Many people dream of casting off the shackles of their nine to five jobs and starting their own small business. Most of them are not able to simply quit their day job to live their dream, so instead they build their business at night and on weekends until it reaches the point where they can finally hand in their letter of resignation.
If you’ve been bitten by the entrepreneurial bug and you’re thinking of starting your own business, there are a few things you need to consider before taking the plunge.
Have a Plan
Statistics show that the majority of new businesses fail within the first five years. Having a solid business plan can help you overcome those odds. You need to consider where your revenue will come from, what kind of expenses you’ll have, and how you’ll keep your business running until it starts to turn a profit.
You’ll need to decide what kind of business structure to set up (sole proprietor, corporation, LLC) and figure out if you need any business licenses. And you’ll need a well thought out plan of action to guide you as your business grows. The more preparation you do ahead of time the better chance you have to succeed.
Don’t Forget About Your Day Job
It’s only natural to be enthusiastic about building your own business, and you may be tempted to work on your side business during regular business hours even if you have a full-time job. Don’t do it. Your employer is paying you to work for them, not to build your own business on their time. How would you feel if someone that worked for you was spending his or her day working on their own private business while you foot the bill? And if your work performance suffers because you’re not focused enough on your job you could find yourself depending on your business income a lot sooner than planned.
Keep a Close Eye on Your Cash Flow
Cash flow is the lifeblood of any business. Many a business has been ruined by poor cash management and if you want to avoid becoming one of them you need watch your cash flow like a hawk. Keep on top of your customers to make sure they are paying on time. If they don’t pay you then you may not be able to pay your vendors. Also, don’t end up stuck with too much inventory. You need to keep a comfortable amount of liquid cash to cover unexpected expenses.
Prepare to Work Your Butt Off
If the reason you want to start a side business is so you can have it easy, you’re in for a rude awakening. Yes, a small business could one day provide you with a steady, semi-passive stream of income. But it takes a lot of work to go from startup to success story and that goes for any type of business whether you are opening a coffee shop, offering accounting services, or launching a blog.
Expect to spend many late nights and weekends slaving away as you try to make your dream a reality. There will be times when you question whether it is really worth all the effort and you’ll be tempted to throw in the towel. If you aren’t prepared to put in the time and elbow grease required then don’t even bother.
Starting a business with unrealistic expectations is a recipe for disaster. But as long as you plan ahead, stay focused and organized, and are willing to work your butt off you could be the next entrepreneur success story.