Cash needed to start a business
Opening a business takes more than the initial investment: until receipts cover costs, money goes out every month. Work out how much you need at the lowest point and what happens if sales take longer.
Month by month
| Month | Receipts | Payments | Cumulative balance |
|---|
How much money you need to start a business
Enter the initial investment, deposits, monthly fixed costs, the months before you start collecting and what you will collect each month at your normal level. The calculator builds the month-by-month schedule and tells you how much cash you need at the tightest point.
Example: with 6,000 of equipment, a 2,000 deposit and 1,500 of monthly costs, if you go two months without receipts you need 11,000. If sales start a month later, 12,500. And if receipts of 2,500 a month take six months to reach that level, the lowest point comes in month 5 and you need 13,000.
How it is calculated
- Month 0: initial investment + deposits. Each following month: receipts − fixed costs.
- Receipts start after the months with no sales and rise in a straight line to their normal level over the ramp-up months.
- Cash needed = the largest cumulative negative balance in the schedule.
Assumptions
- The same fixed costs every month; receipts excluding sales tax.
- Deposits tie up cash even if you get them back at the end.
- No outside financing: if you have some, subtract what you borrow from the cash needed.
Frequently asked questions
How do I work out how much cash I need to start?
Add up everything you pay before opening plus each month's costs until receipts exceed them. The cash needed is the largest cumulative negative balance, not just the initial investment.
Why do deposits count if I get them back?
Because in the meantime the money is tied up and you cannot use it. You get it back at the end of the contract, not during the start-up.
What are the months to reach normal level?
Few businesses sell at full capacity from the first month. With this figure, receipts rise gradually to their normal level, and the cash needed is usually higher.
How much margin should I add for the unexpected?
It depends on the business, but start-ups almost always take longer or cost more than planned. Try delaying sales by one or two months and raising costs a little to see how much it changes.
What if my receipts never cover costs?
The calculator warns you: if receipts at normal level do not exceed fixed costs, the cash needed grows without limit. Before opening, review prices, costs or volume.