This is something which most people who want start a business need to master. Being good at one or more parts of it, without knowing how it all fits, can be more problematic than not. So, this post is designed to get you thinking and being aware of these steps.
If you are reading the Post Tags, this falls under:
- Mindset – Because it IS a mindset, and one which successful businesspeople practice routinely.
- Day to Day Running – because it also is something which you need to keep an eye on as part of your KPIs (Key Performance Indicators – more on those in a later post)
So, what is this, and why is it important?
When you at at the ‘Discovering’ stage of your Lifestyle Business especially, it is important that you are able to take time to do due diligence on what type of area you want to setup a business in. This can, by necessity, take as long as it takes (although it is good to follow the program so that you know when to jump in and start – otherwise you will still be ‘Discovering’ while you are in an old person’s care home). While this process is going on, and can be very enjoyable, fanciful, and enthusiastic you can’t ignore the day to day realities of paying bills, limits on time, money, etc.
So, hence, knowing this in advance, allows you to set up Two Tracks of thinking. These work alongside each other, and NEVER Merge, until they are at the point of actually starting your Lifestyle Business.
Track 1: Thinking.
This is all about ‘the journey’, the ‘discovery’ of what spurs on your passion in life and what you would love to try turn into an income that could sustain you and your family long term. (Or multiple incomes if you have lots of interests).
This track of thought can veer wildly if not kept in check, but eventually narrows down to an aim, and a plan to get a plan. This can be something that you can start working and costing up immediately, or it can be medium to long term like reskilling or getting the relevant qualification first before progressing further.
Where Two Track Thinking comes into play however, is that the minute you decide you want to look at starting a Lifestyle business – whatever that may be – something you currently do for fun, or something which you need to explore further – you start up Track 2 at the same time.
Track 2: Practicalities.
While the above is all about ‘the journey’, this track is very much on the ‘here and now’. Firstly, even though you may not know yet what type of business you will eventually setup, or how it will be shaped, the first thing you do is an audit on your current spending and responsibilities.
Sorry to sound like an old granny here, but there are some rules of money that will not disappear overnight just because you have reached a crossroads in life and have an epiphany.
First things first, and in THIS ORDER:
- Speak to your spouse/partner (if you have one). They need to be aware of what you are thinking, and have buy into it. (If they don’t initially, that is a different post which I will get to – and add the link here when it is complete). Frankly, they can’t be planning that vacation abroad that you always take when you are in business development mode.
Every €100 you don’t need to borrow when setting up a business is worth easily €110 to you, not to mention the stress and hassle of going into debt to finance it. - Speak to your kids/ dependents. Again, they need buy in. It may not be money (although there will be less fun things if mom or dad can’t justify spending €200 on a day out) – but will most likely be time – especially in the early stages when you are discovering.
- Check your spending. Set a budget. (Use technology – apps like Revolut allow you setup budgets for things, – and you can set them to ‘keep’ that budget out of your normal spending view). If you have credit card debt, it is worth trying to focus on eliminating it entirely if possible. If not, set a plan where you put more in than the minimum each month, and then lock the card away somewhere safe. (I would argue NOT cutting it up, as life happens! and if you get a curveball emergency, you may need to access funds fast).
- Pay yourself first! – So, whatever income you have each month, set aside say 10-15% at least, for your business budget. If you are currently an employee – this is already taxed money, and will be the fund you can start building on. (Also, if your Track 1 thinking arrives at the conclusion that you can achieve your goals without starting a lifestyle business or through some other way – I would suggest taking whatever sum has been accumulated – be it in the hundreds, or thousands, and invest it, vs spending it on that needed holiday!)
- Pay yourself first! – So important it warrants mentioning again. OK – so if you already have a low household income, this can be difficult. Unfortunately, it is a choice, as to what you need vs what you want.
– CAVEAT HERE –
Yes, there are MAJOR SYSTEMIC ISSUES in many parts of the world right now – but there are some things which need to be realised if you are someone looking to start out on their own:
a) There have ALWAYS been systemic issues which prioritise a certain cohort of people over others.
b) They are unlikely to go away soon – that said where you can, use whatever tools you have to help remove them – your vote counts.
c) If you need to make a change for yourself, you can only control what is directly applicable to you, and one of those things is on how you spend your income.
It is doubly – triply hard to carve out some funds to set aside to try setup a business if you are already finding it difficult to put food on the table. The main thing is that you do – no matter what, no matter how much. If you spend 10 months working out what type of lifestyle business you can setup that will work for you and your family and you have only managed to save €50 because that is all you could do each month – that’s OK. That is €50 you are free to spend on feasibility checking your business idea. You don’t have to feel guilty about not getting XYZ for the kids, that money is for the business. At the very least that amount can get you a short run of business cards.
(In reality, that €50 will probably go towards meetings, preparing and getting your business proposal printed etc, so that the €50 can help buy you access to the funds you need – whether loans, or grants, etc). All of which would be ironed out through your business plan from Track 1.
It may sound obvious – but if you do decide to setup a business and you start off your business journey – you need to be an old hand at managing money, priorities, and knowing which things are needed and which are not.
Why do you need to be aware of this?
Only focusing on Track 1, means that you run the risk of setting yourself up for failure. It may be that you could eventually get to where you want to be, but doing so will either be circumstances – you already have quite a large nest-egg, in which case you probably already have an awareness of your financial abilities; or, it ends up costing you a lot more than it needs to, both in terms of money, and sacrifice of time
Likewise, only focusing on Track 2 means that you are likely to not take the risk, as you are looking at the scarcity of what you have, which causes a scarcity mindset. From a safety point of view, it then all becomes about protecting what you have, vs taking a chance at growth.
Both seen together are a more healthy balanced viewpoint.
So, start now, the minute you have even half a thought about setting up your own business – especially a Lifestyle Business which should be giving you the freedom you crave.