one place.

Ways to Save Money on Food Truck Startup Costs

Starting a food truck can be expensive, but there are several ways to manage costs effectively. Here are some practical tips to help you save money as you get your food truck business off the ground.

Buy a Used Food Truck Instead of a New Custom Vehicle

Opting for a used food truck can significantly reduce your initial investment. While new trucks offer the latest features and warranties, used trucks can be just as functional at a fraction of the cost. Thoroughly inspect any used truck for mechanical issues and necessary repairs. This approach allows you to allocate funds to other essential areas of your business.

Rent Kitchen Equipment and Upgrade Later as Budget Allows

Purchasing all new kitchen equipment can be a major expense. Instead, consider renting equipment initially. This strategy helps you manage cash flow and allows you to upgrade to better equipment as your business grows. Renting also provides flexibility to test different appliances and configurations before making permanent investments.

Choose a City with More Affordable Permit and Parking Costs

Location plays a significant role in your startup costs. Cities with lower permit and parking fees can help you save money. Research various locations and compare the costs associated with operating a food truck in each area. Choosing a city with a supportive food truck culture and reasonable fees can make a big difference in your overall expenses.

Start with a Smaller, Focused Menu to Limit Food Costs

A smaller, focused menu can help you manage food costs more effectively. By offering a limited selection of dishes, you can streamline your inventory and reduce waste. This approach also makes it easier to maintain consistent quality and simplifies the cooking process. As your business grows, you can gradually expand your menu based on customer feedback and demand.

Hire Minimal Staff at First and Recruit Family/Friends to Help

Labor costs can quickly add up, especially in the early stages of your business. Start with a minimal staff to keep expenses low. Consider recruiting family and friends to help out during busy periods. This strategy not only saves money but also provides a support system as you navigate the challenges of starting a new business. For more tips on hiring, check out hiring your first employee .

Do Your Own Marketing and Advertising Through Social Media

Marketing and advertising are crucial for attracting customers, but they don’t have to break the bank. Utilize social media platforms to promote your food truck. Create engaging content, share updates on your location and menu, and interact with your audience. Social media offers a cost-effective way to build a following and generate buzz around your business. For free tools to help you get started, check out these free marketing resources .

Alternative Option: Opening a Ghost Kitchen

Looking for a different approach to starting a food business? Consider opening a ghost kitchen. This option requires a smaller upfront investment compared to a food truck. You won’t need to worry about the costs associated with purchasing a truck, paying for insurance, securing parking, or handling maintenance. Instead, you can focus solely on preparing food.

Ghost kitchens operate from a fixed location and cater exclusively to delivery orders. This setup eliminates the need to drive around and sell at various locations. You can reach customers by offering delivery through popular services like UberEats, DoorDash, and Grubhub. This model allows you to tap into the growing demand for food delivery without the logistical challenges of a mobile operation.

CloudKitchens provides facilities specifically designed for ghost kitchens. These facilities come equipped with the necessary kitchen infrastructure, allowing you to start cooking and selling your food in a matter of weeks. Renting a space in a ghost kitchen facility can streamline your setup process and reduce the time it takes to get your business up and running. For more information on transitioning to a fixed location, check out transition to permanent location .

Opening a ghost kitchen offers a practical and efficient way to enter the food industry. You can concentrate on creating delicious dishes and building your brand, while delivery services handle the logistics of getting your food to customers. This approach can help you save money and simplify your operations, making it an attractive alternative to starting a traditional food truck.

Is a Food Truck Business Right for You?

Starting a food truck business involves several considerations. First, look at your budget. Can you afford the initial investment? With startup costs averaging around $100,000, ensure you have enough capital or access to financing. This includes the cost of the truck, equipment, permits, and initial inventory.

Next, evaluate the ongoing operational expenses. These include food and fuel costs, staffing, parking fees, maintenance, and insurance. Make sure these expenses align with your projected revenue. Regularly review your budget to ensure you can sustain the business long-term.

Decide if you want to handle the logistics of driving, parking, permits, and maintenance. Operating a food truck requires navigating city regulations, finding suitable parking spots, and keeping the truck in good working condition. If these tasks seem manageable, a food truck might be a good fit.

Determine if a food truck or a ghost kitchen better aligns with your goals. A food truck offers mobility and direct customer interaction, while a ghost kitchen focuses on delivery and may have lower operational costs. Consider your business model and target market when making this decision.

Weigh the pros and cons of food trucks versus alternative options. Food trucks provide flexibility and lower overhead compared to traditional restaurants, but they also come with unique challenges like weather dependency and limited space. Ghost kitchens offer a different set of advantages and drawbacks. Assess which option aligns best with your business vision and operational preferences. For more guidance, consider how to write a business plan .

• What : Starting a food truck in 2024 costs about $100,000.
• So What : Food trucks are cheaper than restaurants but still costly.
• Pros & Cons : Pros: flexibility, lower cost; Cons: high upkeep and permits.
• Bottom Line : Assess if a food truck or ghost kitchen suits your budget and goals.

Let’s make work easier for you and your team. Get started today with Homebase to streamline scheduling, time tracking, payroll, and team management. Sign up now at Homebase and see how we can help your business thrive.

Remember:  This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

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Here’s how much more you can expect to spend on back-to-school shopping amid sticky inflation.

The tab for this fall’s back-to-school shopping list is expected to jump by 6% amid stubborn inflation — forcing some parents to make the difficult decision to either skimp on supplies or pull back on other discretionary spending, according to a new survey.

Parents of students in kindergarten through eighth grade anticipate doling out an average of $333 on their back-to-school hauls – an increase from $315 last year, the survey by game-based learning platform Prodigy found. 

More than 10% of households reported being unable to afford everything on the list, while nearly 25% of parents said they plan to buy used items to reduce the cost, according to Prodigy. 

Another 20% said they plan to lean on community programs to afford school supplies.

It is “shaping up to be one of the most expensive back-to-school shopping seasons we’ve had so far,” Ricardo Rodriguez, Prodigy’s senior data journalist, told The Post.

The cost of school supplies has spiked 24.5% over the past four years, according to the US Department of Labor.

“Compared to pre-pandemic spending, parents are now facing increased prices on everything,” Rodriguez told The Post.

“As parents prioritize their budgets to cover the rising costs of school-related items, they are likely to spend less on leisure activities, affecting industries that rely on discretionary spending.”

Parents said they plan to spend $171 on clothing, $85 on school supplies and $57 on gear like lunch boxes and backpacks, the survey found.

The average price for back-to-school spending is anticipated to be higher in New York City, coming in at $360, while parents in Houston are expected to fork over a nation-high $443, according to the survey.

A separate study by Intuit Credit Karma found that about half of parents said they plan to sacrifice spending on other necessities like groceries and medication to pay for school supplies — while 33% said they could not afford to go back-to-school shopping this year at all.

Many of those parents said they would run up their credit cards by taking on between $500 and $750 in debt, according to the survey.

Parents with young children “are likely entering the school year already stretched thin after covering costs for summer child care, which could be why many parents expect to be in the red after back-to-school shopping this year,” Courtney Alev, consumer financial advocate at Credit Karma, told Fox News.

Factors Influencing Motorcycle Insurance Rates

Average cost of motorcycle insurance by state, how to save money on motorcycle insurance.

• Additional Factors to Consider

How Much is Motorcycle Insurance?

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

• The average cost of motorcycle insurance for a standard bike is $108 per month or $1,296 per year.
• Premiums are affected by factors like the type of motorcycle, age, experience, location, and policy.
• Compare motorcycle insurance policies to find the best rates on the coverages you need.

The cost of a liability-only motorcycle insurance policy for the standard bike is $68 per month or $816 per year. The cost of a full coverage policy is $148 per month or $1,776 per year, but your personalized quote varies based on individual factors. 

Understanding costs before purchasing motorcycle insurance is important for several reasons. First, it allows you to effectively fit this expense into your budget. Second, knowing the standard rates for your profile helps you discover the most competitive rates in the market and save money on insurance. Thirdly, knowing average rates prevent overpaying for insurance based on your risk profile and the coverages you need.

Take a look below for some of the factors affecting motorcycle insurance rates.

Type of Motorcycle

The type of bike you plan to ride also significantly impact how much you'll pay. The value of your bike, the safety features, the crash rate for that model, and the theft rate are factors considered when determining your premium.

Rider's Age and Experience

Like auto insurance, motorcycle insurance for young riders and less experience tends to be more expensive. For instance, 18-year-old drivers with one year of experience usually have higher rates than someone in their 30s with ten years.

Location and Riding Habits

Your location and riding habits heavily influence the cost of motorcycle insurance. For example, drivers in urban areas generally experience elevated rates of accidents and crime. As a result, they'll see increased insurance rates.  

Your riding habits also impact your insurance premiums. Those with a history of reckless driving, (i.e., speeding tickets, at fault accidents, and DUI) pay more for insurance than those with a clean driving record. 

Coverage Options and Limits

The Insurance Information Institute mentions several coverages that motorcycle insurance providers offer: 

• Liability insurance: This coverage that pays for damage you do to others' property or any injuries. Most states require you to carry at least a liability policy to ride on the road.
• Collision insurance : This coverage pays for damages to your motorcycle if you collide with another vehicle or object.
• Comprehensive coverage : This coverage pays for non-collision-related damages, like theft or vandalism.
• Coverage for motorcycle modifications, parts, and accessories: Some insurance policies will cover riding gear (like jackets and helmets), and other types of coverage will pay to repair and replace accessories like trailers, sidecars, or upgraded parts.
• Underinsured or uninsured motorist coverage: This policy will reimburse you when an underinsured or uninsured driver damages your bike or injures you.

Deductibles

Your deductible (what you pay before your insurer disburses your claim) directly impacts your premium. A higher deductible results in lower premiums, but you'll pay more out of pocket if you need to file a claim. 

Comparison of State Rates

As mentioned, the cost of car insurance changes based on your location. The table illustrates the average cost of motorcycle insurance by state.

Source: Insurify

High-Cost vs. Low-Cost States

Some states are more expensive than others for motorcycle insurance coverage. For example, New York has the highest car insurance cost at $305 per month. Meanwhile, Georgia has the lowest at $75 per month. Like car insurance, state laws and risk factors in your area affect how much your motorcycle insurance costs.

Below are some strategies to find the most affordable motorcycle insurance options.

Choosing the Right Coverage

Choosing the right amount of coverage ensures you're not underinsured. It is also one of the ways to save on motorcycle insurance as it prevents paying for coverages you don't need.

When choosing the right coverage, start by considering your state's minimum insurance requirements. You can usually find the most updated information on your state's DMV or insurance department website. Your insurance agent or broker should also be able to help you with this. Remember, the more coverage your state requires, the higher your insurance cost will be. 

Then you'll want to assess coverage needs. If you frequently ride your bike or own a new or high-valued, consider full-coverage insurance. If you have a modified bike, custom parts coverage insures your modifications.  If you live in an area with all four seasons, consider seasonal motorcycle insurance to lower your premiums during the winter months when you're not riding.

Check out our guide to the best and cheapest motorcycle insurance providers to find the right coverage for you.

Taking Safety Courses

Even if you've been riding for years, brushing up on your riding knowledge is never a bad thing. Many insurers offer a discount for taking a motorcycle safety class within the past five years.

Bundling Insurance Policies

With the multi-policy discount , It's usually cheaper (though not always) to buy your policy with the same company then buy them separately at different companies. This is because of the multi-policy discount. Policygenius states that policyholders save up to 20% when bundling their car and motorcycle policy. You can also bundle your policy with other products like home or renters insurance.

Maintaining a Clean Riding Record

Insurers offer discounted rates to those with a claims and accident-free record, as you're less likely to file a claim. If you have a moving infraction, consider taking an approved safety course to lower your premiums and improve motorcycle safety. 

Comparing Motorcycle Insurance Quotes

Each company considers calculates and prices your policy differently. So, like any other type of insurance, shop around to find the best rates on the coverage you need. A good practice is to obtain quotes from several motorcycle insurers at least once a year to see which company offers you the most coverage for the lowest premiums and deductibles.

Additional Motorcycle Insurance Factors to Consider 

Seasonal riding .

In some areas, riders may only want coverage for a limited riding season. This does not kick in automatically. However, you can reduce your coverage in the off-season to cover comprehensive, but not necessarily collision among other things. If you're going to make this move, read your policy carefully as even one ride in the off-season could put you at risk of damages that aren't covered.

Impact of Customizations and Accessories

Similarly, consider any upgrades or customizations. Brands like Harley Davidson customize your bike to your preferences long before you see it. But your insurance will cover the base model only unless you purchase extra coverage for customizations.

Usage-Based Insurance Programs

Usage-based programs track your driving via your smartphone, GPS, or other technology. There are two types of usage based programs.

Driving-based usage programs monitor your driving habits like how fast your ride, how harshly you brake, and the time of day you ride. You typically receive a higher discount on your policy or rewards at participating brands based on how well you ride.

Pay-per-mile insurance also uses telematics data to track your mileage. This program allows riders who use their bike occasionally to save money on insurance by only paying for coverage when you ride. 

Motorcycle Insurance Average Cost FAQ

The average cost of motorcycle insurance is $108 per month or $1,296 per year. Your exact premium varies based on individual factors, your coverage needs, and the company you purchase a policy with.

Lower your premium by opting for higher deductibles, maintaining a clean riding record, taking safety courses, and bundling policies.

The type of motorcycle does affect your insurance rates. Sports bikes generally have higher insurance rates compared to cruisers or touring bikes due to their higher risk profile.

Many insurers offer discounts for motorcycle insurance. Some examples include discounts for safety course completion, multi-policy bundling, and good riding records.

Motorcycle insurance is mandatory in most states. Check your state's DMV or insurance department website for the most up-to-date requirements information.

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• Life Insurance

What Is The Cost Of Long-Term Care Insurance?

Updated: Aug 5, 2024, 2:22pm

Long-term care (LTC) insurance helps pay for long-term care like nursing homes, hospice care, adult day care and getting assistance with activities of daily living, such as bathing, dressing and eating.

Long-term care insurance costs differ based on multiple factors. LTC rates aren’t set and can increase as you age. People with pre-existing conditions or health problems may have trouble finding long-term care insurance or face hefty long-term care insurance costs.

Compare long term care insurance plans from top insurers

Ltc consumer.

Coverage Amount

Up to $500,000

Eligible Ages

Average Cost of Long-Term Care Insurance

The average cost of long-term care insurance is $1,200 a year for a 60-year-old man for $165,000 coverage , according to the American Association for Long-term Care Insurance (AALCI). The average long-term care insurance cost for a 60-year-old woman is $1,960 for the same coverage.

Married couples can buy a more affordable joint policy. For instance, married couples who are 60 years old pay $2,550 annually on average for a joint policy with $165,000 coverage, but that comes with a combined coverage limit rather than two separate limits.

LTC costs increase over the years. Long-term care insurance policies can factor in future inflation costs, such as adding 1% to 5% to the benefits each year. Adding that provision increases your LTC rates, but provides a bumper to help offset inflation growth.

Average Long-Term Care Insurance Costs by Age

Buying a long-term care insurance policy doesn’t mean that’s the rate you will pay for the next 20 or 30 years, though. LTC insurance costs may increase over the years and rate hikes can be significant.

Factors That Affect the Cost of LTC Insurance

Long-Term Care Costs Without Insurance

Long-term care insurance can be expensive, but that’s because long-term care, like nursing homes and assisted living, can be pricey.

The federal government’s Administration for Community Living says the exact cost of long-term care varies by the duration and type of care, the providers and where you live. Other factors that influence costs include the time of day when home health and home care services are needed.

When To Buy Long-Term Care Insurance

It’s wise to buy long-term care insurance before your 50s, so you can have it in place if you need long-term care.

The bulk of long-term care insurance claims happens after a person turns 75. The AALTCI says only 19% of LTC insurance claims begin before a person is 75 years old.

Pros and Cons of Long-Term Care Insurance

Long-term care insurance can play an important role in your long-range financial plan, but long-term coverage isn’t cheap.

How to Deal With LTC Insurance Rate Increases

A sudden long-term care insurance cost increase can leave you scrambling to find money to pay for coverage, but there are ways to keep your policy and not pay the full rate hike.

The National Association of Insurance Commissioners offered solutions that can soften the blow:

• Reduce the policy’s daily benefit , which is the maximum amount the policy will pay by day.
• Decrease the benefit period, which is the length of time a policy covers LTC claims, and maximum benefit, which is the amount of the policy.
• Reduce inflation protection . Long-term care policies may have increased coverage based on inflation. You can lower the amount to save money but may not have enough coverage later when you need it.
• Increase the elimination period , which is the time before a policy begins paying for LTC claims.

If you’re wondering how save for long-term care without LTC insurance, consider these options:

• Add a long-term care rider to life insurance: Life insurance policies sometimes offer life insurance riders that you can add to a policy when you buy it. One type of rider is a long-term care rider, which lets you tap into your policy’s death benefit to pay for long-term care while you’re still alive. Money taken from a life insurance policy means your survivors will get a lower death benefit.
• Pay with savings: You can pay for long-term care by using savings, a pension, retirement account or other account.
• Health savings accounts: HSAs are accounts connected to high-deductible health insurance plans that help you save for future healthcare needs. Long-term care is one of many types of healthcare eligible for HSA funds.
• Medicaid: Medicaid may pay for long-term care services if you’re eligible.
• Medicare: Medicare only covers specific long-term care programs, including a portion of care in a skilled nursing facility and care provided by a home healthcare agency if you’re confined to your home. Medicare doesn’t cover other long-term care costs.

Compare Long Term Care Insurance Plans From Top Insurers

Shop among multiple companies with help from LTC Consumer's licensed specialists.

Cost of LTC Insurance Frequently Asked Questions (FAQs)

Who should get long-term care insurance.

Long-term care insurance can be an excellent investment if you’re worried about potentially needing to pay for long-term care. Nursing home and assisted living care can be expensive and long-term care coverage can lessen your family’s financial burden and offer you peace of mind.

Is long-term care insurance worth it?

Long-term care insurance can be excellent coverage if you’re concerned about paying for long-term care down the road. It can protect your family’s financial well-being and prevent exhausting your savings.

An alternative to long-term care insurance is hybrid life insurance , which lets you use LTC benefits in the policy while guaranteeing a death benefit for your beneficiaries when you pass away. You can also buy a long-term care life insurance rider , which lets you tap into your life insurance policy’s death benefits to pay for qualifying long-term care costs while you’re still alive.

Is long-term care insurance tax deductible?

Long-term care insurance premiums can be tax deductible depending on your age.

The amount you can deduct by age is:

• Age 40 or under: $480.
• Age 41 to 50: $890.
• Age 51 to 60: $1,790.
• Age 61 to 70: $4,770.
• Age 71 and above: $5,960.

What percentage of your income should you spend on long-term care insurance?

You should pay no more than 7% of your household income on long-term insurance, recommends the National Association of Insurance Commissioners. If you find LTC insurance premiums exceed that percentage, you could look into a hybrid life insurance policy, which provides long-term care benefits as part of your life coverage.

How much does nursing home insurance cost?

Long-term care insurance , which you can use to pay for nursing home care, costs $100 monthly on average for a 60-year-old man for $165,000 coverage, $163 monthly for a 60-year-old woman and $213 for a couple with joint coverage. The exact costs differ by age, gender, health, amount of coverage, policy riders and the insurance company.

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Les Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before covering insurance, Les was a news editor and reporter for Patch and Community Newspaper Company and also covered health care, mortgages, credit cards and personal loans for multiple websites.