Updated on July 1, 2021
Do you dream of opening your own business? Being your own boss, setting your own hours, and doing something you feel passionate about are all powerful motivators to head out on your own.
But before you quit your day job, make sure you take the right steps to get ready for business ownership. The five tips below will help you plan financially, mentally, and emotionally for this big change.
1. Find the Right Mentor
Having someone to talk to who’s been through the frustrating but exhilarating process of starting a business can help you in many ways. They can offer you advice and share first-hand knowledge you can benefit from.
For example, a mentor may be able to offer tips for building your business network and connect you with other colleagues in your field. They can share reviews of vendors they’ve worked with and give you suggestions when you encounter a difficult client.
2. Write a Business Plan
Having a solid business plan in place can impact your ability to get financing to start your business. Many lenders won’t approve your application for a business loan unless you can show that you have a clear plan for getting started and becoming profitable.
Some things that you should include in your business plan include a company description, market analysis, organization and management plans, service or product descriptions, marketing plans, funding requests, and financial projections.
3. Understand Your Market
You need to know what your market looks like at both the local and national level. Ask yourself these questions when digging into your research:
- What unique challenges will you face establishing a business in your prospective location?
- Who is your competition and what are their differentiators?
- What can you do better than your competitors, and how can you best position your product or service?
Be sure to do your research on successful companies that provide similar products or services, and note practices you could potentially apply to your own business. Gain an understanding of what may attract future customers, and pay close attention to how these groups make decisions. You’ll benefit from knowing their mindset and can advertise accordingly.
4. Know Your Limits
Some new business owners think they can do everything themselves, however, they may work such long hours during the first few years that they burn out quickly. To avoid this, be realistic about what you can take on as an individual and what you may need to outsource.
Make a list of the tasks that’ll need to be completed for your company to succeed and estimate the time you’ll need to complete each. As you start out, record your hours to see if your estimates were accurate, where your time goes, and how/if each task contributes to your bottom line. Then, determine what you may need to outsource.
You may decide to outsource tasks you’re not comfortable handling, like bookkeeping, or tasks that eat up more time than you had allotted, like managing your calendar.
5. Commit to a Healthy Work/Life Balance
Starting a new business is difficult. It can feel as though you always have a thousand things to do. You may have difficulty stepping away from work, even when you’ve already put in a 12-hour day.
You may feel burnt out if you work too many hours without allowing for breaks. Make sure to continue to do the things you love to maintain a good work/life balance and take time for yourself. Go out to dinner with friends or have a family game night to decompress.
Securing Financing for Your Business
Most businesses need some capital to start. This covers things like your startup supplies, employee salaries, and marketing. For example, you’ll likely want a website, and you’ll have to pay for a web host to carry the site.
You can go about financing in several different ways, depending on how much money you need. If you need a significant amount of money, you may need a business loan. We offer business loans subject to credit approval with no or low fees, as well as low interest rates.
If you’re starting a brand new business, it can be difficult to secure a business loan, as your company may not have established credit or stable income. In these instances, there are organizations you can work with called Small Business Development Centers that can offer free business consulting and at-cost training to support you as you prepare to apply for business funding.
Some entrepreneurs also rely on savings to start a new business. While it’s important to show potential lenders that you’re personally invested, you likely won’t want to exhaust all of your reserves in case you run into unexpected issues along the way. It’s important to plan ahead when thinking about starting your own business so that you’ll be in a good position when you launch.
Learn more about securing a business loan through PSECU today. And, since good finances are important for both your business and personal lives, check out our free money management tips and tools to help keep your personal finances healthy, too.
The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.