Entrepreneurship offers a world of opportunities for those who can manage being their own bosses and running their own businesses. I believe it’s the new job security for my generation. No longer are you at the mercy of your boss — you can take action and create your own work, career, and business.
But that doesn’t mean creating those things for yourself is easy or without challenges. Even starting a side hustle takes consideration and planning, and that only becomes exponentially more important the more you scale up your ideas and goals.
If you’re an “ideas person” and you think you’re ready to call the shots, consider these 4 signs before you take the leap and start your own business.
You Have a Plan
You don’t necessarily need a formal, extensive, and complicated business plan to start working for yourself. But you do need to have some idea of what you want to accomplish, how you’ll do it, and if your ideas for a business are within the realm of reality.
I really like simple, easy to use 1-2 page business plans. It outlines your mission, revenue goals, various income streams, marketing plan, and what you need to be doing each month to stay on track for the year.
You should also know how you’ll handle basic expenses when you start. Understand what rates you’ll charge clients or customers and the different types of services you’ll provide. Expect to explain how your work offers real value for others.
And while you can (and should!) assemble a professional financial team to help you, get started by signing up for an invoicing or bookkeeping system to keep things organized from the beginning. (I like Quickbooks Online and Xero.) At the very least, know how self-employment taxes work. A better idea: hire a CPA to estimate what your obligation will be as well as what you can write off now that you’re a business owner.
You Can Manage Your Own Time and Priorities
One of the biggest challenges of entrepreneurship is being your own boss. It takes a lot of discipline to set your own schedule — and then stick to it when there’s no potential consequence of a higher-up telling you off for not showing up.
You won’t be ready to run a business or work for yourself if you can’t take control of your own time and manage it well. You’ll struggle if you fail to identify your priorities and take care of them.
Start using an app like RescueTime to track where your time really goes and so that you can limit your distractions as much as possible. Turn off your alerts on your computer and phone and even close your email when you’re working on a big project. If you can focus and get the job done, maintaining your own successful business will be much easier.
Bring a serious passion and drive to the table, too. It helps to have a mission and to understand your purpose. Ask yourself what you do, who you do it for, how you do it, and why you do it. Remind yourself of your answers when things get tough!
You’re a Problem Solver
You don’t have to know how you’re going to solve the problem, but you need to be resourceful. Problems are going to arise. Things that you haven’t even imagined will take an entire afternoon to fix. It’s important to not get flustered by these roadblocks and instead work through them.
Create a team or a network of people you can reach out to with questions. It can be really helpful to join a mastermind group or a network of other freelancers or small business owners. Seek out 3 other people who do similar work or run businesses with similar goals and needs, but make sure these people are different enough from you to offer valuable insights and opinions that can only come from that outside-looking-in perspective.
You can meet a mastermind group in person if you have a local community, or hold meetings via Skype or Google Hangouts.
You can also turn to online groups that can help foster ideas, solve problems, and provide camaraderie. Carrie Smith’s Careful Cents Club is a great example of this type of community that you can lean on for support, encouragement, and fresh ideas.
You Know How to Market Your Products or Services
Your product or service should offer people a solution to their problem. If you can create something that helps solve a problem and people will pay for it, then you have a business.
Don’t be afraid to test your idea or do some research! A successful business can only be successful if there’s an actual demand for its services or products. You need to know what you’ll provide — but you also need to know if anyone will actually buy it.
Find authorities in the niche you want to work in or serve. Look for people running similar businesses to the one you want to start, and offer to take them out for coffee in exchange for having a conversation about what works, and what doesn’t, in their business. You can do this with your ideal customers, too. They can offer a world of insight into what they want, but more importantly, what they’d pay for.
You’re Financially Prepared
Starting your own business or going out on your own to freelance means taking a big risk. If you leave behind a steady, regular paycheck for flexible income that can change month to month, you need to financially prepare for a new way of managing your money.
I believe that working with a Fee-Only financial planner to prepare a financial plan will be a huge benefit (but that’s my job). You can also start by boosting your emergency fund. Typically, you can start with one month’s worth of net pay and work your way up to three to six months’ worth of cash set aside. But if you want to start your own business, consider upping that to 6-12 months.
You’ll also want to make sure you’re money management habits are ready for more complicated financial situations. Get in the habit of tracking your earnings, expenses, and spending before you make the leap.
Finally, you need to ensure you understand your options for securing a good financial future. Being self-employed means you don’t have someone else to set up a 401(k) for you and offer you a match. It’s your responsibility to open your own retirement account and fund it! Know your options and understand how you’ll contribute.
Start by maxing out your IRA or Roth IRA and then consider opening a SEP-IRA or Solo-401(k) for your business. Setting aside money for the future is a key component to creating financial independence at any age.
So Why Do This?
By building multiple income streams, you are no longer a slave to one employer and one source of income. When you work a 9-5 job, losing your position also means losing 100% of your income — just like that.
Creating your own work in some shape or form, whether it’s part time, on the side, or full time, can help you reach financial freedom by uncapping your earning potential. You’ll no longer rely on just one source for all your income, and that’s empowering.
Another great thing about entrepreneurship is that in addition to your income, you’re in control of your time and mobility (especially if you build an online business).You have the power to decide who your clients are, when you go to yoga, when you get your work done, when you see your friends, how many income streams you have, and so on.
If freedom and flexibility are high on your values list, starting your own business could be a great solution for you.