- Make sure you have money set aside to pay monthly expenses in a “liquid” vehicle, such as a Certificate of Deposit or Money Market at the local bank. Two to three years’ expenses is a good amount to set aside for this purpose. These funds should be available at any time and should not be invested in a volatile vehicle such as the stock market. With most new businesses, it takes time to build a steady income on which the business owner can depend for personal income. These funds are for personal expenses only, not for business-related expenses; additional funds should be set aside for start-up purposes.
- Run the numbers before giving notice at your current job and review them with someone who is financially knowledgeable such as an accountant with whom you have a good relationship. Are your assumptions valid?
- Have two “fall-back” options in case transition funds are exhausted. Two examples are a home equity line-of-credit or an agreement with a family member who is willing to provide funding. These arrangements should be set up prior to leaving employment.
- Meet with your partner and other household family members to discuss the pros and cons of making the leap from employment to self-employment. Involve others in the household who will be affected by the change. If needed, meet together with a therapist, mediator, or life coach who can facilitate the discussion.
- Develop a business plan, including financial projections, and get feedback from a mentor who has been successful in the type of business you plan to launch.
- Partner with a consultant or coach who can connect you to resources and can help you think through your transition plan
Take Action:
- Talk with someone you know who has run a successful business and ask them what recommendations they would make to someone who is thinking about starting a business. What did they wish they knew when they started theirs? What do they like about having a business and what challenges them?
From: Your Blueprint For Personal And Financial Transitions
Copyright 2012 Connie Livingston All rights reserved
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