Don’t Quit Your Day Job (yet)
The decision to leave a well paying job, quit your day job, and follow your dreams into having your own business is a challenging one that involves strategic, financial and emotional factors. No matter how well prepared, the decision to work full time in a business is still a ‘leap of faith’ which will test you emotionally, physically and financially. However for those souls who are brave, prepared and welcome a challenge, the rewards are worth it.
‘The Clash’ perfectly summed up the anguish of the decision with their words ‘if I go there will be trouble and if I stay there will be double so come on and let me know, should I stay or should I go?’ Knowing when to leave the comfort of paid employment is about planning and preparation for the demands of operating and growing your own business.
Why am I in business and where do I want to go?
The first step is to be able to clearly and succinctly identify why your own business exists, where you want to take the business and the values that will guide how you do business. For instance, Facebook exists to ‘Give people the power to share and make the world more open and connected’. The answers to these questions will give you the framework in which your business will operate. They are the essence of your business.
What is my strategy?
Once you have a clear view of the essence of your business, the next step is having a strategy and plans for where the business is growing. The plans will focus on all aspects of the business including the product or service being sold, the type of customers, how to obtain those customers, the employees, the equipment required, and the brand of your business.
What to expect from having your own business during the first year or so?
Having a realistic understanding of the expected income, expenses and capital requirements of your business by way of a detailed and well thought out Budget is an essential tool for success. A realistic and I stress realistic financial budget assists in identifying and charting profits from the business and how the actual results meet or differ from you expectations. It also serves as a trigger to prompt a detailed analysis of you expectations and knowledge of the business. Before commencing operations, understanding your commitments and how much revenue will be required to cover them and make a profit is essential preparatory work.
How much cash or funds will the business need to keep operating?
No matter what type of business you’re embarking on, ‘Cash is King’. Having cash reserves whether they arise from Savings, Overdraft or Loan Funding is imperative to the success of your business. Being able to pay your Accounts when they fall due is good business and if you operate through a company and are a Director there is a legal requirement to make sure that the company does not enter into any debts that it is not able to pay. A cashflow budget also helps identify the months in the business where funds will be tight so additional funding can be made available. This is one of the most important pieces of information available to you and monitoring your cash reserves and updating this document regularly is an essential tool.
No matter what type of business you’re embarking on, ‘Cash is King’.
How long can I continue to meet all the outgoings if there are no or limited sales?
Having a defined term for the business to succeed ensures that you do not spend over your resources and end up in financial trouble. Very few people have the luxury of being able to continue funding a business that is not generating sales for an extended period of time. Understanding how long you are able to cover both personal and business outgoings without any sales will give you framework to operate in. For example, if you know you can fund the outgoings for 12 months this is the period you have to make your business profitable. As revenue increases the timeframe for success will be extended dependent on the level of sales.
Should I access Professional advice?
Drawing on the expertise of professionals is essential when commencing full-time in a business. Accountants in particular will be able to provide assistance on the right structure to use, how to prepare budgets and cashflows and what registrations and taxes the business will be required to pay. They will also be able to help with the general advice on the operations of the business. During your business life time Solicitors will also be an integral part of your success as they will assist in preparing and reviewing your lease agreements, contracts to purchase and sell etc.
Do I have the right attitude?
The final piece in the decision making puzzle is attitude. Working for someone else usually means that they direct you in how to carry out your employment. Being a business owner requires you to be self directed. It requires you to think strategically as well as operationally. Business is risky and being able to deal with the constantly changing world is part of the challenge of business. You will be in charge of the direction and destiny of the business. Before you take the step and quit your day job, make sure that this is truly what you want.
The only thing left to say is ‘Good Luck’ with your decision making.