When working with clients on their finances, income is an important part of the conversation. Some clients have their own business. Others dream about it.
Starting a business may be your dream. But before you quit your current employment, spend time speaking with other business owners to find out how hard they work. You may change your mind and realize the grass is not greener on the other side.
Here are some things to do before you begin your business:
1- Research if your business idea is a viable concept. Talk with others in the industry who may be located outside of your market. List all competitors and define how you will have a competitive edge.
2- Figure out how much you will spend to start your business. Start-up costs include setting up your legal entity, bookkeeping, space, website etc. Brainstorm your list then add to it as you continue your planning. If you don’t know the cost of some items, use Google.
3- Figure out your ongoing business expenses. This list will include marketing, space, supplies, equipment, etc. Similar to #2, brainstorm this list then add to it as you continue your planning.
4- Calculate your revenue. How much sales will you need to cover your expenses? Is this amount realistic? How long will it take you to reach this amount? Will you have recurring revenue?
5- Start saving to have at least three years of your current expenses covered. If you start your business and don’t have revenue for three years, your reserve will cover your expenses. By creating this reserve, you’ll have a financial cushion to focus your efforts on making your business successful.
While you may “know” these items, it helps to see it listed. Most of the above steps are covered in a business plan. However, many people move forward with a business without spending time developing a business plan. Keep your plan simple and at a minimum, address the five items listed.
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ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA™, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter and financial advisor. Her services include spending plan, financial plan, divorce financial review, life strategy and professional progression. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me’.”