Being financially stable enough to start a business is exciting because that means you don't have to work for anyone but yourself.
(article continues below)
But even those who have the means financially tend to be in doubt about their ability to sustain their business and their lifestyle at the same time. This brings about a question:
How do I know that I am financially read to start a business?
Well, you have to ask yourselves a number of questions to determine the answer. Those questions are:
1. Do you have enough cash in the bank to pay your bills for up to two years without taking any pay from your business? Because a business can take up to two years to bring in revenue, you must make sure you and your family are taken care of.
2. Can you deal with not getting a steady paycheck for a while? Not only does not getting a steady paycheck have a financial impact, but it also has an emotional impact.
3. Are you a better leader or do you work better as a follower? To succeed financially in a business, you have to be a leader.
4. What kind of lifestyle do you want? If you are willing to wait a while to have the lifestyle you want, then you may be financially ready to start a business. If you want an extravagant lifestyle now, you may be better obtaining a power position within a large corporation.
5. What kind of position does your age put you in? If you are younger you may be able to better absorb the risk than when you are older and time is not so much on your side.
6. How much of a financial risk are you willing to take? Some entrepreneurs put everything on the line when they truly believe in their business venture and others only put some of their assets on the line. You have to determine how much you are willing to lose in a business venture you wholeheartedly believe will succeed but has the potential to fail.
7. Are you willing or can you take out business financing if you have to? Some can and some can't. If you can't, you may want to consider other methods of business financing, such as finding investors. If you can, you must determine how much to borrow, but know you are liable for that money even if your business venture fails.
Use the answers to the above questions to help you determine if you're financially ready to start a business. If you are, then it is better to get started now rather than later. If you are not, don't let go of your dream to start a business. Work toward a time when the financial risk is one that you can handle without ruining yourself financially. It is not always safe for you to dive in like some entrepreneurs do and risk everything you have on a business venture that has the potential to not succeed.