Average monthly expenses for startups and small business

Dayna Smith

From the outset, it is crucial to realize what kind of new business you are creating. There is a difference between startups and small businesses. Even though the intention is the same - to “start-up” a new business, the differences are manifest. Startups are usually tech-related and may not be primarily focused on immediate profitability. Conversely, a small business will most likely look to generate cash quickly. Although startups and small businesses alike will encounter the same average monthly expenses challenges, this article is going to emphasize the startup.

As a startup, you will no doubt have a killer idea refined and ready to disrupt the market. Let’s assume you have investors in place and the funding available to get off the ground. The benefit of being a startup is that you don’t necessarily need to be profitable from day one. You do, however, need to ensure that your first round of funding is sufficient to go the distance until you are ready to make a second offering. Typically, startups don’t require many staff members in the first instance. This is because the business type, often software, targets many users without the need for a proportional ratio of employees. 

Here are some costs to consider when planning the startup journey.

Office space

New small businesses, in the beginning, may operate from home. Even if the idea was cooked up in a garage, for a startup to get off the ground, the workspace will be required. Commercial space can be a sizable initial investment as some commercial property owners will require an upfront payment. Other monthly costs will be incurred too, through the likes of utilities (gas, water, electricity, telephone, internet, etc.), building maintenance, and local taxes.

When calculating the average monthly expenses in this area, a coworking space fee might be your preferred option.


It goes without saying that once you have secured a suitable workspace, you are more than likely to need somewhere to sit. Desks and chairs can be a significant expense. Although, remember that bought furnishings become an asset of the company, albeit a depreciating one.

Office supplies

Office supplies - the consumable products that your staff will use to conduct business, can amount to as much as 10% of your monthly outlay. It may be a sensible approach to calculate a ‘per person’ supplies cost. Then this figure can be multiplied to arrive at a monthly expense. Savings on physical products are achievable by conducting more business digitally.

IT requirements:  SaaS subscriptions and web presence

Computing expenditure is always a high cost to organizations of any size. Whether the physical hardware is a one-off purchase or an ongoing lease arrangement, there are still likely to be other monthly expenses in this category—namely, Software as a Service (SaaS). 

Nowadays, more often than not, software packages are provided on a ‘per seat’ subscription basis. Utilizing cloud computing, SaaS is by far the most common way for a startup to handle its software requirements. These products service many categories such as marketing, staff management communications and legal. From the outset, it would be prudent to ascertain which platforms will be required and how many seat licenses needed. 

Scalability in this regard is essential, as well as control over your subscriptions, payment methods and other variables like the ones Monthly lets you easily put in order to manage your average monthly expenses easier.

Similarly, as startups are more often than not, technology-related, high-speed internet connections and server capacity are going to be required. Once again, factoring instant scalability is essential - but remember, a short-notice upscale will also result in a cost increase.

Every new business requires a web presence. Startups, being what they are, will doubtless rely heavily on their website. Outside agencies may be involved in the development, production, deployment and maintenance, all with their own associated costs. Also, as previously mentioned, a website needs a place to reside and serve from. Server and bandwidth capacity will need to be secured to ensure your product reaches the world.

Staffing costs

This is undoubtedly the single most significant monthly expense for any commercial entity. From the outset, it is essential to determine the level of remuneration you plan to offer. Also notable are the benefits that will be available. A startup business should consider the following: salaries, bonuses, stipends, commissions, overtime pay, and applicable taxes/contributions. Another important note is that a monthly wage bill can change very quickly, and space for growth should always be allowed. Similarly, the use of a payroll service will also incur a monthly expense. SaaS packages are standard when handling personnel-related activities - another software bill to consider.

A financial model template can easily help you take these costs into consideration.

Banking and investor returns

As previously mentioned, in the early days, investors are unlikely to be looking for an immediate return on their investment. More likely, they will look to achieve a favorable multiple when it is time to recapitalize and the business is valued again, through a convertible note, for instance. That being said, there will still be financial costs to consider such as business banking and payment processing. Obviously, the charges incurred will be dependent on your startup type, but the reality is the business will need somewhere to put its money and banking does not come free. Once again, it is prudent to mention that accounting SaaS packages will likely be required.


Every new business is going to require several insurance policies to protect assets, investor interests, and employees. At a minimum, startup monthly expenses will include the securing of liability and property insurance. Moreover, a company is likely to require workers’ compensation, professional liability, and ‘key man’ cover. Whether these products come bundled from one provider or via multiple sources, incurring an ongoing expense is unavoidable.

Marketing and promotions

Marketing a startup is no easy job. This cost will represent a sizable portion of initial and ongoing expenditure. The agency or the in-house staff you choose will determine where the new business’s message will be targeted (online or in print, for example) and spend a budget accordingly. These costs will be ongoing and likely increasing. As the business grows and more customers/users are reached so will the need to attract more across multiple media.

When planning to launch a startup, the list of monthly expenses can seem endless. It obviously depends on which market the startup is targeting but many cost requirements are the same regardless. Careful planning and the right SaaS Ops tools are critical from the outset. Identification of the business’s needs at an early stage will help with budgeting and ensuring your pot of cash goes the distance. Make sure Monthly is there to help you!

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