By D. Connie Garzon – M.B.A., C.B.A.
During my career as a Business Consultant, I have met many entrepreneurs that started companies while they were working full-time jobs, and many of them have a goal of quitting their jobs on their New Year’s Resolution List. Are you in that position now?
If you ask me “when can I quit my job?” my answer would be when you make three times your current salary, or if your wife or husband can produce the required household income to provide for the family and your startup expenses. It sounds very discouraging, right?
Being an entrepreneur is not easy, it requires capital, time, and commitment. If you are in the process of quitting your job, thinking your startup is going to sustain your family, please think twice. The US economy is moving into recession and startups are going to have a difficult time raising money from investors or getting loans from banks.
If your answer is my wife/husband can provide until I have traction, I will say, okay, it is time for you to work on your household budget, so you will not put your family in distress. Here are some tips to consider:
- Write a business plan with your next three years’ financial statements.
- Check your credit score and make sure it’s good in case you need to apply for a loan.
- Open an emergency account for your family and your startup, then deposit some cash in each. Don’t touch it unless you need to. That will be your family and business emergency fund.
- Like your business budget, develop your family budget. Family income should appear on top of the excel spreadsheet. List all your sources of income. Family expenses should be on the second half of the excel document. List all your expenses including items we don’t regularly see like subscriptions or medical expenses. Your mortgage or rent cannot be more than 25% of your household income, and your household expenses cannot be more than 50% of your household income.
- If you have debt, concentrate on paying all of it off.
- When it comes to food, be smart when going to the grocery store, and don’t buy unnecessary items. Limit your eating out to once a month.
- Don’t sacrifice your mental health habits. If you’re a gym goer, don’t cancel that subscription. The gym is going to help you when you are anxious.
- If your wife is the provider, let her rest and have her time alone doing what she likes, or help her with household chores, so she can rest.
- Work as hard as you can on your startup and FOCUS on sales.
Following a budget and a business plan will help you to survive the startup chaos. Once you start selling, the startup will give you the quality of life you are looking for.
I am happy to share that many of the entrepreneurs who successfully manage this process have said, “I regret I didn’t quit before” – “Now I am making more than when I was working for somebody else.” That’s not the case for every entrepreneur I know, however, I wish you all the best. You will learn invaluable lessons during this process.
