Phase II: Finances and Funding
- philogen888-a
- May 4
- 5 min read
Updated: May 6
Estimate startup costs
What are startup costs?
Startup costs are the total amount of money you need before you open your food business. It’s all the things you must buy or pay for before you can start selling food and serving customers.
How to estimate (calculate) startup costs
a. Step 1: Make a list of everything you need: Think about:
Kitchen equipment: stove, refrigerator, freezer, oven, fryer, microwave
Cooking tools: pots, pans, knives, spoons, cutting boards
Furniture (if you have a restaurant or café): tables, chairs, shelves
Food and drinks (first order of ingredients): meat, vegetables, rice, spices, coffee, drinks
Supplies: napkins, cups, plates, boxes for takeout, gloves, cleaning items
Licenses and permits: health permit, business license, food safety certification
Rent and deposit: money to secure your space or truck before opening
Marketing and signs: flyers, business cards, website, social media ads
Staff costs (if hiring): training or first paychecks before you start making money
b. Step 2: Find the price for each item
Visit local stores or call suppliers to ask for prices.
Check online for prices (Amazon, restaurant supply websites).
Write down the price next to each item on your list.
c. Step 3: Add up the total: Add all the prices together. This is your estimated startup cost. The total amount you need before you open.
Tips for estimating startup costs
Always add 10–15% extra for surprise costs.
Start small. You don’t need the biggest or most expensive equipment when you are just starting.
Ask other small business owners for advice on costs.
Secure funding (if needed)
Secure funding means getting the money you need to open your food business if you don’t have enough savings. This can come from:
Your own money (personal savings)
Money from family or friends
Loans from a bank or lender
Grants or small business programs
You need funding to pay for startup costs like equipment, permits, rent, and food supplies.
How much you need
Check how much money you already have: Look at your savings and money you can use.
Example: You have $10,000 saved.
Look at your startup costs: Calculate how much money you need (from the estimate you made earlier).
Example: You need $25,000 total.
Find out how much you still need: Subtract your savings from your startup costs.
Example: $25,000 (costs) – $10,000 (savings) = $15,000 needed.
Explore funding options: Here are some common ways to get money:
Personal savings: Use your own money if you have enough. Lowest risk, no one to pay back.
Family and friends: Ask family or close friends if they can lend or invest money.
**Be clear: Will you pay them back? Will they be co-owners?
Small business loans (bank loan): Go to a local bank or credit union and apply for a small business loan. You will need:
Business plan
Good credit history
Proof you can pay it back
Microloans: Small loans (sometimes $500–$50,000) for small businesses, especially immigrants and minority entrepreneurs.
Example organizations: Carolina Small Business Development Fund, and
Kiva loans
Small business grants (free money): Harder to get, but some programs give grants that you don’t have to repay. Check with:
Durham Tech Small Business Center
Durham Chamber of Commerce
NC Rural Center
Prepare your documents
Write a simple business plan
Know your startup costs
Be ready to explain why you need the money and how you will use it
Example of a general startup costs: Total startup cost: $25,000
My savings $10,000
Bank loan $10,000
Family help $5,000
Total funding $25,000 → Ready to open!
Open a business bank account
What does opening a business bank account mean?
Opening a business bank account means setting up a separate bank account just for your business.
This account is used only for business money:
Money you earn (sales from customers)
Money you spend (buying food, paying rent, paying employees)
You do not use your personal bank account for the business.
Why is it important to have a business account?
Keeps business and personal money separate: Easier to track how much money the business makes and spends.
Helps with taxes: You can show exactly what belongs to the business.
Looks professional: Customers and suppliers can pay the business, not you personally.
Helps you build business credit: This can help if you want loans later.
How to open a business bank account (step by step)
Choose a bank: Visit banks near you (for example, Bank of America, Wells Fargo, Truist, local credit unions).
Ask if they have small business accounts and what the fees are.
Bring the right documents:
EIN (Employer Identification Number): From IRS
Business formation papers: For example, LLC Articles of Organization
Business name registration: If you are using a trade name (DBA)
Personal ID: Passport or driver’s license
Deposit starting money
Some banks require a small deposit to open the account (for example, $50–$100).
Get checks and a debit card
You can order business checks. You will get a debit card for the business.
Start using the account
Deposit all sales and income into the account.
Pay all business expenses from this account.
Set up bookkeeping
What does bookkeeping mean?
Bookkeeping means: Writing down and keeping track of all the money your business earns (income) and all the money you spend (expenses). It helps you understand how your business is doing — if you are making a profit or losing money. Good bookkeeping also helps:
Prepare for taxes
Apply for loans
Avoid mistakes or confusion with money
Why is bookkeeping important?
You will know how much money comes in and goes out.
You can see if you are making or losing money.
You will be ready for tax time.
You can show banks or investors how your business is doing.
You will avoid mixing personal and business money.
How to set up bookkeeping (step by step)
Choose how you will track your money You have three main options:
Notebook or paper method: Simple: Write down all sales and expenses in a notebook.
Spreadsheet (Excel or Google Sheets): You can make a simple table to list income and expenses.
Example columns: Date, Item, Income, Expense, Balance
Bookkeeping software: Programs like QuickBooks, Wave, FreshBooks can track everything for you. Some have apps for your phone.
Decide what to track
All sales (cash, credit cards, online payments)
All business expenses (food supplies, rent, utilities, wages, marketing)
Taxes collected (if you collect sales tax)
Any loans or repayments
Set a regular time to do bookkeeping
Do it every day or every week — don’t wait too long.
Save receipts, invoices, and bank statements.
Check your bank account to match with your records.
Hire help if needed
If you are not confident, you can hire a bookkeeper or accountant (part-time or freelance).
You can also ask a family member or friend to help at first.
Tips for bookkeeping
Keep business and personal money separate.
Save a copy of all receipts and invoices.
Back up digital records on a computer or cloud storage.
Setup a point of sale (POS) system
What is a POS system?
A system (software + hardware) that helps you take orders and accept payments from customers.
Examples: Square, Toast, Clover, Lightspeed
What it can do:
Take credit cards, debit cards, cash, and mobile payments.
Print or email receipts.
Track sales and inventory (know what’s selling and what’s running low).
Make it easy to split bills or give refunds.
Why it’s important:
A POS system helps you run smoothly and gives customers many payment options.
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