How Much Investment Does it Take to Start a Small Business?


When it comes to funding a new small business, there are two clichéd versions of founding myths. One version has the business owner burning through multiple mortgages and credit cards. The other founding myth has a tech guru raising millions of dollars from a group of venture capitalists. Neither sounds typical to us so we turned to Steve King, Emergent Research partner and a regular contributor to SmallBusiness.com to provide the accurate funding story for most small businesses.


Amount spent to start or acquire a small business that currently has 500 or fewer employees

Below are the percentages of small businesses with 500 or fewer employees listed by the amount spent to start or acquire the business. This is based on data from the U.S. Census 2014 Survey of Entrepreneurs.

($27,000, median-approximate)

Amount spent to start or acquire a small business that currently has 50 or fewer employees

The chart above pertains to small businesses with fewer than 500 employees. For a 2014 report by Emergent Research, we used data related to small businesses that had fewer than 50 employees. With that criteria, the businesses reported spending less than $5,000 to start their business.

Bottom Line

The vast majority of businesses in the U.S. are small by any measure: from the one person small business to the 500 employee corporation. It’s hard to attribute success to one factor like how much money it took to get the ball rolling.

The internet, cloud computing and the general cost declines associated with technology have made it much cheaper and easier to start a business than in the past. I believe these trends will continue, allowing more people to become business owners and entrepreneurs.

A version of this article also appeared in Small Business Labs.