Before you hand in your notice or sign a lease, check whether the money adds up. Enter the cash you can spare, what you can borrow and at what rate, your startup and running costs, and the sales you realistically expect. The calculator plays the first years forward month by month and tells you whether, in theory, there is enough money to start.
How the calculator decides
- Free cash = your savings minus the personal safety net you keep back.
- Funding = free cash + the loan + any other funding, such as a grant or investor money.
- Day one: the one-off startup costs, plus your contingency, come out of the funding.
- Every month after that: sales × gross margin, minus running costs, minus what you pay yourself, minus the loan repayment. Sales start at the level you choose and grow in a straight line until they reach your established level.
- The verdict: Ready if the lowest cash point stays above your safety cushion (3 months of outgoings by default), Tight if it stays above zero but dips below the cushion, and Not yet if the money runs out or the business never covers its costs.
If the answer is Tight or Not yet, the calculator shows what would fix it: how much more of your own money or funding you would need, how much you would need to borrow in total, and what the repayment would be.
A worked example
With $60,000 of savings, $15,000 kept back, a $40,000 loan at 9% over 5 years and $45,000 of startup costs plus 10% contingency, you start with $85,000 and spend $49,500 on day one. The loan costs $830.33 a month, or $9,820 in interest over the five years. With $9,000 a month of running costs and pay, and sales growing from $5,000 to $20,000 a month at a 60% margin, the business turns its first monthly profit in month 10. Cash bottoms out at about $3,500 in month 9. That is above zero but well below a three-month cushion, so the verdict is Tight.
Three numbers to watch
- Lowest cash point. The most important figure. If it is close to zero, a single slow month or a late-paying customer can sink you.
- Monthly sales to break even. Running costs, your pay and the loan repayment, divided by your gross margin. If that is more than you can realistically sell, change the plan before you start.
- First month in profit. The longer it takes, the more money you need up front. Most plans are too optimistic here, so try your figures with a slower ramp-up as well.
What it leaves out
To stay simple, the calculator ignores income tax, sales tax or VAT timing, customers who pay on 30- or 60-day terms, stock you have to buy ahead of sales, and seasonal swings. Each of these usually makes the cash position worse, so treat a Tight result as Not yet. It is a planning tool, not financial advice. Before you borrow, have an accountant check a full cash-flow forecast.
To firm up your figures, start with startup costs vs. running costs, check the hidden costs new owners forget, and use the monthly cost breakdown to fill in your running costs.
Frequently asked questions
How much money do I need to start a business?
Enough to pay the one-off startup costs, plus enough to cover the losses of the early months until sales catch up with costs, plus a cushion for things that go wrong. The calculator works this out month by month: the “lowest cash point” shows how close you come to running out.
How is the loan repayment calculated?
With the standard formula for an amortising loan: a fixed monthly payment that clears the amount borrowed and all the interest by the end of the term. Payment = loan × r ÷ (1 − (1 + r)^−n), where r is the annual rate divided by 12 and n is the number of months. For example, $40,000 at 9% over 5 years is $830.33 a month, or $9,820 of interest in total. Lender fees can make the real cost higher.
What is gross margin?
The share of each sale left after the direct cost of making the product or delivering the service. If you sell something for $100 that costs you $40 to buy or make, your gross margin is 60%. Your running costs and your own pay come out of that 60%.
Why keep a personal safety net out of the business?
A new business often takes longer to pay you than planned. Keeping your own emergency fund separate means a slow first year doesn’t put your rent or mortgage at risk. The calculator only counts savings above that amount as money the business can use.
Does “Ready” mean my business will succeed?
No. It means that, if your figures are right, there is enough money to get through the start-up phase. The calculator leaves out tax, the timing of sales tax or VAT, customers who pay late and seasonal swings. Test pessimistic sales figures too, and have an accountant check a real business plan. This is a planning tool, not financial advice.
Is my information stored?
No. Everything is calculated in your browser, and nothing you type is saved on our server or sent anywhere. The share link keeps your figures in the part of the web address after the # sign, which browsers do not send to the website.