Steps to Take Before Starting Your Own Business
Do you have an entrepreneurial mindset and are ready to start a business of your own? It is easy to get excited and dive right into the nitty gritty of starting a business, but there are some financial steps you should take before. When starting your own business, you must be cautious to ensure you will be financially secure as your business grows.
Estimate How Much the Business Will Cost
We all know that businesses can be very expensive. Depending on which industry your business is in, it will cost a different amount of money to start. For example, if you are starting a brick-and-mortar store, you will need to pay for the rent and the merchandise you will have in your store. On the other hand, if you are starting a graphic design business, you will need to purchase photoshop and other digital tools to create your designs. Before you start your business, estimate these costs and make sure you can pay for them up front.
Decide if You Will Be Hiring Employees
If you plan on hiring employees straight away, you will most likely need to have some money set aside so you can pay them before you start getting customers. You don’t want to be in a position where you cannot start paying your employees, so it is important to save up for their wages. If possible, it may be a good idea to wait to hire employees until you start seeing revenue. This way, you will be the only “employee” you must pay each pay period.
Save for Three Months of Spending
When you are starting your own business, you move into an area of uncertainty. Of course, you hope your business takes off immediately and you will be able to spend as you did with your previous job. However, there is no way of knowing this will be the case for your business. It may take a few months before you start making a profit for your business, making the rest of your finances a bit tight. This is why many financial professionals recommend saving up a fund that you can survive on for some time. If you are able to, we recommend saving up as much as you possibly can before solely relying on the income from your own business.
Your business will likely be your most valuable asset and you must take measures to protect it. With that being said, you may want to consider investing in business insurance as soon as possible. There are many different business insurance types like property, crime, liability, worker’s compensation, and more. Take a look at the different things you may face with your business and see what you may need to get covered by insurance.
As financial professionals, we recommend staying at least one step ahead financially when starting your own business. For additional advice and information on starting your own business, send us a message and one of our professionals will set up a time to answer your questions