Entrepreneurship is becoming extremely popular amongst many people who want to experience the American dream and believe owning a business is the best way to get there. I see at least one post per day on social media sites where someone is saying they are quitting their full time job to launch a small business startup. I am always happy to know that people see the value in becoming a business owner but at the same time, I get nervous for them.
Quitting your job to launch a small business startup is a huge leap. A leap that shouldn’t be taken until you are 100% sure you have all of your ducks in a row. Here are several things you should have in place before quitting your job to launch your small business startup–
- Personal Savings – According to Gallup, most small business startups are financed by the owner. This means it would be wise to save up enough money to invest in the business before your quit your job. Furthermore, keep in mind that you will still have personal expenses to cover. Your personal savings should be enough to cover both business and personal expenses for at the least the first year.
- Good Personal Credit – Gallup also reported that the next (most popular) funding option for small business startups after personal savings is debt financing. To obtain debt financing, you will need to have a decent personal credit history. If you haven’t established any credit or you need to rebuild your credit history, I strongly suggest working on that for at least one to two years before your decide to go into business for yourself. Having good personal credit that is well established will increase your chances of being able to obtain debt financing.
- A Well Thought Out Business Plan – If you plan on applying for any type of debt financing for your small business startup, you will definitely need a business plan. A business plan provides a lender with insight on how your business will make money (so you can pay back whatever amount you borrow in a timely manner). Having a well thought out business plan along with good personal credit and some of your own money will double your chances of being able to obtain debt financing.