What do I Need to Know to Start my own Business?
Post was originally published in December 2019 and has been updated in June 2020 and August 2021 for relevancy.
Here are 15+ things you need to do before starting a business:
Scoped out specialty/industry for (consulting) services
Are you an expert in an industry and/or what the prospective client is trying to do?
My elevator pitch: 10 years of cross-industry expertise helping companies grow by advising on product strategy to develop customer-centric, data-driven products with market fit -- and happier customers.
To help you estimate your rate, the top-down approach starts with your desired salary to set your rate; the bottom-up approach starts with your total expenses, to help you understand what your minimum rate needs to be -- to break even.
Will you take equity as part of your rate? How will it be vested?
Will you charge by the hour? by the week? by the project? as recurring monthly fee for retainer? something else?
Set your invoicing frequency and repayment terms, e.g. bi-weekly with net-15
Decided what you'll do in case of non-payment
Will you charge late fees?
Will you stop all work until you're paid what you're owed?
Found a great lawyer to help draft and review contracts (including non-payment terms) + sign contract(s) before starting work
Settled on invoicing template and re-iterated non-payment terms from signed contract in "Notes" section
Registered as a sole proprietorship with your city
Applied for an EIN
Lined up 1+ clients, before you start consulting full-time
Set aside 6 months of savings
Opened separate business credit card and business checking account
Set 6-month revenue target, to help me determine if I should continue pursuing consulting full-time
Determine if I'll be using accrual or cash accounting to determine my taxes
Prepared for quarterly estimated taxes
Bought insurance on the Exchange
Opened a SEP IRA account
Listened to "Freelance transformation" podcast
Settled on your productivity stack
Disclaimer: Please consult your own legal, accounting and tax advisors before starting your business.
What worked for you? Good luck!
You may also like:
Considerations for Running an Independent/Small Statistical Consulting Business, in collaboration with American Statistical Association's Section on Statistical Consulting
How I went from $100-an-hour programming to $X0,000-a-week consulting, by Patrick McKenzie
Doing Freelance Data Science Consulting in 2019 by Ethan Rosenthal