How to Financially Prepare for Starting A Business
If you’re getting ready to start your business, it’s really important that you’re financially prepared ahead of time to give yourself the best possible shot at success.
Obviously each person’s situation is different and different business models require different start up costs BUT I have 3 tips that will help you regardless of your situation.
Determine business start up costs, then at 10%
Make a list of every expense require to start up your business and to run it for the first year. Add 10% for unexpected costs. Do your research to find out the EXACT costs for everything. Guessing what things will cost will only hurt you in the long run. To help you, download my worksheet - a comprehensive list of business start up costs.
Have 6 to 9 months of living expenses set aside
Starting a business is a risk and it’s important to manage that risk. Even if you’re working a 9-5 job, having 6-9 months of living expenses set aside will give you the freedom to leave that job when your business takes off. The ability to buy time will provide you with a unique opportunity that not many people have.
Determine how to save
Once you make your list of start up costs and determined how much you need to buy 6-9 months, you need to figure out how much to set aside each month to hit those numbers. Take the time to calculate different percentages and how long each will take you to reach your goals. Start with a minimum of 10% and calculate how long it will take to hit your goal. Manipulate the numbers until you find the percentage and timeframe that works best for you.