Average Business Startup Costs in 2026 (and How to Estimate Your Own)

TL;DR: Startup costs range from under $10,000 for lean online service businesses to $50,000–$250,000 or more for a physical storefront, with labor typically consuming 25–50% of the total budget and many first-time founders underestimating their total costs by 40–50%. Key cost factors include business type, product development approach, team size, and the time-versus-money tradeoff, all of which should be evaluated alongside your spending philosophy, runway, and funding strategy before launch.

Having an idea for an industry-changing startup doesn’t change anything unless you can bring your vision to life. Even if your plan includes raising venture capital funding, you’ll likely have to cover some costs yourself first.

Figuring out exactly how much is a lot like asking how much it costs to plan a wedding or raise a child — every situation is unique, and the number is almost always higher than you expect.

Understanding the most common startup costs will give you a realistic baseline for what it might take to get your own startup off the ground.

Here’s what we’ve learned from growing Bubble and working with thousands of startups building on Bubble. In this guide, we’ll cover the average costs of starting a business, where expenses come from, and how to determine what funding you’ll need to get started.

What are startup costs?

Startup costs are what you spend before your business starts bringing in revenue: legal fees, licenses, equipment, initial marketing, the tech you need to build your product. Depending on what you’re building, they can range from as little as $500 for a lean online service business to $250,000 or more for a physical storefront. Knowing roughly what you’ll need to spend gives you a realistic target for your budget.

Average cost to start a business

The average cost to start a business ranges from under $10,000 for lean online service businesses to $50,000–$250,000 or more for a physical storefront, according to 2026 industry cost data. The biggest driver is business type. Here’s how the three main categories break down:

• Online services businesses: Consulting, web design, small agencies — the lowest-cost tier. Current estimates put launch costs at $500 to $2,000, and AI tools now let a solo founder run a full software stack for under $300 a month, work that used to require hiring staff.
• Digital companies: A digital product or app, usually built with a team or contractors. Traditional development runs $25,000 to $150,000 for an MVP, more for complex builds. Building it yourself with a fully visual AI app builder like Bubble can cut that substantially.
• Storefront businesses: More upfront funding than online-only, thanks to rent, inventory, employees, and overhead. Current estimates put a proper launch at $50,000 to $250,000, depending on location, industry, and scale.

A few things hold true no matter what type of business you’re starting:

• A lot of startups run on personal funds early on, a practice commonly known as bootstrapping. Savings, side income, and reinvested revenue often carry you through the first few months before outside funding is even an option.
• Employees are one of the biggest expenses you’ll face; for a founding team of five or more, payroll alone can easily reach six figures. SHRM’s 2025 Benchmarking Report puts the average cost to hire a new non-executive employee at $5,475, on top of salary, benefits, and payroll taxes. The cost varies a lot by industry and location: A developer in San Francisco is more expensive to hire than one in Minneapolis.
• Underestimating first-year costs is common. First-time founders often miss their total by 40–50%.

Average startup costs by industry

Your industry and product matter almost as much as business type. A restaurant needs build-out, kitchen equipment, and inventory. A lean digital services firm can run on a laptop and a few software subscriptions.

For digital products and tech services, development is usually the biggest cost driver. Building with Bubble instead of hiring a dev team can bring that cost down a lot.

Factors that impact startup costs

Startup costs vary so much that founders need to weigh a lot of factors to estimate their own. A cost calculator you can customize for your situation makes that easier.

Here are some of the biggest factors to consider:

What kind of business are you starting?

The type of business you’re starting impacts your costs a lot, as we’ve seen. A few things worth thinking through:

• Product type: Physical products come with development, production, storage, transportation, and shipping costs. Digital products and services don’t.
• Development costs: A small, lean team might be able to build and maintain your product, or you might need a bigger team to get it off the ground.
• Storefront: A digital or mobile-first business can run on an online store alone. Others need a physical location too.
• Overhead and operations: How many employees do you need to get going, and can they work remotely, or do you need in-person staff with physical office space?

The time and money tradeoff

Time vs. money is another major factor in your costs, and it’s easy to overlook.

Founders often take on multiple roles to cut costs. Build your app yourself with a fully visual AI app builder like Bubble, for example, and you can skip or delay the cost of hiring a dev team. Bubble pairs AI generation with visual editing, so you can move from idea to working app faster than with traditional development.

But going the DIY route comes with tradeoffs.

Say you spend three months on your logo and branding, work that would’ve cost $5,000 and taken two weeks if you’d paid someone else. Not paying yourself doesn’t mean that time was free, especially if you’re building full-time and living off savings or debt (when your time can be worth more than money).

Play to your own strengths, and don’t be afraid to spend on outsourcing the rest.

Risk tolerance and desired runway

Risk tolerance and runway are also major factors in considering startup costs.

For example:

• Runway length: Do you need funding for the first month? Six months? First year? Until you can quit your job? Until you’re profitable? Timeframe makes a major difference in considering how much runway you need.
• Risk comfort level: A higher risk tolerance means you can take on more debt or work with less runway. A lower risk tolerance usually means that you need to become profitable sooner and might need a longer runway before you get started.
• Funding options: You have dozens of startup funding options, but not all of them will be right for you. Are you hoping to bootstrap or take out business loans? Are you a good candidate for raising VC capital or crowdfunding? The types of funding you’re looking at will change how much you can budget for your upfront costs.

Standard business startup costs

Let’s get into the specifics. How much do common startup expenses actually cost? Here’s a breakdown of what to expect for each one.

Costs every business will have

Incorporation, licensing fees, and permits. These fees are necessary to legally launch your business, and typically run $300–$500, though they can vary depending on:

• What state your business operates in. Filing fees, franchise taxes, and annual reports differ meaningfully from state to state.
• What type of business you form (e.g., LLC, Corporation, S-Corp, etc.). Each structure has different setup costs, ongoing compliance requirements, and tax treatment.
• Types of licensing and permits needed based on your industry. Food service, healthcare, and financial services typically require more permits than a general online consultancy.

Taxes. Any cash flow you generate will be taxed, but determining and budgeting the exact amount can be difficult. Taxes depend on the type of business you have, your revenue, and your expenses.

For a baseline, you can estimate based on the current federal corporate tax rate. As of 2026, the US federal corporate tax rate is 21% for C corporations, applied to taxable income. State taxes vary, and if you’re not a corporation, tax rates can vary as well.

Working with a CPA will provide a lot more clarity — and can reduce your tax bill significantly.

Business insurance. Almost every business needs some form of it, and the type you need depends on your industry. It can cover everything from legal liability and lawsuits to worker protections, equipment and property insurance, and more.

You should have a general liability policy to cover things like advertising injury. If you have a physical space or a physical product, your general liability policy may need to be higher, and you may need extra coverage for business property. Digital products with competitive IP may need higher D&O and E&O coverage.

Average business insurance costs vary by policy type, industry, location, and business size. Insureon reports typical median costs around $45/month for general liability and $83/month for a business owner’s policy.

Common business expenses

Aside from the obvious startup costs, there are plenty of other common business expenses that may not apply to everyone but certainly apply to most. This includes things like:

Creating or obtaining a product. Unless you’re a services business, where your skills or your people are the offering, there will be some cost associated with creating your product. How much that costs varies widely based on your product and development strategy.

• Are you selling physical products that you need to obtain from somewhere else?
• Are you designing and producing your own physical product?
• Are you creating a digital product? Do you need a development team, or can you build using a visual AI app builder?

Creating and hosting a website. A website is a must for pretty much any business today, from a sole proprietorship to a major corporation. Brick-and-mortar stores need websites just as much as digital services and products.

Costs depend on whether you build the site yourself or hire someone to do it. On Bubble, hosting, database, security, and deployment are all included in your plan, starting at $29/month for a web-only Starter plan, with mobile and Enterprise tiers costing more. Hiring a designer for a somewhat basic business site, on the other hand, can run several thousand dollars.

Hosting costs vary widely. Entry-level shared hosting may start at just a few dollars a month, with renewal prices often rising to roughly $10–$30/month depending on provider and plan.

Accounting and bookkeeping services. While you can DIY this, most of the time, you really don’t want to. Hiring a good accountant can save you tons of money and time in the long run.

You don’t need to hire a full-time bookkeeper when you’re first starting out. Working with an accountant or CPA monthly or quarterly can give you the support and expertise you need without the cost of a full-time employee.

Costs vary significantly based on business complexity, service frequency, and whether you use software, a bookkeeper, or a CPA.

Labor and employees. This is usually the biggest expense for new startups, often eating up 25–50% of your overall budget.

Employees cost more than their base salary, though, and you'll also need to factor in things like:

• Hiring and onboarding costs, including recruiting fees, background checks, and time spent interviewing candidates.
• Bonuses and commissions, especially for sales roles or founding team members with performance-tied compensation.
• Overtime pay for hourly employees, which can add up quickly during launch periods.
• Paid time off and holidays, which represent real cost even when the employee isn’t working.
• Insurance and benefits, such as health insurance, retirement contributions, and disability coverage.
• Competitiveness within your industry: If your peers pay above market for engineers or designers, you’ll need to match to attract talent.
• Location and employee skills, which drive dramatic salary differences across cities and specialties.

It's common to budget above base salary to cover payroll taxes, benefits, insurance, equipment, and other overhead. Some finance leaders use a rough multiplier of 1.25x–1.5x base salary to estimate fully loaded cost.

Don’t forget to factor in your own labor as a founder. Even if you don’t take a paycheck in the early days, it’s still worth factoring into your own expenses. It can help you understand what to outsource and what’s worth your time to take on.

Software subscriptions. Building your startup tech stack often requires several — if not dozens — of software subscriptions. These include software for things like:

• Communication and collaboration (i.e., Slack, Notion)
• Productivity and project management (i.e., Asana, Airtable)
• Development tools (i.e., Bubble, GitHub)
• Customer service tools (i.e., Zendesk, Salesforce)
• HR tools (i.e., Rippling, Gusto)
• Payroll and accounting software (i.e., QuickBooks, Ramp)
• Analytics tools (i.e., Mixpanel, Segment)
• Marketing and sales (i.e., HubSpot)

To keep costs down in this category, run regular (i.e., quarterly or annual) audits of your tech stack to remove products you’re not using regularly or efficiently, and consolidate where one tool can do the job of two.

Software costs vary a lot by team size and growth stage, and they tend to climb as you hire more and add more tools.

Equipment and supplies. Costs here vary widely, typically running $2,000 to $100,000 depending on your business. A digital product might just need laptops, software, and licensing. A retail business also has to produce, ship, and store its goods.

Rent. If you’ve got a physical office or storefront, you’ll need to budget for rent. Even as larger corporations push return-to-office mandates, many startups still skip an office: Nearly 70% of small companies still let their teams work fully remotely if they choose. Even a home office or coworking stipend for remote employees will cost far less than a physical office, and office costs vary a lot by location, lease type, and space needs.

Utilities and other costs. If you have in-person spaces for your office or your storefront, there will be other costs that come along with rent. This includes things like utilities, water, internet and phone service, and so on. Costs vary significantly depending on where your offices are located and the size of your team.

Additional costs you may encounter in your first year (and beyond) include:

• Legal fees and advisory services, including contract review, IP filings, and ongoing counsel for regulated industries.
• Raw materials for physical products, priced based on volume, supplier terms, and shipping arrangements.
• Marketing and sales costs, including paid ads, content production, events, and sales tools.
• Office furniture and supplies, whether for a physical office or a remote employee home setup stipend.
• Travel for your team, especially for customer visits, industry events, and quarterly team gatherings.
• Shipping and storage costs for goods or products, which scale with order volume and geography.

Sample annual startup budget

What does all this look like practically? Let’s break it down.

In this example, we’re going to consider a tech startup that’s developing a digital product and building a remote-first team. Here’s how their costs break down for the first year of building their startup and launching their product:

Not every startup needs $325K to get started, but this example demonstrates how costs can add up even for a lean team.

What startup costs are tax-deductible?

The IRS lets new business owners deduct up to $5,000 in startup costs and another $5,000 in organizational costs during their first year. That covers things like market research, advertising, travel tied to getting the business going, and legal fees for setting up your business structure.

If your total startup costs go over $50,000, the deduction starts to phase out, and any remaining costs typically get amortized over 15 years. Keeping good records from day one makes it a lot easier to claim these deductions when tax season rolls around.

How to estimate your startup costs, step-by-step

The only way to know how much it will cost to launch your small business is to sit down and crunch the (estimated) numbers.

Here’s how.

Step 1: Figure out your business details and cost philosophy

First, figure out what kind of business you’re starting and what your cost philosophy is. That’ll shape how you project your costs and how you handle them as they come up.

There are two main types of spending philosophies among small business owners:

“Don’t spend what you don’t have.” Founders who take this route spend only actual cash the business brings in: bootstrapped funding, crowdfunding, or personal savings. This keeps you debt-free, gives you full control, and lets you grow at a sustainable pace without pressure from investors or lenders.

The tradeoff: Early-stage cash flow is often limited, scaling quickly becomes harder without outside resources, and you may miss opportunities that require capital you don’t yet have.

“Don’t spend what you can’t make.” This philosophy means taking on expenses you can’t cover today but expect to pay for later: using credit cards, business loans, or external funding to access resources before you’ve earned them. The upside is speed, since more capital means you can hire faster, build more, and scale before competitors catch up.

The tradeoff is risk and control. The more debt or equity you take on, the more exposed you are if your startup doesn’t gain traction — and VC funding in particular comes with pressure to grow fast and hit aggressive milestones.

As with most things in the startup world, there isn’t a right or wrong answer, just what’s right for your own business. The key is to consider your spending philosophy up front, and understand how it will align with your key funding sources and upfront expenses.

If you’re planning to scale fast and hire quickly, but you don’t want to spend money you don’t yet have, you’re going to have a cash flow problem pretty quickly. Your strategies need to be aligned so you can make smart and realistic decisions about budgets and spending.

You’ll also want to figure out your baseline for the business. Not every small business owner expects or needs to be able to live off their business revenue, at least at first.

It’s worth asking yourself:

• What’s my financial goal for this business? (i.e., how much money do I need to make for it to be worth it?)
• How much runway do I have? (i.e., how long can my business survive without being profitable?)
• What’s the potential revenue of my business? That number looks very different for a VC-backed AI startup than for a local coffee shop. Understanding this will help you make smarter decisions about funding and spending.
• How quickly do I need to be able to cover costs and turn a profit? This is related to runway, but it also covers your personal income needs and your team’s.

Step 2: Estimate your costs

As you estimate your costs, keep two key cost differences in mind:

• One-time vs. recurring expenses: Some startup costs will be a one-time expense (such as incorporation fees or select legal counsel). Other expenses (i.e., employee salaries, marketing costs) are ongoing. Budgeting for both one-time and ongoing expenses will help you plan better beyond your first year in business.
• Fixed expenses vs. variable costs: Fixed costs recur; they’re the same month to month or year to year, such as rent or insurance. Other expenses are variable — they change based on your needs, team size, or other factors. Software costs, development costs, even employee costs can vary a lot as you grow and your needs shift.

As you estimate, consider which expenses are fixed, which are variable, and which are simply one-time. This will help you project more accurate costs and get a clearer vision of the budget your company will need.

Step 3: Estimate your company’s revenue

This can be the toughest step of all. Most startups are experiments: They might take off fast, or they might never get off the ground, so estimating revenue often feels like a shot in the dark. Even so, a revenue projection is worth doing, even as just an estimate.

For early-stage startups, revenue isn’t always the number that matters most when considering cash flow. You might also want to think about outside funding, loans, grants, or other income that isn’t tied directly to your product or sales. If you’re chasing venture funding, investors will likely value your company based on your opportunity, technology, competitive environment, and team, not just revenue.

Thinking about cash flow and funding together gives you a clearer picture of what you’re working with, especially if you’re leaning toward a “don’t spend what you can’t make” philosophy.

Step 4: Inventory your funds

With your baseline, costs, and projected revenue in mind, you can inventory your funds to see what kind of runway (i.e., advance funding) you have and if you have enough cash flow to cover the “starting a business” phase.

Profitability timelines vary widely by business model, industry, funding strategy, and cost structure. Service businesses often turn a profit in 3 to 6 months, ecommerce in 6 to 18 months, and SaaS in 18 to 36 months, according to Foundra, so your runway should reflect a realistic timeline for your model.

Your ideal runway comes down to your burn rate, how easy funding is to access, and how long it will take to bring in revenue. Most founders plan for at least six to 12 months, though capital-intensive businesses often need a lot more time to build their product, grow their audience, and reach the break-even point.

Step 5: Plan how you’ll finance your company

Most small business owners don’t just have loads of cash lying around that they can dedicate to the first few years of a new startup.

But there are plenty of other funding options you can consider that can help you cover any gaps in your runway and launch plan. Some of the most common funding sources include:

• Business credit cards or loans: A business credit card or business loan can help give you additional runway and create a stopgap for the funding you need. Business credit cards are better for smaller amounts, such as day-to-day and ongoing expenses. They’re easier to qualify for and faster to get. Business loans are better for larger amounts (say, >$100K), but they’re harder to qualify for.
• Venture capital: VC funding is a popular option for startups that have the potential for high growth and revenue. It’s a great way to raise large amounts of money, in exchange for giving equity in your company to investors.
• Crowdfunding: For consumer-facing products, crowdfunding platforms like Kickstarter or Indiegogo can be great ways to build an audience and raise the cash you need to develop and launch your product.
• Startup incubators: For early-stage startups, an incubator can be a great way to receive funding, training, and mentorship to give your business a solid foundation.

Build your app on Bubble for less

Starting a business is hard, and it isn’t cheap, either.

But if you have a big idea and the drive to make it a reality, Bubble is the fully visual AI app builder that lets you vibe code without the code. Chat with AI when you want speed, edit directly when you want control, and launch real apps to real users.

If you’re looking to cut startup costs, build an audience faster, and start bringing in revenue sooner, Bubble gives you the platform to do it. You can start building for free, and move to a paid plan when you’re ready to go live or publish to app stores.

Frequently asked questions about startup costs

Is $10,000 enough to start a business?

Yes — $10,000 is often enough for online service businesses, consulting practices, and digital product startups, especially when you build your app yourself using a fully visual AI app builder like Bubble and operate remotely.

Is $5,000 enough to start a business?

$5,000 can be enough for service-based businesses or software startups where you build the product yourself using a fully visual AI app builder like Bubble, keeping your team small and overhead minimal.

How much money should I have before starting a business?

Aim to have enough to cover both your projected business expenses and your personal living costs for at least six to 12 months — enough runway to build your product, acquire your first customers, and reach consistent revenue before funds run out.