Key Items for Starting Your Business
Are you considering starting a business?
As a financial advisor who helps early and mid-career professionals, I am seeing more and more people growing interested in starting a business. And the data confirms more companies are starting. There were 4.3 million businesses that filed paperwork last year, so if you’ve always wanted to be independent, you’re in good company.
Since I run a small business and as a fee-only advisor, I can provide a perspective across a financial plan; our clients often ask us to weigh in on their business and how it will impact their wealth. Here’s what we tell them: it’s about the trade-offs. So here are a few things to check off your list before making the leap.
First, ensure You Have an Income Runway.
As a business owner, I can tell you that not having an income runway is skydiving without a parachute. And while entrepreneurship may bring you riches down the road, the early days often mean you’re dealing with no income for months or even years. So, you must get your cash in order.
An excellent step to take is to write down your cash balance when you plan to launch your business and set a timeframe or runway. After that, determine what your initial monthly expenses may look like for both your business and your personal life. Consider rent, food, electricity, kids’ school, technology, internet, and services.
The key is to get the total picture. And finally, determine your current cash balance at the end of your runway. This will help set the stage for how long you have before you either need to get an investor or generate positive cash flow.
Second, get your business plan or idea in order and tested.
After you have your idea on paper, it’s time to test the concept. Generally, there is no hard and fast rule, but getting in front of 50 potential customers or clients can help you to test any new business idea.
What is the best way to do this? Aim to reach out to 100-150 people to get 50 interviews. Document the information and feedback you receive, and at the end of these interviews, you should have a path forward to build your small business.
And last, get comfortable with a new schedule.
When it comes to entrepreneurship, not only will there be trade-offs with friends and family, but you’ll be pulled in numerous directions and have to wear multiple hats. Accounting, sales, product, marketing, finance – in most small businesses, one or two people do these functions in the first 3-12 months.
And if you’re not careful, you’ll spend too much time working in the business rather than on the business. Therefore, it’s critical to respect your time and your calendar. The easiest way to do this is to engage in time blocking. Set aside time throughout the day or week to tackle heavier tasks.
Nothing is like the experience and autonomy that comes with launching or being a part of a small business. But just like anything else, there will always be trade-offs, and being an entrepreneur is no different. Speaking with a trusted resource, like a financial advisor, can help you think through and navigate the ins and outs of the start-up scene.
I work with early and mid-career individuals from Gen X or Y. If you are navigating your finances and trying to understand how your business can enable you to achieve your goals, feel free to place a complimentary 30-minute meeting on my calendar. In that meeting, we can discuss your objectives and situation.
Have something on your mind?
Pursuit Planning and Investments, LLC (“PPI”) is a registered investment advisor offering advisory services in the State of Oregon and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions. Past results do not guarantee future results. Please contact us at 971-803-5948 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend you compare any account reports from PPI with the account statements from your Custodian. Please notify us if you do not receive statements from your Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, www.planyourpursuit.com. This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis.
This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication.
The information herein is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Pursuit Planning and Investments, LLC (referred to as “PPI”) disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
All opinions and estimates constitute PPI’s judgement as of the date of this communication and are subject to change without notice. PPI does not warrant that the information will be free from error. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall PPI be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided herein, even if PPI or a PPI authorized representative has been advised of the possibility of such damages. Information contained herein should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.