How to Calculate Your Startup Budget

Give every cost one home

Create a list with an item, category, payment date, estimate and source for each cost. Keep one-off purchases separate from regular payments. A laptop bought before launch belongs in one-off costs; a monthly software subscription belongs in operating costs. If you pay annually upfront, record the initial cash payment once and avoid funding the same months again.

Include setup fees, delivery, installation, payment processing, replacement consumables and deposits. A refundable deposit still uses cash even though it may not be an expense in your accounts. This budget is a cash planning exercise, not a tax return.

Calculate the three parts

• Add one-off costs needed to begin trading.
• Multiply monthly operating costs by the months of working capital you want to fund.
• Apply a contingency percentage to the combined amount.
• Add the three results to produce the initial funding target.

Worked example

A service business plans £2,000 in setup purchases and £600 in monthly operating costs. Four months of working capital is £2,400. Together that is £4,400; a 15% contingency adds £660. Total planned funding is £5,060.

If £4,000 is available, address the £1,060 gap before spending. You could reduce the initial scope, postpone optional equipment or change the launch date. Reducing the working-capital period makes the total smaller but leaves less cover for slow sales.

Test uncertainty and maintain the budget

Identify what could change: equipment costs, customer acquisition time, stock minimums or lease commitments. Run a second estimate with higher costs or a longer period before customer receipts. Contingency is an allowance, not a guarantee.

An annual renewal or large stock order can create a difficult month even when the average looks manageable. Record payment dates separately. Keep budget and actual columns, and include committed purchases as soon as you agree them. Review differences and update future estimates. The editable workbook provides one-off and monthly schedules feeding a summary; the free calculator is useful for quick scenarios you can print.