PEOPLE GET SO EXCITED when they feel like they’ve connected all of the intellectual dots and now have a complete idea to get their new business off the ground. Maybe they finally figured out the chemical composition of their new product, or finally just thought of the perfect name for their business.
Whatever the last piece of the puzzle was, don’t let it excite you to the point where you get tunnel vision and run right off of a cliff. Before you go quitting your day job to start your new business, you need to ensure that you check these 5 boxes so that you don’t end up right back at your old desk, labeled as a failure.
- Do you have enough money? It might sound silly, but sometimes people get so wrapped around the axel thinking about money for their new business that they forget to think about other important expenses that they will still be expected to pay like rent, a mortgage, food, car, insurance, etc. Do you have enough money to live on while you’re getting your business started? Experts say that by having six months of living expenses saved up is a safe estimate. Just make sure that you’re not calling your living expenses “start-up capital,” or vice-versa.
- Have you conducted a market test? Just because an idea is awesome doesn’t mean that it is awesome for where you’re starting a business. Snow shoe companies don’t do well in Florida, electronics stores don’t do well in Amish Pennsylvania, and I don’t believe that a Dollar General in Beverly Hills would have a single customer. The reasons why certain establishments don’t survive in certain markets are countless. Sometimes, people find out the hard way by going out of business. Research other business like yours in the area in which you want to open and see how they’re doing.
- Did you write a business and/or marketing plan? Do you have any kind of plan at all? If so, is it good enough? Have you covered all of your bases? While part of writing a plan is organization, the other major part is uncovering hidden issues or things you may not have thought of.
- Test the water before you dive in. While you still have your day job, try doing as much as you can toward your new endeavor at night. This ties directly to number 2 in that you may be able to conduct a full market test through working at night and on the weekends while you still have your day job. If you can manage this for just a little while, it’s a great way to maintain your life’s security while testing whether or not your new endeavor will work.
- Plan the transition. Brainstorming the strategy of your transition from employee to entrepreneur should be a multi-draft plan. No one, no matter how smart, can effectively plan the transition in one try. There are simply too many facets, including the ones that you can’t learn from books and that may be specific and unique to your personal life, to keep track and on top of to plan it all at once. The biggest holistic facet to stay on top of and ensure that you’ve planned inside and out is your finances.
This can be daunting because not only do you have to consider your new business finances, but your personal finances need to be considered, too. Consider, also, that, typically, things never go as planned. You need to have contingency plans in place for your life-vitals like health, vehicle and home-owners insurance, child care, your mortgage, etc.
It’s important to stay on top of your personal finances during the transitional period from employee to entrepreneur because, while no one wants to think about it, in case your endeavor doesn’t make it, you don’t want to have to look for a new job while trying to put your personal life back together, too.