Starting your own business can be an incredible life-changing experience – that is, if it’s done right.
We’ve seen many entrepreneurs who have jumped off the hamster wheel and created successful businesses but, do you know how much work and planning it takes to get there?
On this episode, the guys have a roundtable discussion with guest Justin Krane about what is necessary before making the leap from your cushy weekly paycheck to starting your own business.
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February 8th, 2008 was showtime for Justin when he pulled a Jerry Maguire and quit his job to start his new life as an entrepreneur. He started his firm as a money strategist for businesses.
Justin’s mission is to help business owners understand the money side of their business. He doesn’t just create spreadsheets; he teaches entrepreneurs how to be strategic with their money so that they can grow their businesses.
Before You Bail
Quitting your 9-5 job to start your own business is not just taking a plunge, it’s more like submerging yourself into a whole new world. It takes a ton of planning and many considerations.
Before you do anything else, you need a business plan. Not just some stuff you jotted down in your ideas notebook, a real-life business plan.
Figure out how you will sell your product, where will you work, if you’ll need employees, how you will pay yourself and what your monthly expenses will look like (or as Justin calls it your “nut”). Don’t forget to think about other considerations such as the cost of health insurance when not subsidized by your employer.
You want to make sure people will buy your idea and if you can profit enough to survive and grow. Depending on your individual situation, you should try and have six months to 1 year of personal expenses in the bank as a runway before quitting your full-time gig.
If you are unable to save that much, then Justin suggests keeping 2-3 months of expenditures and working part on your own business until you can get it to 50-60% of your income. Then make the jump.
Take your product for a test drive to see if people will buy it, don’t go all in cold turkey. Test, test and test again. Don’t sink $50,000 into making cat sweaters only to find out cats don’t get cold. Do small trials, see what sticks and iterate from there.
What Comes First, Passion or Values?
Do you need to find your passion before deciding to start your own business? Thomas believes there are two ways to go about creating your gig.
One, you can have interest or passion for an individual subject and structure your business idea to support it. Or, generate work with the attributes you want in a job such as autonomy, independence and create things that will bring you reoccurring revenue. Thus fulfilling your passion for starting your own business and creating passive income.
Sometimes what you’re passionate about just can’t be profitable, but that doesn’t mean you can’t start your own business. Take a look at what other skill sets you to have and figure out how you can use them to earn an income. Thomas puts Andrew in the hot seat so listen to find out what came first for him, passion or values.
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Getting Through Hardships
When you start your own business, everything falls on your shoulders, and it can get hard sometimes. Even if you have friends and family around you that support you, no one knows what struggles you are going through or what you’ve done to get where you are. It can get stressful so you’ll need an outlet.
Justin’s outlet was a mastermind group. There he found support, accountability, belief and a community of people who understood him. They made him feel at home while he evolved his business. The group provided him the support in business strategy as well as keeping a productive mindset.
When you are in the process of growing a business, there are a lot of surprises, good and bad. You may have to deal with failure, rejection, and financial stresses. You have to be able to pick yourself up and get back in the game. Remember, failure is a good thing.
It’s easy to get caught up in all aspects of the business which can distract you from what you are best at doing. At some point, it is important to rely on human capital. You need to spend time on what you excel in so you may need to hire others to help you.
When you are ready to quit your job and start a business, remember reoccurring cash flow is what makes a business. One-off commissions can be stressful so creating something that can last and bring you income into the future is key.
Stay tuned for Justin’s book that is coming out October 2017 called Money; You Got This. He uses funny short stories to teach real financial lessons.
Justin Krane– Get help with your business finances
Cat Sweaters– In case your fluffy friend get chilly