Secure Yourself First, Start a Business Later
Personal Planning 101 for Small Business Entrepreneurs
Starting a new business is an exciting experience; that feeling of hormones rushing into your blood vessels and brain painting the most colorful dreams of you being filthy rich.
Boom, it feels good to be rich.
Finally, you can buy whatever you want and for everyone who challenges you, you just throw a bunch of middle finger emojis and put them back in their place.
You never realize until it’s too late that you were overly excited and pumped up by a motivation or fake gurus or overly confident about an idea that has no hope in the marketplace.
The problem with inexperienced entrepreneurs is that they primarily see the bright side of their idea, daydreaming about how everything would be perfect rather than looking at the entire situation and acknowledging the difficulties of the equation.
Starting a small business isn’t a simple task and isn’t the guaranteed or fastest way to prosperity.
Nine out of ten businesses fail; in other words, the chance of you falling in business is precisely 90%.
With only a 10% chance of success, you need to be extra cautious about planning for the worst-case scenario and how to take a calculated risk.
Why am I being so pessimistic today? Well, read on, and you will get it.
Many people I know, including myself in the past, messed up and went through a painful divorce, horrible lifestyle, and awful health circumstances.
Today, I will share a few tips I learned through a real-life experience you might need to consider before starting a business.
Personal Planning 101 for Small Business Entrepreneurs
Risks: the significant risks to consider for your personal life before starting a business are:
- Financial risk
- Relationship risk
- Health risk
Starting a small business requires time and money; in many scenarios, you need to quit your job and focus on building your business.
It also means that you might need to get cut your spending on many of your favorite items and activities or go into debt and invest in your newborn dream.
If you decide to quit your job, you will be at the risk of not having a consistent income to secure your living expenses or any emergency events.
How to de-risk your financials:
1. Create separate bank accounts for business investment, personal emergency funds, and living expenses.
Never pull money from your emergency and living funds accounts and throw it at a new and risky business.
2. Calculate basic living expenses for one year, including food, rent, bills, and essential everyday items. Add 25% to 50% of your total life expenses (three to six months) as an emergency fund for special events.
I don’t recommend starting a business or quitting your job unless you have a one-year expense + emergency fund secured in savings.
If you don’t have this amount secured or are currently unemployed, get a job, work as a freelancer or start a side hustle, but don’t start a business.
Most inexperienced entrepreneurs think the best time to start a small business is when they need money. That’s not the case.
The best time to start a small business is when you meet one or multiple of the following conditions:
You can afford a good living and have extra cash to grow your assets.
You have established a network of clients and the resources to provide them immediately with a service.
You have a market-proven idea, and you find the right financial investor.
You have gained a decent amount of industry, market, and operational management experience.
3. Decide on a specific timeline and budget for building your project; your new venture should not be a never-ending failing process and a money-sucking machine.
4. Accept the fact of ending with the worst-case scenario and develop an emergency plan that takes into consideration the following:
- Three months of living expenses until you find a job.
- A list of jobs to get employed until you get back on your feet.
Flexibility and long-term thinking are critical for starting entrepreneurs. Most projects can wait a year or two.
The goal of your financial planning is to separate your survival expenses from your dream expenses.
This separation will help you keep your project running while staying secure financially; your passion and dreams should not destroy your financial future and put your life under threatening pressure.
For a business to become profitable, it requires investment in product manufacturing, hiring the right team, marketing, and advertising.
If you don’t protect yourself and your family financially, your business expenses can burn through your savings quickly, with little to no financial reward in the short term.
This pressure will exhaust you financially and leave you empty-handed with no resources. It’s a checkmate move and a game over for your business.
Eliminate the stress from worrying about the bills and putting food on the table. Give yourself that peace of mind to focus on building and growing your business.
Starting a business will take a significant portion of your time, effort, and focus; it requires consistent care and nourishment, which might risk your relationship and social life.
How to de-risk your relationship:
1. Understand that one of the primary motivations for starting a business is to provide a better living for yourself, your life partner, and your family; therefore, the goal isn’t to become isolated but to achieve some sort of work-life balance.
If you followed me previously, I’m against burning your energy and putting more work into making money; instead, I promote the idea of getting results as fast as possible and being effective by doing less work.
2. Discuss your project and idea with your life partner and make them aware of both risks and rewards of your new business.
3. Have a clear financial and contingency plan and give your project a deadline.
Most partners disagree with starting a business because they don’t want to be financially stressed or fear you will get sucked and stuck in an ongoing failed project.
4. I don’t recommend over-communicating your business details and issues with your family and ordinary friends.
These conversations might create unwanted stress around your situation, especially if they have no prior business experience.
Instead, focus on communicating the positive results of your business and being optimistic.
Don’t expect or ask your family members and friends to develop empathy toward your business struggles and situation.
Instead, join a group of entrepreneurial-minded people to discuss your business challenges and get relative feedback on your progress.
Starting and running a business will take a lot of mental and physical effort and energy, especially at the beginning stages.
If you get busy planning and executing your small business all day, then your daily habits will change.
You would rely more on junk food for convenience, have less time to sleep, and do less physical exercise.
How to de-risk your health:
Stop trading time for work; entrepreneurship is not about hustling sixteen hours a day, seven days a week, trying to satisfy every customer.
Entrepreneurship is about finding a critical pain point, arranging resources such as the right people and money to come up with a solution, and following an effective strategy to achieve rewarding results.
Most people will not build the next tesla factory or Amazon; you don’t have to overspend your time on activities that don’t drive results.
Entrepreneurship requires mental clarity for constantly learning new skills and making accurate decisions. It’s more thinking and planning than just randomly executing.
A lack of sleep will fog your mind and leave you with no energy and clarity. Make it your priority to get at least eight hours of sleep daily.
Entrepreneurship requires physical fitness; as an entrepreneur, you are always on the move, dealing with suppliers, customers, and staff, never mind the stress that comes from new challenges.
Make it your priority to exercise for thirty minutes a day and adjust your meals to a healthy food diet.
Most importantly, get yourself and your family health insurance.
When you secure your financials, align your goal with your family members, and have a clear mind and healthy body, you free yourself from the stress and drama of starting and running a business.
Shift your focus and attention from the stress and drama of starting and running a business to building and growing your business.
Plan it right, and you don’t have to struggle a lot and fight.
Please share this article with someone who needs it if you find it valuable.
I would also love to hear how you plan to secure yourself before starting a new business. I value your insights!
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