How to start a business: expenses to keep in mind before going all in

Starting a business from scratch is not easy, especially if you want to take care of the initial budget and turn a small investment into a big project. To do this, it is necessary to establish a clear vision of the nature of the project, how far you expect to go, make a business plan, and compare the investment you need to make with the budget you have.

With the aim of advising those who want to start their own business, this article will focus on the necessary expenses to start a business.

Factors to consider depending on the type of business

As mentioned above, the first thing to be clear about is the type of business you plan to open.

There are different factors to take into account that will undoubtedly have a considerable influence on the total amount to be invested.

The target customer

Before starting any plan, it is very important to establish who the target customer of your business will be. Selling children’s clothing, sanitary ware, or even establishing an essay writer service will have completely different business plans, as it will require different suppliers (or no suppliers at all), different essential items in the inventory, the cost of the items, etc. Targeting a specific clientele is recommended.


In the case of a physical shop, the location of the business is vital to its success. The ideal area for your business depends, to a large extent, on the target customer, as the area where customers with lower income rates are located is not the same as where those with the higher level are frequent. So, as you can see, the location of each physical spot is a strategy that can determine the success or failure of businesses and enterprises.

Business modality

You can choose to set up a business offline with the building, workers and other necessary resources or create a website and sell online, where the budget varies significantly depending on the business scheme you choose. Not to mention the idea that you can use both modalities in the same business, but this is obviously a project that would require a much larger budget.

How much money does it take to open a physical business?

The first thing to do, considering the location indications mentioned above, is to rent the right premises.

The various sizes of premises can either harm or promote your business, as they must be appropriate for the type of business you want to start. If the premises are too large, they will cause the office to look empty, and if too small, there will be a sacrifice of aesthetics and comfort for both employees and customers.

Obviously, the cost of rent depends on the city, the size of the office, and the location with all of its additional expenses. In turn, the cost of utilities, such as electricity or internet. It may also be necessary to make improvements to the premises, depending on the conditions of the premises. For this, you might need to have a building permit.

In addition, the furniture and machinery would generate another important expense, which includes purchasing the objects necessary for your business to run smoothly, such as computers, showcases, shelves, boxes, points of sale, etc. It is recommended to compare prices and quality and the object’s usefulness in your business to avoid unnecessary expenses. One way to manage these expenses and save time and money, which can be invested in the development of the business, is to plan them all carefully from the beginning.

Another significant expense to consider is the payment of employees. This section, as well as including salespeople, includes the case of hiring a promoter who specializes in your business area, which is especially important if they have some experience in sales and customer service. You should also include every other person in your team, from your substitute to a cleaning person, and build the budget for their payment following job market tendencies.

However, the main expense is the initial inventory. In this case, starting with smaller batches of goods or several smaller services is always recommended so that it is possible to analyze which of them generate higher demand and which leave higher profit margins.

How does a company differentiate itself online?

Evidently, the use of the internet to sell has multiplied in recent years, displacing many physical markets or forcing many lines to adapt to this new commercial modality.

Many entrepreneurs are unaware that selling through a website is entirely different from selling in a shop, and, therefore, the expense involved is equally diverse.

To begin with, you need to invest in the website. Here are the main expenses:

  • Buying the domain name and the hosting service;
  • The website’s design will be crucial to attracting the customer’s attention. To do this, you can buy templates from different websites or hire a graphic designer to make it attractive enough;
  • Establish means of contact with the customer, shipping company, and return policy;
  • Invest in advertising, either through Google or social networks;
  • Getting external contacts or alliances with other websites to improve positioning.

These fundamental steps to emerge among the strong competition represent your main expenditures, which will take you hundreds of dollars to set everything up. Depending on the size of the business, staff costs can be set aside so that the owner can be the sole administrator, which would eliminate one of the biggest monthly expenses.

How much should the budget be?

With all the data we have provided, you can get a clear idea of how much the budget should be when starting such a project.

Analyzing the market and having clear information about the business’s profitability is important to know how much to invest and how much income is expected in the first year of the business, as it may take some time before it generates significant profits. It is therefore advisable to start with a reasonably large budget, using personal financing or loans, which may be the best option for a self-employed person.


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