Timing is crucial to the success of any business. You’ve done the planning, you know your product and you’ve researched the market. The only question left is ‘when should I start my business?’
Timing is crucial to the success of any business.
You’ve done the planning, you know your product and you’ve researched the market. The only question left is ‘when should I start my business?’
As you might have guessed, the truth is that there never really is a ‘right time’ that we can recommend to all business owners. Everyone’s situation is different and there may never be that perfect moment to jump into the deep end.
You can, however, approach your business in a way that will give yourself the best possible chance of success.
When deciding on the ‘right time’ to start a business, make sure you have these two key considerations front of mind: your financial and personal circumstances. These two parts of your life will be the biggest influences on whether you’ll able to make it out of those first few nervy years.
Let’s look at the financial side first.
Understanding and planning for the financial cost of starting your business is crucial.
The kind of capital you require will be dictated by the size and type of business you’re setting up.
If you offer a service that can be done online, you may be ready to launch with relatively low startup costs. But, if your business requires supplies, machinery, staff or a shopfront, then you will likely need a detailed plan and good credit to finance getting off the ground.
Being realistic and preparing for your outgoing expenses will give you a good indication of the kind of cash you will need.
You also need to factor the kind of money that will be coming in.
Small business is a long-term game. It can often take months or even years before a business starts to become profitable.
If you are currently employed, saying goodbye to the safety net of a salary can leave you feeling vulnerable. If you’re don’t think you can afford to earn an uncertain income for the indefinite future, then maybe the timing isn’t right yet.
Cash flow is what will keep your business afloat and allow it to grow, so you need enough of a balance to get you through the first few critical months.
Some important financial questions you should be asking yourself include:
Do I have enough cash?
Do I have enough savings?
What does my credit look like?
What are my business expenses?
How do I make my first pay check?
If you haven’t left yourself much of a savings buffer, you might be exposing yourself to a lot of stress later on. This leads us to the personal side.
Whilst the logistical part of starting a business is important, the impact on your personal life is often overlooked.
Running a business requires so much of your time, money and focus, so you need to be in a position to invest as much of yourself as possible.
For example, if you’re hoping to start a family in the near future, you have to be prepared for a heavy workload and increased responsibility. This doesn’t mean aspiring parents shouldn’t start a business, but they should have a strategy to handle both endeavours.
Not having enough time can have an effect on the performance of your business and your overall quality of life. Your relationship status, family dynamic, personal finances and headspace will all be play a huge part on getting the timing right.
From our experience, stability in your personal life gives yourself the best chance to tackle the instability of small business ownership.
Anticipating the mental warfare will also help stop the pressure of your work from spilling over into the other areas of your life.
Ultimately, there will always be reasons why you shouldn’t start at a particular time and the goal posts will be constantly changing.
There may not be a ‘perfect time’ but you can put yourself in the best possible position to succeed. Understanding the personal ramifications and financial costs is critical for deciding when you are ready to start your own business.
For a deeper dive and to hear about our business journey, check out our podcast episode below or subscribe on your podcast app.
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Elephant Advisory is an accounting and mortgage broking firm based in Melbourne, with a successful history of helping our clients achieve their goals. With a little help from us, you'll be prepared to make the right decisions for your business or property journey, avoiding many of the potential mistakes along the way.