For many of us who need a change in work environment and want a larger income, starting a new business seems to be the best way to go. By dedicating your life’s work and savings towards a business you can call your own, you enjoy the freedom and professional growth that you have always longed for.
When it comes to setting up your own business venture, there is one factor that you will need to pay special attention to above all others; that of your finances. Having your own business requires a large amount of capital to cover your operational expenses as well as payments for building lease, office equipment, manpower, and your personal expenses at home. As you will be investing your own money and credit towards your new small business, it is imperative that you answer these five financial questions to help you assess whether you are financially liquid enough to stand on your own.
1. Do I have enough money saved to cover my expenses? One of the foremost questions you will need to ask yourself is whether you have enough money in the bank to cover both your business and personal needs. As you probably won’t be earning much during the first few months of your business, you will need to make sure that your savings can cover your needs for a good 6-12 months. Knowing how much you have also helps you control and prioritize your expenses.
2. How much debt can I take on? For many budding entrepreneurs, acquiring a financial loan is a necessity to help fuel their new business and give it a better profit margin. As such, business debt can do your new company much good, provided that you know how much debt you can take on. Always keep in mind, that although it is business loans, it is still your name on the line and should your business fail, you will still be required to pay off your loan.
3. What options do I have for health insurance coverage? One consideration you would also need to take into account is that of your health insurance coverage. If you are presently employed by a company that is subjected to the Consolidated Omnibus Budget Reconciliation Act (COBRA) regulations, you can still have the option to keep your current coverage by personally paying for it while you scour the health insurance market for a more affordable option.
4. Do I have enough lines of credit to work with? While still contemplating whether you are truly prepared enough to set up a business of your own, you can also take the time to look at your home equity line of credit as this can provide you with the means to get a loan at a much friendlier interest rate then credit cards provide.
5. Do I have enough disability coverage? Resigning from your current post can mean the loss of your disability insurance which is essential if you intend to set up your own business. To give yourself enough protection, you will need to pay for your own disability insurance policy to prepare for any eventuality.
If you take the time to calculate these expenses as you develop your business plan, you are setting yourself up for a better chance of success. Know-how and effort are not what put a stop to most new businesses. It is almost always the finances that keep a new venture from being successful. Be smart, plan ahead, and enjoy the incredible difference of successfully becoming your own boss.
For those who are looking to start their own business, the trucking industry can be a great way to become your own boss. At TruckertoTrucker.com, we help connect new entrepreneurs with new and used daycab trucks at a great price. Whether you are searching for used Texas trucks or new California semis, we can help you make the step to business owner when you are ready.