Let’s start with item number one, what to use for shop space. Obviously, the best thing would be if you owned a shop space such as your garage or some other out building. This would certainly be less costly than renting even a small space. However, it may not be viable in a subdivision with deed restrictions, where you may not be able to conduct any business from your home. Or, it is possible that there are noise restrictions precluding the use of woodworking machines. Check all that out before you start a business at home.
Assuming you have to rent a space, don’t start out with a large and costly space. Your monthly rent can quickly drain your reserves. Consider a small space, perhaps in some low rent storage area since most of the high end storage area do not allow businesses to operate. My storage area encouraged small businesses so it was easy to convert it to a small shop space. You can always move to larger quarters as your business grows. My last shop before I retired from woodworking was 1400 square feet.
I often hear concerns that projects can’t be built in a small space. Even though it is more difficult to work in smaller spaces, it is definitely viable. For over a year I did power tool demonstations for Skil Power Tools at Home Depot stores. On weekends I would set up a 4 foot by 8 foot space with a small table saw, a work bench, and a few other power tools and build small projects including a childs table and chair set, book case, end tables, and other projects that I would often design on the fly. I wouldn’t want to run a business from a 4X8 space but I did sell a lot of power tools because of the neat projects I was building.
-- Bill, Austin, Texas, http://woodworking-business.com