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  • Writer's pictureNate Baim, MBA, CFP®

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?


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