What Is a Business Startup Cost?

A startup business doesn’t only mean a business that’s just started, even businesses that are running for five years are still considered startup businesses. A startup business is any business that is in its initial stage and is expecting growth or success in the future. When you start a business, an idea wouldn’t be enough. For the business to start, you will need capital. Capital is an asset that can be used or invested in producing a product or business, examples of capital is money, machinery, building, or company cars. The primary asset in creating a business is the money, and for starters, that is what we called the startup cost.

Many business owners neglect the importance of preparation in business and usually jump right away to the trend. There are a lot of things needed to consider before starting a business, you need to have a clear goal, capital, and exit plan. There are two types of startup costs, the Pre-opening startup cost, and the Post-opening cost.

Pre-opening startup cost – It is the expenses before the business starts, it includes the machines, the storage building, the resources, the research, etc.

Post-opening startup cost – It is the expenses after the opening of the business, it includes employees’ wages and salary, mortgages, and rents, bills, etc.

The Components of Business

Business is like a plane, it won’t float in the air if one engine is down.  Starting a business takes a lot of consideration, from its liquid asset to non-liquid assets. A lot of businesses tramples to the ground because of lacking components, minor or major components will greatly affect the productivity of the business. every business has its own foundation and component, it varies to what kind of product and what kind of environment you are in. Business can be vague, there are a lot of definitions as to what business is, there are small businesses, startup businesses, major businesses, etc. The business can’t stand with the capital alone, or the product alone, these components must be equally valued and balanced. the fall down of one component might cause the fall down of everything.


Product is the primary element of business. A product is what the company or business produces. It must accord to the skills and the environment as well. The product doesn’t just mean, food or beverages, it also includes applications, gadgets, technology, machines, appliances, etc. In creating a product, one must consider its purpose to society. The product evolves over time, it constantly improves. The product defines the idea of the person creating the business.


The market is the area where the transactions happen, it can be physical or virtual. With the help of social media, we are introduced to online selling. Business can be in a market where competition exists. There are various types of markets, examples are, black market, auction market, financial market, physical market, and virtual markets. The market plays a vital role in business, it helps the people or society expressing their needs and wants. The market is like a vessel of supply and demand.


Capital is what runs the company, it can be monetary or other resources. This is the fund that makes the operation running on day to day basis. The main role of capital is to maintain the assets of the business. Capital is not only for the resources it can also be used for employment, which is an asset as well for business. If people running the environment manage the capital effectively, it grows rapidly and easily. The main role of capital is to support the product and people in the flow of growth.


Society is one of the most important components of the business. They dictate the trend, the profit, the needs, the time, and the capacity of your business to grow. This component can be the people buying the product or the people making the product. Both are very essential to the progress and success of the business, the relationship built by the people around the business is what keeps the operation running. If we have the capital to make the business happen, we need the people to keep it running as well. There must be a relationship between the business, employees, and buyers.

How to Prepare for Business?

You can’t be in war unprepared, preparation is essential in all aspects of life. Successful businesses didn’t just grow without proper deliberation and liquidation of assets. Preparations save so much time, reduce risk and stress. Benjamin Franklin once said, “Failing to prepare is preparing to fail. Here are some tips on how to prepare for business.

Create a Goal: Planning your objective is the primary thing to do, you need to have a clear goal of how your business would operate. The goal isn’t only to satisfy the customers but also for your business to expand. When creating a goal, you’ll need to have a clear vision of what your business would look like after five to ten years. The purpose of creating a goal is to keep your commitment and progress moving.Make a Research: Passion isn’t enough, you will need the knowledge to work things out. Before jumping into something, you need to know the structure or ways of how to get in and get out. You can read articles related to your business, you can also ask experts from the field. Know your customers, look for the trend and check for the best place where you could build your company or store. Compile all your research so that you can compare and evaluate. In making research for your business, consider all the factors and variants that may affect your business.Create a budget plan: Creating a budget plan can be challenging considering all the factors. When you are going to create a budget plan for your business, you’ll have to consider as well the possibility of the struggles you might be facing afterward. A budget plan composes of the pre-opening, post-opening, and exit plans. The pre-opening is about the resources, the materials, and all other expenses before opening the business. The post-opening is the bills, mortgage, rent, stock, market value, wages of employees, and other expenses. An exit plan is like a retirement plan, you will need to create a budget on how you are going to take profit after getting away from the business. This preparation takes a lot of thorough and critical planning.Test your Idea: This is for evaluation purposes, you will never know a thing unless you try it. You can ask people or group that is not influenced by anyone from your company to have honest feedback. If you are creating an app, have it test run by people to check if it is accessible on their end or to check if there are any improvements needed to do. You can make a list of the things they love about your product and the things needed to improve. Always remember that in testing your product, you cannot please everyone so have a credible source.Dive the market: No man or woman is an island. Diving the market means, getting your network. You’ll need to have a target, whether it’s local or international. This is where socioeconomic get in, a relationship with other investors, business owners, producers, groups, and organizations. Social media is very rampant nowadays and access to communication can be easy. Diving the market also means opening yourself to others to build rapport, communication is vital. In order to achieve this, learn first the pattern, wants, and needs of the market. The closer you are to the majority, the higher the rate of success.

How to Create Business Startup Costs?

Business is like a game of chess, there are sacrifices, preparation, and strategy to win the game. One of the most important parts of the game is the opening, it will decide the course of the middle and end game. Every move in business is crucial, that’s why it needs to be planned carefully. The business startup costs serve as the opening liquidation or budgeting of the business. There are samples here as a guide, and here are procedures as well on how you can make a good business startup costs.

Enumerate Variables

The first step is listing down all the resources and variables that are circulating in the business you are about to create. examples or resources are pieces of machinery, building, advertising, rent, materials, courier, utilities, etc. These are the common variables that compose the business. List them all down and categorize which is for pre-opening and post-opening. You can use Microsoft Excel so that you can easily organize the items or variables.

Enumerate Income sources

One of the things to consider in creating a business is Income, it includes capital, investments, and loans. These are the cash or money needed to start the business. You can categorize them by capital, investment, shares, and loans, indicate the value and the sources of that income. You can indicate the source for example in the capital, it came from your retirement or savings then for investment, you can also indicate the organization or person who invested in your business. You can put them on different sheets or below the fixed cost and estimated cash flow.

Determine Estimated Costs

Determining the estimated costs is more like budgeting the capital. Before getting and knowing the actual cost of the materials, you need to create a budget based on your research. The importance of determining your estimated costs is to know the limit of your capital per item. Along with the variables, you can label an estimated cost beside each item. Estimated cost doesn’t mean that it is not based on something, and in order to support your estimated cost, you can do acquiring or survey the possible costs of those variables.

Determine Actual Cost

Part of making startup costs is getting the actual costs of the variables, in this part, you already have the network and the prices of each item. You can list it down beside the estimated cost to compare and evaluate if it hits the target cost for the capital. In getting the result as well, total all the expenses and subtract from your capital to know if you exceed the capital or not. In that way, you can properly allocate your capital for the much-priority variables.

Discuss with Team

This is one of the most important steps in creating a startup cost. In this part, you can work with a team or pair to discuss the result of the startup costs. Deliberation and evaluation can lead to better actions, the more mind working on it, the greater the possibility of its effectiveness. Discussing in a team means leaving the door open for improvement, possible suggestions, or other options. Constructive criticism and communications ideas are the keys to success.


What is fixed cost?

A fixed cost is an expense of the business that doesn’t change right away, examples are, rent, tax, and salaries

What does startup business mean?

Any business that just started can be considered a startup, startup businesses expect to be successful someday.

What is the difference between a startup and a small business?

A startup business aims to grow faster, deal with much bigger things while small businesses, settle for profit.

The idea of business can sometimes be frightening, especially if it’s your first time. You’ll have doubts and worries but with business startup costs, you’ll be able to foresee the course of your business. There are samples here where you can download and use as a guide. Always think about success but don’t be afraid to fail, what matters the most is how you keep on going.