It is a misconception that a huge amount of capital is required to start a business. Many of the world's most successful and fastest growing small businesses started with a shoestring budget--commonly less than $5,000. A realistic startup only needs to include elements required to start the business, and many types of businesses can be started with limited funds.

On the Other: Have a Large Emergency Fund

Starting a new business will be less stressful if you have a healthy emergency fund. An emergency fund will help you outlast unforseen shortfalls, such as a client who doesn't pay or slower than expected business. Beyond being able to cover operational expenses until your business begins to turn a profit, you should have an emergency fund that will allow you to ride out unforseen expenses and keep afloat for at least two months.

Bottom Line

The Small Business Administration notes that every business is different, with specific cash needs at different stages of development, and therefore there is no "one size fits all" method for estimating startup costs. The more capital available to cover operational expenses and unforseen costs, the better your chance of establishing a successful business. A venture that can cover essential costs has a chance to start, and it shouldn't be forgotton that no matter what, starting a business is a risk. But many very successful people started with little more than an idea.

Source:

emergency fund

Resource:

Small Business Administration