In my time as a financial advisor, I’ve had quite a few self-employed clients in a variety of industries. Along the way, I’ve learned what my clients need when they decide to start a business.
For those that are looking to transition from full-time employment to self-employment, we usually go through a process like this:
How to Start a Business: The Dreaming Stage
Before you start a business, look at anything and everything you enjoy doing. I usually encourage my clients to take an assessment like Gallups Strength and/or Kolbe A to see if their natural strengths will guide them toward or away from any particular industry.
Another way to point yourself in the right direction is to think about what people come to you for. What are you the go-to person for? Where are your natural abilities? These can be areas of excellent potential for your new business.
Next, you’ll want to consider whether it would be better to transition slowly by working on your business part-time, or making the full-time leap right away.
The Planning Stage
This is when you get down to the specific logistics of the business. This could include factors like the upfront investment, the expected runway you might need, and the estimated business deficit or profit for the first few years.
You should also calculate any adjustments needed to your personal cash flow and any adjustments you might need to make to the personal cash flow to give the new business enough time to be grown from a seedling into a flourishing business.
The Implementation Stage
At this point, it’s time to make things official. Here are some of the tasks you’ll need to check off to get there:
- Figure out a business entity (from both a legal and tax standpoint)
- Set up the business entity (which may necessitate using an attorney and/or accountant)
- Get set up with bookkeeping and/or accounting professionals
- Decide when to set up a retirement plan (right away or wait until after the first year or two)
- Evaluate anything else that could and should be run through the business
The Maintenance Stage
Once the foundation of your business is in place, your focus will shift to maintenance. That could include tax planning, budget reviews, goal setting and other regular check-ins to promote the health of your business.
Don’t forget about your personal financial planning – as the business owner, it’s important that the business is serving you, too. Make sure you know how much to pay yourself, what to put away for retirement, and how to prepare an emergency fund.
There are so many resources available to small business owners at every stage, including:
- State and local organizations (Check SBA to find your local chapter)
- SCORE mentoring and resources for small business owners
- Facebook groups (Search for Facebook groups in your industry)
- Peer mentoring
- Books and podcasts
- One-on-one business coaching
- Financial planners and accountants to help work out the details
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.