Is your small business actually your second job? Do you work full-time in the 8 to 5 grind and then step into your entrepreneurial shoes in the evenings and on weekends? If your goal is to quit your day job and actually make a living with your small business, our cafe team has put together some planning exercises to help you.
1. Assess your current situation.
What are the reasons why your small business isn’t your full-time job? Reasons will include personal and professional. Once you have compiled a master list, separate the items on the list into two categories: changeable and unchangeable. When categorizing each item on your list, if it is possible to change the situation, put it under changeable. What is important here is the word possible, not that you would rather not change it.
For example, one reason might be that you have to be able to pay your home mortgage and the income from your small business won’t cover this expense. This reason is a ‘changeable’ reason since you have the option to sell your home or rent it out and in turn rent something cheaper for yourself. Or, perhaps you have equity in your home and could open a line of credit or hold a second mortgage that would help cover your living expenses while you work with your small business full-time. Putting the reason in the changeable column doesn’t mean it is practical or something you will do, it just means that you need to consider the option because it is a possibility.
2. Prepare a household and operational budget.
As with any job, it is important that your income cover your household and other living expenses. When you own a small business, the income must also cover operational expenses. Prepare a household and operational budget and compare it to the projected income from working at your business full-time. Will your income cover all of these expenses? If not, review your list of changeable items. Evaluate every item in your changeable column, What are you willing to change to help you decrease your deficit or risk?
3. Prepare, implement and manage a plan.
By working through the two above exercises, you now have a good idea of what you need to do to make your small business your only business. Some changes might include decreasing your expenses by making lifestyle changes, downsizing, or sacrificing luxury items. Perhaps you will consider finding silent partners who are willing to invest in you and your business, or consider bringing on an equal partner.
Whatever the situation, you now have a clearer picture of what is preventing you from moving forward full-time and whether operating your small business on a full-time basis is realistic. Review these items and create a plan that includes resolutions and deadlines. Depending on what changes you need to make, your plan might cover a year or even longer, but you are on your way.
4. In the interim, gain the skills you lack or build new partnerships.
As you review your list of reasons impeding your move to full-time, identify those items related to administrative or operational skills. For example, maybe one of the reasons you can’t operate your business full-time is because you lack the skills needed to successfully market your business. This is certainly a changeable reason. Identify skill-related issues and then work toward resolving these issues, either through training or partnerships.
Using the marketing example, this issue might be resolved by taking workshops, classes, or trainings. It might be resolved by partnering with a local marketing company willing to do some work pro bono, or offering your business as a class project for a marketing class at a local college or community college. While it might not be feasible for you to gain expertise in every area of business operations, by reviewing your weaknesses, you can begin to find resolutions for many skills.
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5. Conduct a Supply and demand reality check.
Is the product or service you provide something the public truly wants? For example, if your small business is operating a VCR repair shop, supply and demand is not on your side. When moving forward on the road to full-time (which any small business owner will tell you is actually 80 to 100 hours per week), ensure that what you are offering is in demand. For this exercise, reach out to family, friends, and strangers. You need honest, unbiased input.
Questions? Feel free to post your questions here or shoot me an email. I’m on your side and I’m happy to help.