How much in savings should I have before starting a business?
I have often heard that making money from your own business always takes longer than expected. I have planned for 6 months with no income. Is that enough?
Like other posters have said, every business is different. It also depends on how much experience you have already. I started a tree service business and we were profitable very early because my father had a tree care business when I was growing up. When my husband and I moved, we decided to start our own business and my father helped us get started very quickly. I would be somewhat concerned if I only had a 6-month reserve tho. There are a lot of hidden costs and things that pop up unexpectedly. You want as much of a cushion as possible to weather the startup storm.
Manager of Richmond Tree Removal
Making money from your own business doesn't take long at all if you buy a business that is already generating cash flow, net profit and has working capital and still has potential for a big upside. With over 10,000 baby boomers retiring every day and many being small business owners, it is worth at least thinking about buying a business. Often smaller business owners (between $2M - $10M) in revenues looking to retire are looking for someone who will continue to grow their business and may even be willing to finance the majority of the sale themselves.
Then you pay the note our of net profit already being generated while drawing a fair market salary day one. Just make sure the numbers work in terms of net profit etc and you work with a forensic CPA and experience business lawyer to help you through the transaction.
Several places you can look for businesses for sell online but I recommend asking friends, family and business contacts if they know of anyone who might be looking to sell. Even asking LinkedIn connections via message. That way you have first mover advantage and can avoid extra expenses of a business broker which is usually the case for business for sale listings online.
A good book on buying and selling businesses is "Buying & Selling a Business" by Garrett Sutton, ESQ.
All the best in whatever you decide to do.
Starting a proven business in a box typically takes a minimum of $300-$1200 investment. Marketing plans have an expense, so you know who will buy the product or service. What is the business?
Look for ways to get paid in advance. Also, can the business you have in mind be started while you're still employed? As a lapsed accountant and banker, I was trained in the apparent wisdom of having such and such in savings, etc. However, when I went out on my own I realized that it's much more important to get the subconscious programming sorted out so I love money, love business, love entrepreneurs, love wealthy people/wealth, etc., as blocks in these areas (and others) are what kills first time entrepreneurs (well, their businesses), no matter how well-intentioned they are, how much action they take, and how much they've saved.
When you start a business, you will come face to face with any inner blocks and barriers you have, so best to sort that out before you get started. Then you will start seeing ways to start with little or no capital, because your subconscious mind will show you, rather than protecting you from the foreseeable consequences of your hidden inner blocks and barriers.
What kind of business?
I stated with $13.68. You will need to know the costs of your startup, then you can see about acquiring the funds. Service businesses cost very little. If you're thinking you need certain things on place it maybe a fear of starting. Go for it!
My little startup did millions!
A serious minded person who is anxious to start business and grow it big, does not need so much to start a business.What matters is planning and serious concentration Some entrepreneurs start with nothing. The whole show is that customers getting confidence in you, and you utilized their money.
Obviously more is always better but don't listen to prognostications of time. DON"T LOOK AT YOUR SAVINGS AS AN EXCUSE NOT TO EARN right away (or whatever that means in your selling cycle) I would tell you that in the great majority of personal businesses if you aren't showing positive signs in billings/contracts/sales/revenue in 6 months you've got a fundamental missing. So the real issue is what are you doing to prepare your business. Do you know how to sell professionally? Have you identified your target customer and where and how you will find them? Do you have proven value in your product/service on a small scale that you believe can scale? Do you believe in yourself? How much does being successful matter to you and how do you define it? Are you in business for yourself because it is your passion or you just want an easier/better job/boss? Do you have a business plan, a marketing plan, a prospecting plan? Do you know how many times you have to do whatever the required behaviors are (on average) to generate a customer/sale. Get those answers right and 6 months is plenty with the expectation that income will build if you are doing it right.
It depends on your type of business , some business needs more than six months - someother business need less >
You should read $100 Start Up by Chris Guillebeau - he made me so confident in where I was in my planning I went for it with 6 months money - got a bit scary around month 4 and I've had to be conservative in my own spending but have no regrets. Others give you much more practical advice below which I am not saying for one moment you should ignore - all I am saying is you WILL know when the time is right.
6 months could be enough, but not likely. I'd plan for not taking a salary for 2 years. each case will be different, but in order to expand, you are going to continue to need capital along the way.