A logo is a visual sign to remind people of your brand, which is itself a promise of an experience. In most cases you will want to register your logo as a trade mark. The four characteristics which make a logo effective are: memorable, appropriate, distinctive and efficient.
Your logo exists to remind people of your brand. It must therefore be memorable. The loop of short-term memory is 2-3 seconds, so the eye should take in your logo in that time. In seeing a logo, we see first colour, then shape, then the contents. Studies indicate that a memorable logo will be generally like other things the viewer is familiar with, with just one clear point of difference. Good examples include IBM, which is the well known letters (general) presented as through a scanner (difference), the Gillette logo, which is the word Gillette (the letters are general) with a razor edge in the i (difference), and the Apple logo, which is an apple (general) with a bite out of it (difference).
No logo can fully describe or illustrate a brand, but it should be appropriate to the brand's promise, market category, values and style. Appropriateness will not be obvious, but inappropriateness will be. For example, a professional services organisation's logo using the typeface Comic Sans will be immediately inappropriate, whereas viewers will not especially notice the typeface if it is in Helvetica, Frutiger, Univers, Franklin Gothic or Gill Sans.
Your logo should be distinctive from that of your competition. This includes competitors in your own category, and larger players in the same general market. The most direct method of making it distinctive is to choose the complementary colour in relation to your main competitor's logo. The second method is to use a different shape. For example, an oval if your main competitor is using a rectangle. The name itself will determine the overall shape, and, if this is distinctive of itself, the logo does not need to work as hard.
Your logo must be efficient in all of its applications. Generally speaking, this means that your logo must have a version which works in black and white, and should also be capable of being reproduced at small sizes or by coarse printing means without losing its clarity or distinctiveness. If your logo relates to a physical product, reviewing all of the packaging requirements is an essential step in committing to a logo.
Your logo must also be legally efficient. To be registered as a trade mark in the UK, it cannot be a depiction or illustration of your goods or services.