How Much Money Do You Need to Start a Business? A Useful Guide for Service-Based Entrepreneurs

March 10, 2023

Starting a business is thrilling.

One of the most common questions new entrepreneurs have is, "How much money do I need to start my business?"

Determining how much money you need to get started can feel complicated and difficult to comprehend. Some entrepreneurs forego any calculations; they jump in and start selling their service. On the flip side, many risk-averse business owners will obsessively build out financial models to predict the future and understand what they're getting into.

Without accurate data, any financial model is going to be incorrect. A business' budget is wrong as soon as it's created!

So, why would we choose to create any financial projections in the first place? Why not dive into starting a business head first, without concern for how much money it takes?

The first hurdle in any business will always be finding your first customer.

Most businesses require startup capital. But the question is, how much? How much money do you need to start a business?

While the answer depends on various factors, the truth is that you can start a business with very little money, especially if it's a service-based business.

How Much Money Does it Take to Start a Service Business?

Starting a business can take very little money, especially if it's a service-based business.

The truth is that no set amount works for everyone. The amount of money you need will depend on several factors, including the type of business you are starting, the industry you are in, and the resources you have at your disposal.

Service-based businesses typically require very little capital to get started.

You might think you need an LLC, a website, business cards, and a whole host of other things. While these things can be helpful, they are not necessary to get started. Most of the time, these can be helpful additions to protect your business or make your operations more efficient along the way.

Many people get started by simply offering neighborhood services like pressure washing or lawn mowing.

If you are starting a consulting business, you can start with just a computer and a phone. You don't need an office or any expensive equipment.

Similarly, if you are starting a freelance writing business, you only need a computer and an internet connection.

However, servicing your customers comes with its own cost! If you're pressure-washing driveways, you need a pressure washer to do any work. Consultants without an office may need a subscription to Zoom, freelance writers may want to leverage a project management system like ClickUp.

There's a balance to strike when first starting out: you don't want to start a business without any money, but you also don't want to spend all of your time obsessing over the amount of money you need.

The key is identifying what's necessary to acquire and support your first customer. Whether that number is $100 or $1,000 per month, it's important to understand your costs to support and acquire your customers. It'll probably be less than you think.

The most important thing you can do is to get started. Don't let the fear of not having enough money stop you from pursuing your dreams. You can always make adjustments along the way.

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How Much Will Your Business Make?

Once you've acquired a single customer and have identified the costs that come with both acquiring that customer and providing your service, you've identified the bare minimum needed to launch your business.

From this position, you can identify what it takes to get more people in the door. Whether you choose to begin investing in marketing, hiring sales associates on a commission basis, or networking in local groups, expanding your business takes additional cash.

Acquiring new customers at a consistent rate is difficult, but it's the foundation of every successful business. Customer acquisition comes through various marketing channels, such as social media, search engine optimization, or paid advertising.

By creating a pipeline, you can ensure that your business has a steady stream of customers, which can help you grow and expand.

Based on the costs of customer acquisition, servicing, and other ancillary items your business needs to get off the ground, you can create projections for the future. This can help you determine how much revenue you need to generate to break even or become profitable.

Projections can also help you make decisions about scaling your business, such as whether to hire additional employees or invest in new equipment.

What Do You Personally Need?

Running a business takes a lot of time and attention, so making the transition from a part-time business owner to a full-time business owner is as big of a leap of faith as it is forward progress.

Before taking that leap, you need to understand your personal expenses.

Calculate how much money you need to take from the business to survive. This includes not only your living expenses but also any debt payments, savings goals, or other financial obligations you may have.

Once you have identified your personal expenses, you can determine at what point your business can continually sustain itself if you take out that amount. Understanding this amount can help you create a target for when to transition fully!

Having a clear understanding of your personal expenses, the rate of growth that your business is experiencing, and how much money you need to take out of the business helps to ensure that the decisions you're making are well-informed.


Once your business is running, customers are coming in, money is being made, and you can support yourself, it's time to jump.

Making the transition from part-time to full-time business owner can be extremely difficult. You may have doubts and fears about leaving the security of a regular paycheck. However, your business will only grow the more time and energy you put into it.

Throughout the process of starting and growing your business, it's crucial to have the proper guidance and support.

One way to get this is to hire an accountant or financial coach. These professionals can help you with everything from setting up your accounting systems to creating financial projections to managing your taxes.

By having a knowledgeable and experienced professional on your team, you can make informed decisions about your business and ensure its long-term success.

In conclusion, starting a business doesn't have to be an intimidating or overwhelming process, especially when it comes to the financial aspect.

By breaking down the absolutely necessary costs of acquiring and serving your first customers, new entrepreneurs can get their businesses up and running with little initial investment.

The key is to focus on acquiring your first customer, calculating your costs, creating well-informed projections, understanding your personal expenses, and taking the leap to transition to full-time entrepreneurship. Working with an accountant or financial coach can provide valuable guidance and support.

Remember, the most important step is simply to start, and with time, effort, and proper execution success will follow.

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Jeremy Millar
Written by:
Jeremy Millar

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