Having an idea for an industry-changing startup doesn’t do anything for you unless you can bring your vision to life. Even if your concept is for one of the top startups VC firms want in 2022, you’ll likely have to cover some costs yourself before you can get outside funding. So, how much money does it cost to start a business today?

There are several factors at play. Some products are a lot more challenging to build than others. Still, learning about typical startup costs will give you an idea of what it might take to get your own company off the ground. Here is what we know about the average cost to start a business in 2022, where expenses come from, and how you can save along the way.

How Much Money Does It Take to Start a Business on Average?

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If you recently came up with an idea for a startup, you might be wondering if you can start a business without any money. The short answer is, "normally not." You might be able to make do with your existing home office, computer, and software if you only want to start a simple consulting or freelancing business that is a service.

When you want to build a more substantial startup that can include a brick and mortar storefront, employees and a product, however, you’ll need some capital to get things moving.

Business.org polled business owners across three categories to determine the average first-year expenses to start a business:

  • Online-Only Businesses – $35,000 on average to start the business and run it for one year
  • Mobile Businesses – $92,500 on average to start the business and run it for one year
  • Storefront Businesses – $100,000 on average to start the business and run it for one year

About 30% of business owners polled had access to traditional business loans, but the majority relied upon their savings, personal loans, and personal credit cards. In other words, founders often have to use their own money to start a business. If you proactively identify potential costs, you can find ways to mitigate your expenses and stretch your money further.

Expenses to Consider: How Much Money to Start a Business?

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Finding and setting aside some capital is a good start. To make sure you don’t spend wastefully, it helps to think about precisely where that money will go. Itemizing your expected expenses will help you prioritize, plus find ways to get creative if necessary. Costs will vary depending on the nature of your business, but most startup costs fall into the following seven categories:

  1. Incorporation – Even if you use an online service instead of hiring an attorney, you can expect some fees to file articles of incorporation. If you need trademarks or patents, this expense grows.
  2. Office Space – You need a place to work as you build your business. Even if you have a home office, you might have to buy equipment, computers, furniture, and utilities.
  3. Staff – Who will you have to hire to start your business, whether as an employee or as a contractor? If you need a team of developers or engineers, the cost of your staff alone will far exceed the average cost of starting a business.
  4. Website – If you can build a website or web app in Bubble, this cost might only be a few hundreds of dollars per year. A hired web designer could cost several thousand even for a somewhat basic site.
  5. The Cost of the Product Itself – If you have an idea for a sustainable new shoe, how much will it cost to produce the shoe? If your idea is for an app or digital marketplace, how much will it cost to build?
  6. Business Admin Costs – You're likely to encounter additional costs in areas like marketing, software, and business insurance.
  7. Taxes – Whatever cash flow you generate will be taxed, so plan accordingly once you start seeing some revenue. Working with a small business accountant gets you professional support in this area, but it adds to the expenses.

With some idea of where your expenses will come from, you’re ready to prioritize your spending and find inexpensive alternatives.

How to Reduce Business Startup Costs

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Business owners can dramatically reduce their startup costs by starting online instead of in a physical storefront location. If your business can’t be fully remote, are there opportunities to find an inexpensive office such as a co-working space? It’s also easier to keep your office space expenses down when you don’t have to hire many employees.

Startup founders usually wear many hats, and one of the reasons they do this is to mitigate their expenses. You can eliminate the cost of outsourcing work whenever you can build something like an app or website (or learn to build something) yourself. The do-it-yourself approach does have its limits, however. If you can pay someone $5,000 to do something in two weeks or spend six months doing it yourself, the wasted time might cost you more than the $5,000.

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Staffing is one of the most significant expenses for most tech startups. Developers, engineers, and user experience (UX) designers all command large salaries. As a result, scrappy founders are finding no-code ways to build apps and have been getting great results. No-code app builders offer startup founders ways to create functional products with minimal cost.

Developing a functional product or service in little time and with little money also yields benefits beyond the initial cost savings. With a functional product or service, the new business owner can start generating revenue. Having a functional product or service also makes getting seed funding for your startup easier, which can help minimize your personal costs as spending ramps up.

About Bubble

Bubble is a leader in the no-code movement. Bubble offers a powerful point-and-click web editor and cloud hosting platform that allows users to build fully customizable web applications and workflows, ranging from simple prototypes to complex marketplaces, SaaS products, and more.

Millions of users are building and launching businesses on Bubble — many have gone on to participate in top accelerator programs, such as Y Combinator, and even raised $365M in venture funding. Bubble is more than just a product. We are a strong community of builders and entrepreneurs who are united by the belief that everyone should be able to create technology.