Are you planning on starting a side hustle or turning your passion project into a full-time business? If so, it’s wise to get clear on the first steps, so you don’t accidentally find your business dreams turning into a nightmare!
One of the main reasons new businesses fail is a lack of cash flow; aspiring entrepreneurs are often keen to tap into funding so they don’t risk losing their own capital, but many banks are reluctant to fund new business ventures because approximately 20 per cent of them fail in the first year.
So if you can’t get a bank loan or funding, are you destined to stay at your kitchen table forever?
If you have a mortgage, perhaps you could raise finance using your house as security depending on your current loan-to-value ratio, (always seek advice from a mortgage broker) but that requires a fairly high degree of risk tolerance in your fledgling years. In this blog, we’ll explore some down-to-earth options to support you to take your business to the next level without causing unnecessary stress.
- Plan to be self-reliant (anything else is a bonus!)
Commit to fully backing yourself in order to get your ideas off the ground; it’ll help you maintain focus. The following steps will support you to build financial resilience.
- Get up close and personal with your numbers
In coaching circles there is often talk about earning £10k a month, but how much do you really need in order to fund your lifestyle? If you’ve been accustomed to earning £35k per year, you might be happy earning £2,500 per month.
- Work out how much it will cost for you to cover your business expenses and living essentials.
- Work out how much it will cost to cover luxuries such as weekends away or holidays.
- If you were to think “running my own business is amazing, this is the smartest move I ever made”, what would that business and life look like? Work out how much you would need to earn in total to make this a reality (holidays, new car, entertainment, team members etc).
If you are in a relationship, it’s always sensible to discuss these numbers with your significant other! For more information on financial considerations, check out my earlier blog 7 Simple Things You Must Do Before Starting Your Own Business￼.
- Build a safety net
If you are planning to build your business as a side hustle initially while remaining in gainful employment, consider saving every penny you can for at least a year. This might be enough to pay yourself the income you’re accustomed to for the first three months you are running your business, without relying on another income. In addition to this, it enables you to experience what it would be like to live at your most basic level without luxuries (which could serve as powerful motivation at a later date!).
- Get creative
As tempting as it might be to hire your own office space from the get-go, think about your other options. You could spend £150 on a promotional banner to stand behind you that creates the professional image you’re looking for.
You could also have face-to-face meetings with clients in public areas such as hotels or coffee shops. Choose your location depending on the impression and environment you want to create. For example, Starbucks coffee might cost you £3.50 but you have to stand in line. Coffee at a hotel might cost you a bit more, but it is likely to be table service and could also offer easier parking and greater privacy.
There are plenty of tips to help you get out of the garden shed (or away from the kitchen table) in my book Think Simple Win Big: How to Build the Business of Your Dreams With a Few Simple Goals.
When I first set up my financial services business, we hired a two-person office that cost £450 per month, which was covered by signing up one client per month; know the impact a cost like this would have on your business.
- Create and repurpose valuable content
It’s less common for businesses to invest heavily in paid marketing because there is so much potential for organic growth through the use of social media. If you are writing a blog about your product or service (or relevant themes of interest to your target audience), you might also like to make this into a post for social media, or turn it into a podcast or online video.
It’s natural to feel overwhelmed when you step out of your comfort zone and focus on building your own business empire. I hope this blog has helped you find ways to move forward in small, manageable steps. My book shares more insights around the groundwork you need to do when you are preparing to launch your business.
If you’d love my professional support to set goals and build business momentum, send me a message at firstname.lastname@example.org.