Everyone has to decide for themselves what level of sacrifice and risk they’re willing to undertake in order to enjoy the satisfaction of working independently. However, knowing the strategies for managing the risk of starting a business will allow you to make a more well-informed decision.
1. Continue to Draw a (Reduced) Salary
Most employers won’t give you the possibility of taking a temporary leave of absence so you can focus on launching your business. So that’s why leaving your employment can seem like the only option. While this could be the case, you could come up with an ulterior way of asking to take time off. First off, you need to ask yourself how your company can profit from keeping you. Be sure to do your homework first, however, and be able to back up your request with a solid rationale.
2. Develop Another Income Stream
If you need to leave your current job, you have to come up with a plan B if your business isn’t quite ready to take off yet. What are some of your skills that you can put to work without a significant expenditure of time and energy? Is moonlighting or freelance work an option? Consider websites that may be worth looking into for short-term professional service opportunities.
3. Reduce Expenses
Another financing idea for starting a business is seeing what you can save. Apart from fixed expenses (mortgage, taxes, insurance, food), there are discretionary expenses that make up the larger part of budgets. Doing a careful analysis of these expenses and choosing what you can forego for a while can often save thousands per year.
You don’t necessarily have to wait to borrow for start-up costs until you have a well-documented idea to submit for a business loan. Refinancing a home or taking a line of credit are relatively low-cost ways of generating capital when starting a business. Depending on your credit rating, you can also get time-limited low-interest loans from credit card companies. If you choose this financing idea for starting a business, applying for loans or refinancing packages while you’re still employed is strongly advised. Your rating as a borrower declines quickly once the regular paychecks stop.
You don’t have to wait! Get started on your new business idea while you’re still employed. Several important first steps can be taken while standing in the grocery line or running on the treadmill. It’s simply asking yourself some questions about what you want out of your business and doing some informal research on it. This can take weeks off your actual start-up time.
5. Identify Your Niche
When starting a business, think about the services you’re uniquely qualified to provide, as well as the ones you most enjoy providing. Be specific! Write them down! Then think about what group of people would benefit from them. Again, be specific: age, location, habits and values and how they define the problem your services are going to solve. If you don’t know, it never hurts to ask. Find someone who fits your “ideal client” profile and asks them some questions. People generally love to be helpful.
6-Create your marketing plan
What you need from a marketing plan will get more sophisticated as your business develops. However, for now, you simply need to answer a few questions:
- How is my business going to make money?
- What is the product or service I want to sell?
- How can I describe it so people recognize the value?
- How will I price it? (What’s being charged for comparable services?)
7- Manage fear
For most people, anything involving money involves some level of fear. It’s important to acknowledge to yourself and to others that you are taking a risk, and you’ve decided it’s a risk you want to take.
Getting the support you need from people who believe in you and in what you’re embarking on is number one in fear-management tactics. Don’t assume that you’ll get it from the people closest to you or that if you don’t have it you shouldn’t proceed. They’re probably the ones most impacted by your decision and so may be least ready to offer support. Although their consent is helpful, their support may come later.
It’s also helpful to set a goal that’s key to your new venture. Arrange to finance by a particular date, or sign a lease, and announce it to at least one person. You’ll find that making that commitment to that financial idea for starting a business, saying it out loud, and following through will, in turn, generate more confidence and more forward momentum.