Well, you had to know it was just a matter of time before we explored the simultaneously exhilarating, frightening, and potentially extremely rewarding matter of starting a brand-new company. There are many different reasons people start companies, including to follow a passion, monetize a hobby, achieve financial independence, or to accumulate wealth, among many other reasons. Rather than focus on administrative questions such as what type of the company to establish (C corp, S corp, sole proprietorship, etc), let’s tackle the most important question of all – can the company make money? Unless you’re independently wealthy and money simply doesn’t matter, your business must make money in order to continue to exist. This is a cold hard irrefutable fact. You may only need to make a small amount of money to suit your purposes or may be willing to sustain significant losses for a period of time, but if you can’t sustain losses indefinitely, even modestly unprofitable business will cease to exist at some point. Thus, step one in starting a new business is to build a model of how it becomes profitable.
Up next: Building a model for profitability.