Starting your own business sounds fantastic in theory. Who doesn’t want to march into their boss’ office, hand in their resignation, and spend the next year working from Fiji’s beaches?
No boss, no stress, just fun in the sun and plenty of money.
That’s a great dream, but that’s not how entrepreneurship works. If you want to start your own business successfully, there are some foundational steps to take. And yes, you need to do these things before you can tell your boss goodbye.
The good news is that running your own business is possible. The bad news is that it’s not easy, and you aren’t likely to do it from the beaches of Fiji.
The first step is to understand your finances and make plans for navigating the ups and downs of entrepreneurial life. Here’s are the tips you need.
Prepare For Uneven Income
One of the most significant changes, when you move from a regular job to running your own business, is that you no longer get a steady paycheck every two weeks. That might not sound like a big deal, but the reality is that we rely on that consistency more than we realize.
Bills still come due whether money comes in from your business or not. You’ll need a way to deal with the shortfalls, especially in the beginning.
There are two ways to do this, and the most successful entrepreneurs do both of them.
The Side Hustle
First, you can run your business as a side-hustle alongside your regular day job. This allows you to build your brand, your client base, and prove that there’s a demand for your product or service. Almost any type of business can start small enough to be a part-time venture for a while.
You’ll also get plenty of opportunities to practice time management, handle stress, and cope with uncertainty. However, you’ll have the safety net of your job to fall back on.
The Savings Plan
The other important financial step to take before you quit your job is to build a healthy savings account. This will allow you to smooth your transition to full-time entrepreneurship and give you a financial cushion for hard times.
While you’re building your savings, make sure you choose a bank that makes sense for your needs. Transactions should be simple and you want to avoid fees as much as possible.
While there’s no amount of savings that will make running a company risk-free, the more of a cushion you can build up, the more confident you will be when you make the leap to full-time entrepreneurship.
Research the Business Environment
Before you start any company, you need to understand the current business environment. For instance, mobile payments are essential in most retail environments — if you plan to be in the retail space, you need to prepare for that.
You can’t afford to be caught off-guard, so be sure to educate yourself before you start a business. You can use online research and look at potential competitors for ideas. If you want a broad overview of the business world and what it takes to succeed, you might consider returning to school and getting your MBA.
The better educated you are about business and the specific niche you plan to enter, the more likely you will be successful.
Prepare Your Business Plan
A business plan is essential for setting goals and knowing where you want your business to go. However, there’s more to it than that. A well-crafted business plan will help you present your business idea to others when it’s time to raise money.
If you’re planning to take out business loans, you’ll need an excellent credit score. Your business will be based on your personal rating in the beginning. Banks also establish a lot of their lending decisions on how realistic and well-thought-out your business plan is.
Suppose you aren’t able to secure a bank loan, or you need additional funds. In that case, your business plan will be instrumental in helping you present your ideas to investors and even friends and family who may want to put money toward your company.
The Right Finances Smooth the Way to Business Success
There’s no way to guarantee that your business will be successful, but there are definitely ways to make it harder than it should be.
Not having proper savings, failing to understand the business environment, and not creating a clear business plan can all trip you up. However, by having these components in place, you can make your transition to entrepreneurship much more manageable.
There’s never a perfect time to start a business, but today is generally better than tomorrow. Get started laying your financial foundation now!
