18 Questions to Ask Before Starting a Business

This article contains affiliate links. We may earn a commission at no cost to you. Learn more

A guy I know quit his job to open a coffee shop. He loved coffee, had a great location in mind, and figured the math would work itself out. Eight months later, he was $65,000 in debt. Not because the coffee was bad. The coffee was great. But he hadn’t researched the lease terms, underestimated renovation costs by $30,000, had no marketing plan, and didn’t realize his neighborhood already had four coffee shops within a half-mile.

He didn’t fail because he was passionate. He failed because passion isn’t a business plan. Starting a business is one of the most exciting things you can do with your career and your money. It’s also one of the riskiest if you skip the homework.

These 18 questions cover the financial, legal, market, and operational realities of launching a business in 2026. They’re not meant to discourage you. They’re meant to help you go in with open eyes, so your passion has a fighting chance.

Before You Contact Anyone

Think through these fundamentals before you spend a dollar:

Be honest about your motivation. Are you starting a business because you’ve identified a real market opportunity, or because you’re unhappy at your job? Those are very different starting points, and only one tends to produce a sustainable business.
Assess your financial runway. How many months of personal expenses can you cover without income from the business? Most businesses take 12 to 24 months to generate consistent profit. If you can’t survive that gap, the timeline pressure alone can sink you.
Talk to people who’ve done it. Not motivational speakers. Actual business owners in your industry who can tell you what’s really hard, what costs more than expected, and what they’d do differently.
Research your industry. Understand market size, growth trends, competitive landscape, and customer demographics. This isn’t optional homework. It’s the foundation of every decision you’ll make.
Get a business planning notebook and start writing things down. Ideas in your head are vague. Ideas on paper are actionable. Use a dedicated notebook for your business planning process.

What to Mention or Send Beforehand

When meeting with advisors, mentors, or potential partners:

Your business concept in one clear sentence. If you can’t explain it simply, it’s not ready. “I’m opening a dog grooming salon for large breeds in underserved suburban neighborhoods” is clear. “I’m disrupting the pet care space” is not.
Your financial situation. Savings, existing debt, income from a partner, access to capital. Advisors can’t help you plan if they don’t know your starting position.
Your experience in the field. Relevant skills, industry knowledge, and any gaps you’re aware of. No one expects you to be an expert in everything, but acknowledging gaps is the first step to filling them.
Your timeline and commitments. Full-time or side hustle? Immediate launch or gradual transition from your current job? This context shapes the advice you’ll receive.

Market and Viability

1. Is there a real market for this, and how do I know?

Believing there’s a market isn’t the same as proving there’s a market. You need evidence: customer surveys, competitor analysis, pilot tests, or pre-sales. If you can’t find people willing to pay for your product or service before you launch, that’s a signal worth taking seriously.

Talk to potential customers directly. Not friends and family who’ll be supportive. Actual strangers who represent your target market. Their honest feedback is worth more than any market research report.

2. Who is my target customer, and what problem am I solving for them?

“Everyone” is not a target customer. The more specific you get, the better your marketing, product development, and pricing decisions will be.

Define your customer by demographics, behavior, and pain point. “Busy professionals aged 30-45 who need meal prep delivered weekly because they don’t have time to cook healthy food” is actionable. “People who like food” is not.

3. Who are my competitors, and what makes me different?

If you can’t name three to five competitors, you either haven’t done your research or your market might be too small to support a business. Competition is a good sign. It proves demand exists.

The question is: what do you do better, differently, or more specifically than they do? Price alone is rarely a sustainable advantage. Service quality, niche focus, customer experience, and convenience are stronger differentiators.

4. What does the first year look like realistically, not optimistically?

Most new businesses lose money in year one. Plan for it. Build a 12-month projection that accounts for slow customer acquisition, unexpected expenses, and seasonal fluctuations.

Your worst-case scenario should be survivable. If your business plan only works under the best-case scenario, it’s not a plan. It’s a wish.

Financial Questions

5. How much money do I need to start, and where is it coming from?

Calculate your startup costs: equipment, inventory, licenses, insurance, marketing, website, legal fees, office or retail space, and any renovations. Then add 20-30% for unexpected expenses, because there are always unexpected expenses.

Funding sources include personal savings, small business loans, SBA microloans, investors, crowdfunding, and friends/family loans. Each has different implications for ownership, debt, and risk.

6. What are my ongoing monthly expenses, and when will I break even?

Rent, utilities, inventory, payroll, insurance, marketing, software subscriptions, loan payments, taxes. List every recurring expense and calculate your monthly burn rate.

Then figure out your break-even point: how many sales, customers, or billable hours per month you need to cover those expenses. This number should be realistic, not aspirational.

7. How will I pay myself, and when?

Many founders skip their own salary to keep the business alive. That works for a few months, but it’s not sustainable. Decide when you’ll start drawing a salary and how much. It doesn’t have to be your dream income initially, but you need a plan.

Also consider health insurance, retirement savings, and self-employment taxes. As a business owner, you pay both the employee and employer portions of Social Security and Medicare, which means roughly 15.3% of your income goes to self-employment tax alone.

8. Do I need a business bank account, and how do I keep finances separate?

Yes, you need a separate business bank account from day one. Mixing personal and business finances creates accounting nightmares, complicates taxes, and weakens your liability protection if you’re structured as an LLC or corporation.

A business plan book walks you through the financial planning process step by step if you’re not sure where to start.

Legal and Structural Questions

9. What legal structure should my business be?

Sole proprietorship, LLC, S-Corp, C-Corp, or partnership. Each has different implications for liability, taxes, and administration. The right choice depends on your risk exposure, income level, and growth plans.

An LLC is the most common choice for small businesses because it separates personal and business liability while keeping taxes relatively simple. But talk to an accountant or attorney who specializes in small business before deciding. The wrong structure can cost you thousands in unnecessary taxes.

10. What licenses, permits, and registrations do I need?

Business license, sales tax permit, employer identification number (EIN), industry-specific permits (food handling, professional licensing, etc.), and local zoning compliance. The requirements vary by state, city, and industry.

Check with your state’s Secretary of State office, your city’s business licensing department, and any industry-specific regulatory bodies. Missing a required permit can result in fines or forced closure.

11. Do I need business insurance, and what kind?

General liability insurance is essential for almost every business. Beyond that, you may need professional liability (errors and omissions), commercial property insurance, workers’ compensation (if you have employees), and product liability (if you sell physical products).

The type and amount of coverage depends on your industry and risk profile. An insurance broker who specializes in small business can assess your needs and find appropriate coverage.

12. Do I need a lawyer and an accountant?

Yes to both, eventually. At minimum, have a lawyer review your business structure, any contracts you’ll sign, and your lease (if applicable). An accountant sets up your books correctly, advises on tax strategy, and keeps you compliant.

These aren’t expenses. They’re investments that prevent much more expensive mistakes.

Operations and Planning

13. Where will I operate, and does location matter for my business?

For retail, restaurants, and service businesses, location can make or break you. Foot traffic, parking, visibility, neighborhood demographics, and proximity to competitors all matter.

For online businesses, “location” means your website, hosting, and digital infrastructure. For home-based businesses, check local zoning laws and HOA rules.

14. What technology and tools do I need to run the business?

Point of sale system, accounting software, website, email marketing platform, CRM, inventory management, project management tools. The tech stack varies by business type, but plan for it and budget for it.

Start lean. You don’t need enterprise-level tools on day one. A whiteboard mounted in your office or workspace is one of the simplest, most effective planning tools available. Use it for tracking goals, mapping processes, and brainstorming ideas visually.

15. How will I find and keep customers?

Marketing and customer acquisition strategy. Word of mouth, social media, SEO, paid ads, partnerships, referrals, email marketing, events. You need a plan, not just a hope.

The most important marketing question: where do your target customers already spend their time and attention? Meet them there.

16. Should I start full-time or as a side business?

Starting as a side business while keeping your day job reduces financial pressure and lets you validate the concept before going all in. The tradeoff is slower growth and less focus.

If your business requires significant time investment to get off the ground (like opening a restaurant or retail store), a side hustle approach may not be practical. Match the approach to the business type and your financial runway.

Mindset and Preparation

17. What am I willing to sacrifice, and for how long?

Starting a business requires time, money, and energy that come from somewhere else. Your evenings, weekends, savings, social life, and sometimes your health are on the line, especially in the first year or two.

Be realistic about what you’re giving up and set boundaries. Hustle culture romanticizes burnout. A business that requires you to work 80 hours a week indefinitely isn’t a success. It’s a trap.

18. What is my exit plan or long-term vision?

Not every business needs to become a billion-dollar company. Some people want a small, profitable business that supports their lifestyle. Others want to build and sell. Others want to scale aggressively.

Your vision shapes every decision: how much to invest, whether to take on partners, when to hire, and how much risk to accept. Knowing where you want to end up helps you navigate the daily decisions of getting there.

Typical Cost Range and Factors

Starting a business in 2026 costs vary enormously by type:

Online/service-based businesses:

Website and hosting: $100 - $2,000
Software and tools: $50 - $500/month
Marketing: $200 - $2,000/month
Legal and accounting setup: $500 - $3,000
Total startup: $1,000 - $10,000

Home-based businesses:

Equipment and supplies: $500 - $5,000
Insurance: $500 - $2,000/year
Licensing and permits: $100 - $1,000
Total startup: $2,000 - $15,000

Retail or restaurant businesses:

Lease (first/last + deposit): $5,000 - $50,000
Build-out and renovation: $10,000 - $200,000+
Equipment and inventory: $5,000 - $100,000
Licensing, permits, and inspections: $500 - $5,000
Total startup: $25,000 - $300,000+

Factors that affect startup costs:

Industry. Restaurants and manufacturing cost far more to start than consulting or freelancing.
Location. Commercial rent varies dramatically by city and neighborhood.
Scale. Starting small and growing is cheaper than launching at full scale.
DIY vs. outsourcing. Building your own website costs $100. Hiring a developer costs $3,000-$15,000.
Inventory. Product-based businesses require significant upfront inventory investment.

Red Flags vs. Green Flags

Red Flag	Green Flag
No research on competitors or target market	Detailed understanding of the competitive landscape and target customer
Business plan is entirely based on optimistic projections	Financial projections include realistic and worst-case scenarios
No separate business bank account or financial tracking	Separate business finances from day one with proper accounting setup
Skipping legal structure and insurance “to save money”	Consulting a lawyer and accountant before launching
Going all-in with no financial runway or backup plan	6-12 months of personal expenses saved before leaving a day job
Can’t clearly explain the value proposition in one sentence	Clear, specific value proposition that addresses a real customer need
Ignoring negative feedback from potential customers	Seeking honest feedback and adjusting the concept based on real input
Planning to “figure it out as we go” with no written plan	Written business plan with financial projections, marketing strategy, and milestones

Money-Saving Tips

Start as a side business to reduce risk. Validate the idea and build revenue before quitting your job. This is the single most effective way to reduce financial risk.
Use free or low-cost tools. Google Workspace, Canva, Mailchimp (free tier), Wave (free accounting), and WordPress or Squarespace cover most startup needs at minimal cost.
Bootstrap before borrowing. Every dollar of debt comes with interest and pressure. If you can self-fund the early stages, you retain full ownership and flexibility.
Keep a business notebook for tracking expenses, ideas, and to-dos. The simple act of writing things down improves your decision-making and helps you spot spending patterns.
Negotiate everything. Rent, software subscriptions, vendor pricing, insurance rates. Vendors expect negotiation, especially from new businesses. Ask for discounts, deferrals, or better terms.
Join a coworking space instead of leasing an office. Coworking memberships ($200-$500/month) are a fraction of the cost of a commercial lease and include utilities, internet, and meeting rooms.
Learn what you can. Basic bookkeeping, social media marketing, and website management are all learnable skills that save thousands in outsourcing costs during the early stages.

Glossary

LLC (Limited Liability Company): A business structure that protects the owner’s personal assets from business debts and lawsuits. LLCs offer tax flexibility (you can choose to be taxed as a sole proprietor, partnership, or corporation) and require less paperwork than a corporation.

EIN (Employer Identification Number): A unique nine-digit number assigned by the IRS for tax reporting purposes. You need an EIN to open a business bank account, hire employees, and file business taxes. It’s free to apply on the IRS website.

Break-Even Point: The point at which your business revenue equals your total expenses, meaning you’re no longer losing money. Calculating your break-even helps you set realistic sales targets and understand how long it will take to become profitable.

Burn Rate: The rate at which your business spends money before becoming profitable. If your monthly expenses are $8,000 and your revenue is $3,000, your burn rate is $5,000/month. With $30,000 in savings, you have six months of runway.

SBA (Small Business Administration): A U.S. government agency that provides resources, counseling, and loan programs for small businesses. SBA loans typically offer lower interest rates and longer terms than conventional business loans. The SBA doesn’t lend directly but guarantees loans made by partner lenders.

Sole Proprietorship: The simplest business structure, where the business and the owner are legally the same entity. Easy to set up and run, but offers no liability protection, meaning your personal assets are at risk if the business is sued or defaults on debt.

Helpful Tools and Resources

Our Pick

Business Plan Guide Book

Walks you through every section of a business plan with examples and worksheets. Especially useful if you've never written a business plan before and need structure.

Our Pick

Entrepreneur's Notebook

A dedicated notebook for business ideas, financial projections, meeting notes, and to-do lists. Keeping everything in one physical place makes planning tangible and keeps your thinking organized.

Our Pick

Large Dry-Erase Whiteboard

A whiteboard in your workspace lets you map out processes, track goals, brainstorm ideas, and visualize your business strategy. One of the cheapest, most versatile planning tools you can buy.

SBA.gov: Free resources for starting, managing, and growing a small business. Includes business plan templates, funding guides, and local counseling through SCORE and Small Business Development Centers.
SCORE: Free mentoring from experienced business professionals. SCORE mentors provide one-on-one guidance on planning, funding, marketing, and operations.
IRS Small Business Resources: Tax guides, EIN application, estimated tax calculators, and compliance information for self-employed individuals and small business owners.
Wave Accounting: Free accounting software for small businesses. Handles invoicing, expense tracking, and financial reporting without a monthly fee.

Quick Reference Checklist

Review these before committing to starting a business:

Frequently Asked Questions

How much money do I need to start a business?

It depends entirely on the business type. An online consulting business can launch for under $1,000. A restaurant can require $100,000 or more. The key is calculating your specific startup costs, adding a 20-30% buffer for surprises, and making sure you can cover personal expenses during the period before the business is profitable.

Should I write a formal business plan?

If you’re seeking funding, absolutely. Lenders and investors require one. Even if you’re self-funding, a written plan forces you to think through your assumptions, test your financial projections, and identify weaknesses before they become expensive problems. It doesn’t need to be 50 pages. A lean plan of 5 to 10 pages is sufficient for most small businesses.

When should I quit my day job to focus on the business?

When the business generates enough revenue to cover your personal expenses, or when you have 6 to 12 months of savings as a runway. Quitting too early creates financial pressure that leads to bad decisions. Quitting too late means slower growth. Find the balance that lets you commit fully without risking your financial stability.

Do I need a partner or co-founder?

Only if they bring skills, resources, or connections you genuinely lack. A partner who shares your exact skill set doubles the effort but not the capability. A partner who complements your weaknesses (you handle product, they handle sales) can accelerate growth significantly. Choose carefully. Business partnerships are second only to marriages in their potential for both reward and conflict.

What is the most common reason businesses fail?

Running out of money. Specifically, running out of money because revenue didn’t materialize as quickly as projected, expenses exceeded estimates, or the founder didn’t have enough financial runway to survive the gap. Virtually every other failure (bad location, weak marketing, wrong product) eventually manifests as a cash problem. Solve for cash, and you solve for survival.

Disclaimer: This article is for educational purposes only and does not constitute financial, legal, or business advice. Starting a business involves significant financial risk. Consult a qualified accountant, attorney, and business advisor before making business decisions. Tax laws, regulations, and market conditions vary by location and change over time.

This article is for educational purposes only and is not financial advice. Consult a qualified financial advisor before making financial decisions.