Owning your own business is a goal for many people. Unfortunately, the majority of small businesses fail within the first few years. This does not have to happen to you. Preparation greatly improves your odds of success. Take the time to research the market and make sure you are in the best position possible before making the jump into self-employment.
Streamline Your Budget
When you start your own company, you are the person who is responsible for the day to day activities, making sure products are ordered, and bills are paid. It is a huge responsibility, made more stressful if you don’t have a handle on your finances. Before jumping into becoming an owner, make sure that you have a personal budget in place, your bills are paid on time, and that you make regular contributions to your savings account. It is important to know exactly what you spend each month on everything from utilities to groceries. What areas could you cut if necessary? You don’t need to live on a bare-bones budget when you start a new business, but you should have a feel for how much you can cut, and where those cuts could be made if necessary.
Putting yourself in the best possible position to launch a business means not dragging unnecessary debt with you. If you have credit card debt, work on paying it down. If your credit is in good shape you can look to transferring your balance to a zero-interest or low-interest card while you work on paying the debt off. Reducing credit card debt before starting your business has another benefit. If times get tight, having available credit can help you through the lean periods. You should never plan to live off your credit cards, but having that open line of credit can smooth the rough edges of a business start-up. Check the interest rates on your student loans. You may be surprised at how much money you can save by refinancing your loans at a lower rate. This will free up money and lower your monthly expenses without making any changes to your lifestyle.
Don’t Expect to Make a Profit Immediately
If you need to draw a salary from your new venture immediately, you may want to delay your launch. Even if your business is an immediate success, it is nice to have the freedom to invest that money back into your business in the early days. Count on everything involved in starting a new business to cost more and take longer than you plan, and if you are wrong, you will be pleasantly surprised. Having a cushion in your savings account that allows you to hold off drawing a salary immediately has another benefit. If yours takes off quickly, you can use the money you would pay yourself and start staffing. Launching and running on your own is rewarding, but demanding. Having someone else to share the burden with will allow you to focus on the many management issues involved in being an owner, and helps prevent burnout.
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