Today’s post is continuation of previous one where I presented five ways to earn or save some money at your home or doing things, you do any way. Especially, if you are planning to switch from full time job to your own business, no matter what it is, beginnings are usually hard. That’s why it is important that you’ll make your decision about leaving your save income not earlier than you are ready. You might have a hard time figuring out how to market your products or services, you might struggle to get hang on your taxes or just working from home might be harder than it was at work, when you had your boss over your head for the entire time. Why shall you add to this worrying about money? Remember that no matter how well or bad your business is going, you will still have your bills to pay.
So how much is good to save before leaving your job. And the answer isn’t as simple and direct, as some people would like to hear. I would definitely like to. But there are some questions which, in my opinion, everyone who starts their own business should ask themselves, before going on their own (and they are not all possible questions, just all of them I thought of myself and which I’m using to take this decision).
How much am I spending each month?
This is very important question. First of all, it will determine, the minimum amount of money you need to survive. You should include all you house bills, groceries, clothes, debt payments, etc. When you will look at your costs, I would right away divide it into two categories: necessary and unnecessary. Necessary would be all stuff like bills, food, medicines, if you are taking some, clothes, cleaning stuff, etc. Generally everything what you really need. Unnecessary will be all except them. And it doesn’t mean that you have resign out of them, at least not right away. In this category would be your all subscriptions (except these which you would be using for your work, they will be in previous one), all coffees drunk outside and all other costs, you would be able to live without if you had to. If you get some numbers, you can move to the next question.
Can I reduce any costs of the unnecessary category, if I have to?
This one might be hard sometimes, but no one ask you to do so. Just think about this, in case if there will be any unexpected cost, something you didn’t know how to prevent. Or if there would be a tight period in your business. Where could you pull money out to cover it? Or if you’d realised that your business actually needs a bit more time to work for itself, how much longer are you going to be able to stretch your funds?
What is plan B?
You have this great idea for your business, with eyes of your imagination you can see how you are becoming a millionaire within no time. But what if this will not be the case? Of course I wish you that you succeed, but there are many businesses which don’t make it. What are you going to do in case if your one will be the one? Will you have an opportunity to return to your old work? Or you will have to find new job? How long approximately it can take you to do so?
How long do I think I will have to wait for my business to take off?
This question might be hard, especially if you are new in entrepreneurship. But just think what is your first thought. Maybe your business is already running and you just need to scale it? What steps do you need to take and how long the process is going to take? If you are about to start, maybe try and think, how long mentally are you going to take it. You can give some deadline to yourself, and after that start looking for at least part time job to support your actions?
When you’ll get an answer for all for questions, you could try to decide this way: if the answer for last question is one year, multiply your monthly costs by 12 months plus the time of how long do you think getting your plan B into the life might take you. To be even more sure, you could add couple of months as a mistake margin. Or you could just try to cover it by reducing your unnecessary category costs. This is a way of how I am planing to do so. I think this system would keep me calm and give me a lot of time to react, in case if something will go wrong. But remember, this is my way. Maybe for you peace of mind will bring doubling these numbers or even tripling. The only thing I want to ask you to do, make sure to get at least a bit ready. Don’t throw you straight into the deep water, if you don’t have to.
But at the same time remember, that you can start your business as a side hustle after your work. At least on the beginning. It will make you much more tired, but can save you a lot of stress in the future. And as you’ll see that the product or service you have to offer is on demand, you can resign knowing that you are not in a bad situation (but you could try to have some savings any way, even if you are working full time 😉 )
That’s it for today’s post. I wish you a very productive day and I’ll see you in my next post.