March 2002
Going Out on Your Own
Amy E. Gibb, MBA, CFP
There is something in the American spirit that calls us to go out on our own. Back in the old days, pioneers jumped into covered wagons and headed west, not really knowing what would happen but feeling the need to go. So now, you have heard the call of the wild, you want to start your own business, not really knowing what will happen but feeling the need to go.
In Colorado entrepreneurs abound. Everyone has a different story about how they started and what drove them there. So what is your story? Were you laid off, fired or did you quit? Were you fed up with seeing your efforts unappreciated and unrewarded? Did you just receive a severance or early retirement buyout? Maybe you have always been an entrepreneur at heart?
If you haven't jumped ship, or been pushed out yet, you can do some prep work
to get ready. First, get your personal finances in order; accumulate cash, decrease
expenses, keep your credit clean, get a line of credit, and refinance existing
debt while you have a job. Understand and use your current employee benefits.
Payoff retirement plan loans, understand your health insurance options, and
get life insurance outside of your employers plan.
Money is a big challenge for new businesses. Whether is it getting a bank loan,
finding investor money or living off your spouses' income, it all comes down
to money. Having a working spouse is a big benefit, and being able to live on
their salary is another. Avoid cashing out retirement plans if you are less
then 59 ½. Between the penalties and taxes you could end up with only
50 cents on the dollar and loose your nest egg to boot. Borrowing money is often
difficult or impossible for a start-up business. Be prepared to pledge personal
assets and sign personal guarantees.
Get the basics covered. Set your business up in the proper legal structure, get some up front tax advice and get help keeping the books. Don't go it alone. There are lots of organizations and resources to help small businesses. Nothing will replace the connections and resources you will get at your local Chamber of Commerce. Invest a few dollars and some time here.
In the short run, a new business will cost you more and generate you less income
then you ever expected, so don't start a business to get rich quick. A new business,
like a new baby, will take up all your time. When you aren't chasing new customers,
you are shopping for office equipment, typing letters and answering the phone.
All this puts a great deal of stress on your family. Make sure they are onboard
before you start and be appreciative of them along the way for the sacrifices
they are making.
In spite of all the best advice and planning, there comes a time when all that is left is courage, courage to take the risk of going out on your own. You hear the call of the wild; the wagon is hitched and waiting. Are you ready?
Amy E. Gibb, MBA, CFP
President
Money $ense
Amy@MoneySenseSolutions.com, www.MoneySenseSolutions.com
303.494.5362
Financial Advising for individuals and business owners
"Money isn’t everything, Managing it is"
Amy E. Gibb, President of Money $ense specializes in helping small business make it on their own. She may be contacted at 303.494.5362, or for more information go to www.MoneySenseSolutions.com.