There’s nothing wrong with working for an employer and reporting to a boss who calls the shots. But if you’re an independent worker by nature and prefer to run your own show, starting your own business could be a move that pays off big time this year. But before you make that decision official, ask yourself these key questions to see if it’s the best choice for you.
1. Do I have a solid business plan?
It’s one thing to have a great business idea, but it’s another thing for that idea to make money. If you want your venture to be successful, you’ll need to make sure you have a solid plan before you kick it off. That plan should include any financing you need to get that venture off the ground, and it should cover logistics such as where you’ll work from and whether you’ll need to hire staff or plan to tackle things solo.
2. Do I have a healthy level of savings?
It can take time — a lot of time — for a new business to turn a profit. And if that’s your sole source of income, you’ll risk falling behind on your bills if you don’t have a solid level of savings to tap. Therefore, assess your emergency savings (not your retirement savings — you don’t want to touch the money you already have set aside for your later years) and see how many months of living expenses your balance can cover. Though most people are advised to have three to six months’ worth of bill-paying money tucked away in the bank, if you’re starting a business, you might want to aim for a year’s worth — especially if you also have a mortgage and a host of existing financial commitments.
3. Do I have a backup plan in case my venture fails?
It’s always good to be optimistic when starting a business. But you’ll need to be realistic as well. The truth is that about 80% of new businesses fail after a year. This was the case 20 years ago, and that percentage hasn’t really wiggled since. As such, you’ll need a backup plan in case your venture doesn’t take off. That plan could entail going back to your former employer, freelancing in your previous field, or trying out something totally different. But it helps to have that plan in place, if for no other reason than that it might help keep you calm in the face of the challenges you’re apt to encounter early on.
4. Am I prepared for the emotional investment involved?
Starting your own business isn’t the same thing as accepting a job offer and showing up to work for someone else every day. When you own a business, you invest your money, your time, and in some cases, your tears. Make sure you’re ready to face the emotional implications of owning a company, because chances are things won’t always go smoothly. Also consider the impact starting a business could have on your work-life balance. Though you may reach a point at which you get more freedom by virtue of being your own boss, you may also find yourself working nonstop when problems arise or deadlines must be met, so make sure you’re OK with that possibility.
Starting a business could be a rewarding career move — and the best move you’ll make all year. Just make sure you’re really ready before diving in.
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