Business Startup Cost Calculator

The first is leaving your own pay out of monthly burn. If you need income to live, it is a cost of the business whether or not you call it a salary. A founder who omits a $3,500 monthly draw from a $6,000 burn rate has understated it by more than a third, and a runway calculated on $6,000 instead of $9,500 is roughly 60% longer than the real one.

The second is misclassifying recurring costs as one-time. Software subscriptions, insurance, accounting, bank fees and domain renewals are frequently entered once during setup and then never counted again, even though they recur every month or year. Each individually is small; together they routinely add several hundred dollars a month to a burn rate that was supposed to be lean.

Do not hide uncertainty inside one unexplained percentage. Create a base case from quoted costs, then a separate stress case for the specific items likely to change. This shows which assumption creates the extra cash requirement.

The reason contingency matters more than accuracy is asymmetry. Overestimating costs means you finish with cash left. Underestimating them by the same amount can end the business, because running out of money three weeks before break-even is functionally identical to never getting there at all.

Runway assumes revenue begins on a certain date. In practice the first sale usually lands later than expected, and the first payment lands later still — a client who signs in March on 30-day terms may not pay until May. For any business invoicing rather than taking payment at the point of sale, budget for the gap between earning and being paid, because that gap is funded entirely by your runway.

This is why a business can be profitable on paper and still fail. Profit is a measure of the period; cash is a measure of the moment. The runway figure on this page is a cash calculation, and cash is what determines whether you are still operating next month.

It does not model inventory, which for a retail or product business is often the largest single cost and behaves differently from both one-time and monthly categories — it converts cash into stock that may or may not convert back. If you are holding inventory, treat its purchase as a cash outflow in the month it happens rather than spreading it.

It also does not account for seasonality, staged hiring, or revenue that ramps rather than switching on. And it makes no attempt at legal or tax structure: incorporation, registration and licensing costs vary enormously by jurisdiction and sector, and should be researched locally rather than estimated.

Used as intended, it answers one question well: how much cash do I need before I start, so that a slower-than-expected launch does not end the business.