20 Questions to Ask Before Starting a Business
These are the questions to ask before starting a business, meant to be answered by you, on paper, before any money goes out. The list began as 20 and now holds 58, sorted in the order the decision goes: your customers, the offer, the numbers, you, the setup, then whether to go ahead or stop. If you only have one evening, start with the customer group at the top, because every later answer leans on it, and come back to the rest when starting a new business turns from an idea into dates and figures.
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The questions
Each question, and why to ask it
Customers
Who has this problem badly enough to have tried to solve it already?
Why ask it
A person paying for a bad workaround, a spreadsheet, an agency, a part-time assistant, has proved the problem is worth money. If nobody has attempted a fix, you may be looking at an annoyance rather than a need.
Can I name ten specific people or businesses who would buy this?
Why ask it
Named prospects are a market, adjectives are not. A list that reads small businesses or busy parents, with no names on it, means the first job is research and not building.
Have I asked twenty likely customers about the problem and written down what they actually said?
Why ask it
People are polite about ideas and specific about problems, so the useful notes are the complaints in their own words. Anyone who says it sounds great without asking the price has told you nothing.
What do my likely customers do about the problem today, and what does it cost them?
Why ask it
Whatever they do now is what you are really up against, and its cost in money or hours is roughly the ceiling on your price. Ask to watch the workaround instead of hearing it described, because people leave out the steps they have stopped noticing.
Has anyone agreed to pay, put down a deposit or signed anything yet?
Why ask it
A deposit, a pre-order or a signed letter is a different kind of evidence from a compliment. Asking for one is uncomfortable, and it can teach you more in a week than another month of friendly conversations.
Is the person who would pay the same person who has the problem?
Why ask it
A parent buys for a child, a manager signs for a team, a landlord pays for something a tenant uses. When the two are different you have to persuade both, and the sale is decided by whoever holds the budget.
Where do these customers already go looking when they need this?
Why ask it
It might be a search engine, a trade group, a marketplace or a neighbour's recommendation. Until you can name the place, you do not know how a stranger would find you, and that gap tends to be wider than any gap in the product.
How will I reach the first ten customers without paying for advertising?
Why ask it
The first ten usually come from direct effort: messages to people you know, visits, phone calls, a market stall, a post in a group you already belong to. Wincing at that list is worth knowing about now, since every later channel is built on what those ten teach you.
How often would one customer buy, and what would bring them back?
Why ask it
A business that sells once, a wedding cake or a house survey, has to keep finding new people for as long as it trades. One that sells to the same customer every week can afford to spend more winning each of them, so know which kind you are starting.
The offer
Who is the competitor my customers would name if I did not exist?
Why ask it
Put this to customers and not to a search engine, because the name they give is often a firm you had not thought of, a friend of a friend, or nobody. Competing with doing nothing at all is harder than competing with a company.
What do I do better than the obvious alternative, in one plain sentence?
Why ask it
If the sentence needs a diagram or three clauses, customers will not remember it. Cheaper and faster and better usually means you have not chosen yet.
Why has nobody I respect already done this?
Why ask it
There is usually a reason: regulation, thin margins, a brutal customer, or a distribution channel locked up. Finding the reason is not discouragement, it is the actual work.
What is the smallest version of this I could sell within a month?
Why ask it
Something manual, ugly and narrow will teach you more than six months of building. If the smallest version still takes a year, you have chosen a hard first business.
What will someone pay, and how did I arrive at that number?
Why ask it
A price built from your costs plus a margin ignores whether the value is there. Working back from what the problem costs the buyer today gives you a figure you can defend when somebody pushes back on it.
How much of this could a bigger company copy in a few months, and what would I still have?
Why ask it
The parts that are hard to copy tend to be unglamorous: a supplier who trusts you, a local reputation, a licence, years inside the trade. When the honest answer is nothing, the plan has to win on service and speed, on margins that are likely to be thinner.
What does this depend on that I do not control, such as one supplier, one platform or one big customer?
Why ask it
A marketplace can change its fees, a supplier can put prices up and a single large client can leave, each at short notice. Write down what you would do the week after, and where a second source is cheap to line up, line it up before you need it.
What will I say no to in the first year?
Why ask it
Custom jobs, customers three hours away and one more product line each look like revenue and behave like distraction. A short written list of what you do not sell makes the offer easier to describe and easier to deliver.
The numbers
What does one sale cost me to deliver, counting my own time?
Why ask it
Materials, postage, card fees and your hours all come out of the price before anything is left. Owners who leave their own hours out of the sum can end up with a job that pays less than the one they quit.
How many sales do I need each month to cover my own living costs?
Why ask it
This one number turns a vague dream into a testable claim. If it takes hundreds of small transactions, your marketing problem is much larger than your product problem.
What does it cost me to get one customer, and how do I know?
Why ask it
Guessing this is how businesses with good products run out of money. Run a small real test, one advert, a batch of flyers or a day of calls, and divide what it cost by the customers it brought before you build anything expensive.
How long between doing the work and being paid for it?
Why ask it
A business that is profitable on paper can still run out of cash on timing, for instance when clients pay in sixty days and staff are paid weekly. Map the gap in weeks and decide in advance what will fund it.
What do I have to buy or pay for before the first sale?
Why ask it
List it line by line from real quotes: equipment, opening stock, deposits, a website, licences, the first insurance premium. Then add a margin for what you forgot, because a first list of startup costs is rarely the full one.
What bills arrive every month whether or not I sell anything?
Why ask it
Rent, software, insurance, loan repayments and a phone contract do not care how the month went. This is the figure a slow month has to survive, so the lower it starts, the more slow months you can afford.
How many months can I pay my personal bills with no income from this?
Why ask it
Count from savings and any other household income, not from forecast sales. A new business often takes longer to pay its owner than the plan said, so set the plan against the months you truly have.
What do I give up besides the salary if I leave my job for this?
Why ask it
Health cover, pension contributions, paid holiday and sick pay may come with the job, and what replaces them differs a great deal by country and employer. Price the replacements and add them to your living costs, because the salary alone understates what the business has to earn.
If the first year brings half the sales I hope for, can the business still pay its bills?
Why ask it
Halve the sales line in your spreadsheet and leave every cost where it is. A plan that only works at full forecast needs lower fixed costs, not a more cheerful sales line.
How much money can I lose before it damages my life?
Why ask it
Naming the figure in advance stops the slow escalation of putting in a bit more. It also tells you whether this should be a side project for now.
Am I funding this from savings, borrowing, or someone else's money?
Why ask it
Each option changes who you answer to and how fast you must move. Borrowing against a home turns a business decision into a family one, so say that out loud.
When will the business be able to pay me, and how much?
Why ask it
Put a month and a figure on it, even a modest one. A plan in which the owner is never paid tends to end when the owner's savings or patience run out, whichever goes first.
You
Do I want this business, or do I want out of my current job?
Why ask it
Both are legitimate, but they lead to different decisions and only one of them survives a hard second year. If it is escape, look honestly at the cheaper exits first.
What am I going to stop doing to make room for this?
Why ask it
Adding a business to a full life without subtracting anything is how both suffer. If nothing can go, the honest plan is a slower start.
What is the job I am worst at that this business requires?
Why ask it
Most owners have one job they keep putting off, often selling or bookkeeping, and the putting off does more harm than doing it badly would. Decide now whether you learn it, pay for it, or pick a different business.
Have I ever worked in this trade, even for a few weeks?
Why ask it
A month behind the counter of someone else's cafe shows you the early starts, the waste and the awkward customers in a way no spreadsheet can. Without any inside experience, getting some is about the cheapest research available.
Can I start this alongside my job, and does my employment contract allow it?
Why ask it
Evenings and weekends keep a salary coming in while you test whether anyone buys. Some contracts restrict outside work or lay claim to what you create, and the rules differ by employer and country, so read yours and ask before you begin.
Does the person I share my finances with agree to this, including the worst case?
Why ask it
Their income, savings and evenings are part of the plan whether or not the plan mentions them. Show them the maximum loss and the stop date, and treat any hesitation as information you needed.
Am I doing this alone, and if not, what have my co-founder and I put in writing?
Why ask it
Who owns what share, who decides, who puts in money and what happens when one of you wants out are easiest to settle while you still get along. A lawyer can turn those answers into an agreement that holds where you are based.
Who will tell me the truth about how it is going?
Why ask it
Friends encourage and customers go quiet, so you need one person who will say the numbers look bad. Name them before you start.
Who do I know that has run something similar and would give me an hour?
Why ask it
An owner in the same trade in another town has no reason to guard anything from you and can say what the first year really cost. Bring specific questions about margins, slow seasons and early mistakes instead of asking for general advice.
How do I cope when my income changes from one month to the next?
Why ask it
Some people find an uneven income energising and some lose sleep over it, and neither is a flaw. Anyone who was miserable on commission or freelance pay before should plan a bigger cushion or a slower handover from the job.
If this works, what does my week look like in two years?
Why ask it
Some successful businesses produce a life you would not choose: constant travel, weekend shifts, twenty staff. If you would refuse the successful version, change the plan now.
Setup
What taxes do I have to register for, charge or report once I take the first payment?
Why ask it
Sales tax, VAT or the local equivalent can apply from the first sale or only above a threshold, and the rule changes with the country, the state and what you sell. An hour with a local accountant beforehand tends to cost less than untangling back-dated returns afterwards.
Which business structure suits this, and what does each mean for my tax and my personal liability?
Why ask it
Sole trader, partnership, company and their local equivalents differ in paperwork, in tax and in how far your own assets are exposed. The answer turns on your country, your state and your plans, which makes it one for an accountant or a lawyer and not for a forum.
Do I need a licence, permit or registration to do this where I live?
Why ask it
Food, childcare, building work, alcohol, transport and money services are commonly regulated, and in some places so is trading from your home. Your city, county or council licensing office can say what applies and how long approval takes, which may set your start date.
Is the name I want free as a business name, a web address and a trademark?
Why ask it
Search the business register, the domain and the trademark database for your country before you print anything. A name already in use in your trade can force a rebrand later, and a lawyer can tell you how much risk a near match carries.
What insurance does this kind of business need, and what would it cost?
Why ask it
Liability, professional, vehicle and equipment cover each answer a different bad day, and some customers or landlords will ask for proof before they deal with you. Which of them the law requires depends on the trade and the place, so ask a broker, early enough for the premium to be in your monthly figure.
Will I keep business money separate from my own from day one?
Why ask it
A separate account shows at a glance whether the business itself is making money, and it saves hours when the tax return is due. Whether one is required depends on your structure and country, so ask the bank or an accountant.
Who will keep the books, and how much of each payment should I set aside for tax?
Why ask it
Decide whether it is you with software, a bookkeeper or an accountant, and on which day of the month it gets done. Ask an accountant what share to put aside where you live, so the first tax bill does not land after the money has been spent.
What terms do I need in writing before I take on a customer or a supplier?
Why ask it
Payment dates, deposits, refunds and what happens when a job is cancelled cause most early arguments. One page in plain words covers a lot of them, and a lawyer can check it against the consumer rules where you trade.
Would I be signing anything personally, such as a lease or a loan guarantee?
Why ask it
Landlords and lenders often ask a new owner to sign in their own name, which can mean the debt follows you if the business closes. How that works depends on where you live and how the business is set up, so have a lawyer read it before you sign.
Will I need to take anyone on in the first year, and what does employing someone involve here?
Why ask it
Payroll taxes, minimum pay, contracts and required insurance differ by country and state, and so does the line between an employee and a contractor. Ask an accountant or the government employment office before promising anyone work, since that line is easier to get right at the start than to correct later.
Whose data, designs or materials will I be using, and do I have the right to?
Why ask it
Customer details, photographs, software and anything you made for a previous employer can all come with strings attached. Privacy and intellectual property rules vary by country, so check before the business rests on something you may not own.
Go or stop
What has to be true before I spend serious money or hand in my notice?
Why ask it
Pick two or three conditions you can check, such as five paying customers, a lease you can afford or six months of living costs saved. Conditions like these turn a mood into a decision you could explain to someone else.
What will I do in the first ninety days, week by week?
Why ask it
A dated list of calls, tests and first sales is harder to hide behind than a mission statement. Where most of it turns out to be logos, websites and business cards, move the selling to the top.
Which three numbers will I look at every week?
Why ask it
Choose the ones that would warn you early, often enquiries, sales and cash in the bank. Checked weekly from the start, a bad trend is three weeks old when you notice it and not three months.
What is the first sign that this is working, and when should I expect to see it?
Why ask it
It could be a repeat order, a referral you did not ask for, or a customer who complains when you are closed. Naming the sign and a rough date beforehand stops you counting every busy afternoon as proof.
What would make me shut this down, and by when?
Why ask it
A written threshold, a date and a number, is what separates persistence from denial. Setting it while you are calm is the only time you can.
If it does not work, what do I walk away with and what do I still owe?
Why ask it
Add up what could be sold, which leases and loans would keep running, and what the experience would be worth on a CV. A failure you can afford is a reasonable bet, while one that leaves years of debt calls for a smaller first step.
Which would I regret more in five years, trying this and failing or never trying?
Why ask it
The arithmetic settles whether the business can work, and this settles whether you want the risk. Answer it last, so the feeling is informed by the figures and does not stand in for them.
Pressure-Testing the Idea
Practical guidance for the conversation itself
How to Use These Questions
Answer in Numbers Where a Number Exists
Price, customers needed per month, cost to acquire one, months of runway. An answer like enough to be worth it is a way of avoiding the arithmetic that decides whether this works.
Take One Group at a Sitting
The groups run in the order the decision does, and each leans on the one before: the offer is a guess until the customer answers are in, and the numbers are a guess until the offer has a price. Do the customer group first even if the setup questions feel more urgent. The paperwork can usually wait a few weeks, and finding out whether anyone will pay cannot.
Have Someone Else Ask Them
Read your answers aloud to a person who is willing to be unimpressed, ideally someone who has run a business. The questions you rush past are the ones to go back to.
Do the Cheapest Test First
Before building, try to take one payment for the manual version. A single customer who pays is worth more than fifty people who said they would.
Separate the Idea From the Escape
Wanting to leave a job is a good reason to change something and a poor reason to choose a particular business. Work out which one is driving the timeline.
A Sensible Order to Work In
- 1Write down the problem in the words a customer would use, not the words you would use.
- 2Find twenty people with that problem and ask what they do about it today and what it costs them.
- 3Set a price and try to take money for the smallest useful version.
- 4Build the monthly numbers from your own quotes: rent, wages, tools, insurance, tax.
- 5Work out how many customers cover your living costs and how you would reach that many.
- 6Go through the You group with whoever shares your household money, and agree what gives way to make room.
- 7Take the Setup group to an accountant, a lawyer or the local licensing office, whichever each question belongs to.
- 8Decide your maximum loss and the date you review it, then write both down and tell someone.
Questions You Cannot Answer Alone
Customers Answer the First Two Groups
Nothing under Customers or The offer can be settled at your desk. Each answer should trace back to something a named person said or did, and where it does not, mark it as a guess and go and ask. Guesses are fine in a first pass as long as you know which lines they are.
An Owner in the Trade Answers the Numbers
Typical margins, the slow months, how long customers take to pay and what the equipment really costs are known to anyone who has run the same kind of business. Someone outside your area is not competing with you and is often willing to talk. Ask for one hour and arrive with figures to check, not a blank page.
Professionals Answer the Setup Group
Structure, tax, licences, insurance, contracts and taking on staff depend on the country, the state or province and the trade, so this page can only tell you what to ask. An accountant covers structure, tax, bookkeeping and payroll, a lawyer covers agreements, personal guarantees and the name, and an insurance broker can quote the policies. Many offer a short first meeting, so ask what it costs before you book.
Only You Can Answer the Rest
What you can afford to lose, what you will give up and when you would stop are not questions anyone can advise their way through for you. Write those answers while nothing is at stake yet, and show them to the person who would share the consequences.
Where Plans Usually Break
Confusing Interest With Demand
Encouragement, sign-ups and likes are free. Nothing counts as validation until money changes hands or a contract is signed.
Ignoring the Gap Between Work and Payment
Businesses with full order books fail because the cash arrives later than the bills. Model the weeks, not just the annual totals.
Building Before Selling
Long build phases feel productive and postpone the only question that matters. Sell first, even if you have to deliver it by hand.
Doing the Setup First Because It Is Easy
A registered name, a logo and a bank account feel like progress because each one has a clear finish line. None of them tells you whether a customer exists. Keep the paperwork to what the first sale legally needs, and do the remainder once somebody has paid.
No Stopping Rule
Without a written threshold, every bad month becomes an argument for one more month. Decide the exit conditions while nothing is at stake.