What belongs in setup
Entity formation, licences, equipment, initial inventory, website build, branding, deposits, and the legal review you are tempted to skip. Inventory is usually the largest line for a product business — and the one most often underestimated.
The number founders get wrong
Almost nobody funds enough runway. Twelve months of recurring costs plus setup is the honest baseline; six months is a gamble that assumes revenue arrives immediately, which it rarely does.
Reducing first-year cost
- Lease equipment before buying
- Start with a smaller inventory buy and reorder sooner
- Use contractors for non-core work until volume justifies hires
- Negotiate annual software pricing only after proving you need it
Reality check
Compare the total against what you can raise or save without stress. If the number requires a loan you cannot service from projected cash flow, the plan needs to shrink — not the assumptions to stretch.
Frequently Asked Questions
How much runway should a startup fund?
12 months of operating costs is the common target; 18 for hardware or regulated industries.
Should I include my own salary?
Yes, at a modest but real figure — founders who skip it discover the gap later.
Does inventory count as a startup cost?
Yes, as a one-time line, though it recycles as you sell.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
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