There comes a point in time where you may reach this crossroad. Is it that time to 100% bet on myself and my dreams? How can I take my business more seriously and solely invest everything I have into it? The never-ending juggling act of working a traditional job while pursuing your passion projects can often leave you overworked, coupled with a laundry list of things that require your attention. Before you make your side hustle a full-time job, let’s explore these steps below to help best prepare you for your new, thrilling (and most likely frightening) transition.
Consider all of your expenses
Before we fully commit to our own businesses, we have to take a step back and evaluate – how will my household expenses be taken care of month after month? What is the total of my recurring expenses? How will my family make adjustments based on this? Review your budget as it is today and don’t make any adjustments at this point. The next order of business would be to review your most recent bank statements. Are you actually abiding by your budget? What do your discretionary spending habits look like? Are there areas that could use some improvement? While we hope that your business begins (or continues) to generate income, you must consider some very important things. If your business does not profit for a set amount of time, how long are you able to comfortably cover your personal and business expenses?
In the instance you still have full-time employment, take this transition period to save as much as possible. Not only will your overhead need covering, but there will also be startup costs incurred as your business continues to grow – impacting your overall budget. The last thing you want to do is remove your safety net and place yourself in a constant state of anxious frenzy trying to figure out how you’re going to keep you and your family afloat. Running a business in any capacity requires other areas of your life to maintain a certain level of peace. Making any premature moves can have a long list of negative consequences in the future.
Pro tip: If business expenses have been charged on a personal card, start tracking business transactions by adding custom categories and tags in the Mint app. This will help you get a clear picture of how much you’re spending, even if the charges are on multiple cards!
Save as much as possible
We’ve all heard the saying, “patience is a virtue.” Well, saving is too! If you already have an existing emergency fund, feel free to increase this amount. Keep in mind, the money you are accustomed to receiving per-pay period will no longer be rolling in. To ensure your transition to full-time entrepreneurship is a bit smoother, stash away as much as you possibly can. This can start off incrementally to build momentum and gain traction over time. Remember house repairs, car expenses, and other life events will not choose to take it easy on you. Do the necessary work upfront to avoid too much financial overwhelm later.
The next major savings category is dedicated to business expenses. Have you sourced any funding through grants, loans, or small-business programs? Depending on your business type, you may have to invest more money into technology, advertising, or inventory. Understand that if you are self-funded, it’s best to position your finances to handle whatever may be thrown your way.
Review and assess your current, overall business health
How much revenue is your business currently generating? What are your business monthly expenses? If you have a product-based business, take a look at your best and worst performing month. Seasonality is something that has to be taken into consideration, no matter the industry.
If you are operating a service-based business, also take a look at your net income. For either type, are your rates or prices too low for what you’re providing the consumer? Many business owners believe that they’re charging a relatable premium. While that may be the case while you still have full-time employment, that may not apply going forward. This serves as an opportune time to revamp some ideas and execute based on where (and how) you want your business to grow.
If you’re having a difficult time being impartial, view this from the lens of an auditor or a potential lender. Is there enough information for a third party to evaluate your business? You can leverage someone you actively trust – or invest in the help of a business coach. No matter the method, it can assist you in making the right steps toward not only surviving but excelling in your business endeavors.
Establish a backup plan
In the case things don’t pan out as quickly as you’d hoped – please make sure you’ve created a plan to increase your earning potential if the business isn’t executed as projected. This doesn’t necessarily mean going back to the traditional 9-5 job (even though this is always an option). It could be, picking up a part-time position that still allows the freedom and flexibility that’s needed to run a business. This could also be having an emergency fund that’s used to handle household or business expenses. All in all, you want to make sure your bases are covered and try your best to put your pride at bay. You don’t want to fall into a deep hole of debt in the process.
Learn how to embrace the storms
Life journeys can be quite unpredictable, causing us to not always understand how things end up the way they are. When a business is in the ideation stages, there’s a lot of time dedicated to making sure things begin well but also are sustainable over time. Because of this, home life may look and feel a bit different. Your time that was once dedicated to family and friends will be shifted to ensuring your business is everything you’ve imagined it to be. As situations arise, keep in mind these serve as steppingstones. Remember the process of learning how to do complete something for the first time? It seemed so daunting. There were probably occurrences where you didn’t want to attempt again out of fear. Operating and running a business isn’t any different. As you mature in business, things will become more seamless and less intimidating over time.