Starting your own business requires some level of risk tolerance, no matter how much of a “sure thing” it seems to be. Like any construction project, a startup seems to take twice as long and cost twice as much as originally planned. In addition, there is no guarantee as to how long it will take to build a sufficient customer base or how quickly the business will grow. Even the best of circumstances won’t ensure rapid success…and most new businesses aren’t started under the best of circumstances. On the other hand, most entrepreneurs don’t actually consider themselves “risk-takers” the way non-entrepreneurs do. Where others see risk, successful business owners see factors that are within their own control. Controlling risk is the key, and before you set out to launch your big idea, it is important to clarify the limits for yourself that will keep you motivated and out of the weeds.
Whether looking to replace a current job or grow a thriving company, it is a good idea to get started on startup planning while you are still employed. Developing a business without a safety net often results in knee-jerk responses to problems that inevitably arise during a startup. Every decision you make through the early stages of your venture matters, and the more objective and logical you can be, the better decisions will be made. If you are unemployed and money is tight, it is far easier to base decisions on emotions, resulting in the worst possible long-term outcomes.
If you are going to keep working during the planning stage, it is important to manage your time so your startup gets the attention it deserves. If you are not doing so already, use a planner to schedule your responsibilities, including blocks of time set aside to work on your business idea. Once you sit down and actually write out what you do in a day, you may very well find that you do not have too many hours left over. Review your commitments to see where you can cut back. Can the kids carpool to Little League practice? Can you get up an hour earlier or stay up an hour later? Remember that even 3 hours per week adds up to nearly a month of full-time work over a year — 3 hours x 50 weeks = 150 hours. Your schedule isn’t likely to lighten up naturally, but the year will go by either way, so you might as well get started!
If you decide to start your business full-time, set target dates for evaluating how the process is going. It is impossible to estimate how long it will take for a brand-new business to land on its feet, so it is important to check in periodically to be sure you are on the right track. If you need to take a part-time position, do some consulting on the side, or even pick up some odd jobs to stay on track, it is better to make that decision before your cash flow becomes too strained to continue at all.
Before beginning work on the business idea, set clear parameters on the personal investment you are willing to make, both financially and otherwise, in building the venture. Look over your monthly budget (or create one) to determine where you can cut back, if needed, and the absolute minimum income you can survive on. If you are married or otherwise committed, be sure to involve your significant other in the discussion. Determine how much cash and credit you have available, and how much you would be willing to risk on your startup idea. While many entrepreneur types are tempted to go all in, it is a good idea to set aside a reserve, just in case. A good target is three months of household expenses, but often that is just not possible. Regardless, you will need to use some of your own assets for your startup — not only do you need a thorough, convincing plan to find formal or informal investors, anyone who is willing to buy into your idea will want to see that you have put assets at risk as well.
There are many creative ways to finance a startup, but none can be accessed without a well-developed plan for your business. The effort you put into the planning will also reduce your overall risk because you will understand every aspect of the venture, every decision that needs to be made, and all the options you have for solving problems as they arise. Don’t worry about funding your business until you know how much it will actually cost — a determination that cannot be made without thorough planning.
Take the time to evaluate your own situation and be realistic about what you are willing and able to risk. Establishing your personal limits will make it easier to remove emotions from the business — a critical skill if you plan to grow your venture successfully.