Laying a Solid Foundation
For a 12x16 foot shed, you'll still be building at a small enough scale that you shouldn't need a deep, permanent foundation. Make it any larger, though, and you'll need to pour concrete or bury posts to reach below the frost line. Nonetheless, whether your shed's foundation is built from pressure-treated timber or concrete blocks, called "skids," build it with the individual blocks or skids set close to one another. If you go with concrete, use solid blocks; the hollow ones are not supportive enough for foundation building. Before setting the foundation materials themselves, lay gravel over the building site; 2 to 4 inches should be enough to prevent soil erosion.
By opting for a 12x16 foot shed, you're sticking to standard measurements and avoiding the extra expense of irregular shapes or lengths. With the money you save, you can invest in higher quality materials and design features. For example, build the floor beams out of pressure-treated lumber to limit damage from weathering or insects. You can trim the outside of your shed with PVC boards instead of wood for a low-maintenance option. Otherwise, cedar is among the most insect-proof and weatherproof choices for lumber. PVC also makes a sturdier option than vinyl or aluminum siding, which may not perform as well from the regular beatings of hauling equipment in and out of a regularly used shed. If you want to further reduce costs, it should be fairly easy to find materials for your dimensions at recycle centers and from used building material suppliers.
Tweaking Design Elements
If you aren't following a ready-made plan, orient design elements, such as windows and doors, to accommodate your needs. With two 12-foot walls and two 16-foot walls, you have plenty of broad spaces where you can set up a workbench or install shelving. If you will use the shed to store heavy, rolling equipment, such as lawnmowers, place a sufficiently wide door wherever it's most convenient for a ramp. If you want the windows in your shed to offer the most natural light, take any nearby trees, buildings or other shade elements into consideration when planning the window placement. If you live in a cold environment, setting the windows on the southern side of the shed will provide the most heat.
Selecting a Site
For a shed that's 12x16, you'll need a clearing of at least 16 feet by 20 feet for your building site. In this area, you should not have any trees, shrubs, fences or other structures. Erecting a shed too close to plantings or other outbuildings will reduce the direct sunlight and wind on the shed; both elements are important to avoid excess moisture and mildew problems. You'll also have an easier time repainting or repairing the exterior.