Right. Where was I? Oh that’s right, I was telling you stories of my jump from corporate into fashioning the life I want.
In Tom Foolery part 2, I alluded to bridging your gaps.
What I mean by this is very simple; be sure to cover your financial butt.
It’s a known reality that the first one – five years of any small business’s life are tough.
There are many reasons for this, but I believe bridging their gaps is a big part of it.
Many businesses do not honestly assess how much money they need to be coming in to their household just to survive. They also do not honestly assess a) how much they will need to get their business off the ground, b) how much they will need to maintain the running of their business and c) honestly, honestly estimate what they are going to earn in their first year.
I was unabashedly naïve and ridiculous when it came to starting my business.
I left a corporate role with all the backing and flare of a big supportive organisation, meditated in Bali for 2 months and came back thinking I was going to score 10 clients a week for the rest of my born days.
Ah ah. No.
I didn’t know anything about productising, packaging, realistic vs emotional pricing or the amount of time it would actually take to get clients, build word of mouth or build a following. I didn’t know the first thing about marketing! (Though I thought I did at the time.)
Suzy Jacobs, founder of She Business, tells us that we need to have savings in order to start up (or some really very generous family and friends). Yep, I agree with her. I wholeheartedly agree that you need to have a ‘back up’. Do not, under any circumstances, think that you are going to leave your job and make the equivalent in your first year that you were there. Do not do this. I don’t care if you’re the bees knees at marketing and sales. Ask any business owner their salary for the first three years and they will tell you it was not what they expected.
There are always exceptions to this rule, sure. Yes, there are some businesses that will far exceed what they expected and knock it out of the park.
Assume that that’s not you. Assume that you’re the one who has to dot the I’s and cross the T’s.
Always under promise and be pleasantly surprised if there’s over delivery.
Over promise through a total lack of realism and you will bite yourself on the financial butt.
Here are some of the things I wish I knew;
Get a realistic figure of what you need in order to survive per month – the bare minimum
Figure out what being comfortable means – the ‘niceties’
Figure out what would absolutely knock it out of the park for you – living a life of luxury
(These all get you really clear on where you are, where you would like to be and where you would like to be further still. It will start giving you financial goals.)
Decide on a budget for your business in the first year – start- up costs AND monthly ongoing costs
Now compare that budget to what you have coming in and recognise any differences
Can savings/other income/ my significant other cover this?
Am I willing to part with those savings?
If not, how do I carry on earning money whilst closing this gap? (Perhaps exit your career as a part time, gradual thing?)
Get really clear on money and what this means for you and consistently revisit those meanings, comparing and contrasting your current state of affairs.
Has anyone done this and have additional suggestions for our readers? Would love to hear them in the comments below!
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