Choose the right finance when starting a business

How much money you need to start your business


It is important to be realistic about how much money you need to get your business off the ground.

There are a range of start-up costs that you may need to consider, including:

  • business registration fees
  • solicitor or accountant fees
  • a marketing budget, including your website/logo/social media promotion
  • finding premises
  • business assets
  • business insurance
  • stock supplies
  • salaries for potential staff
  • business equipment, eg. computers, office furniture 

Write a business plan

A business plan will help you set out how you intend to operate your business and should include essential financial forecasts. These forecasts will help you determine how much funding your business requires, what it is needed for and when you will need it by. See write a business plan: step-by-step.

Good planning will also make it easier to raise the money you need by showing potential investors that you know what you are doing and that it is worth investing in your business. See use your business plan to get funding.

How much finance do you need - and when?

It's essential to have an accurate idea of your financial needs. Once you have calculated the amount you'll need to cover your initial start-up costs, you'll also need to factor in your running expenses. The following financial forecasts will help you to calculate how much money you will need to start and run your business:

  • Sales forecast - the amount of money you expect to raise from sales - see forecast and plan sales.
  • Cashflow statements - your cash balance and monthly cashflow patterns for at least the first 12 to 18 months - see cashflow management.
  • Profit and loss forecast - a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads.

For financial forecast examples, download a spreadsheet containing cashflow forecast, profit and loss forecast and sales forecast templates.

You should also remember that customers may not pay you immediately - but you will still need to pay all your bills to keep trading. It's sensible to have sufficient capital to cover projected expenses for at least six months. 

At the same time, you need to make sure that you have taken into account how much money you need to live on. In the early stages, a new business is unlikely to produce spare cash that you can spend on yourself. For more information, see managing business finance during the start-up phase.

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