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:

  • Read "Freelancer's Union" (book and blog) and "Getting Started in Consulting" (book)

  • 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.

  • Determined your business model or what rates to charge, using top-down or bottom-up approach

    • 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.

    • How much of your time do you expect to be billable? 50%?

    • 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!

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