Operating a business has its perks. You can make decisions without approval from a boss. If you want to develop and market a new product or service, you are free to do so.
While being your own boss is exciting, you must prepare for the challenge. In many instances, starting a business will require a significant investment of time, money and sweat equity.
So, you think you’re ready to turn in your resignation letter to live the life of an entrepreneur? Here are 5 things you must do before quitting your job.
1. Start your business before leaving your job.
Plenty of savvy entrepreneurs start their business as a side hustle. They build their business on the nights and weekends. After the business generates a certain amount of income, they quit their job.
Starting a business before you leave your job offers several advantages. These include:
- It gives you the opportunity to determine if operating a business is right for you.
- You’ll have the security of a steady income while building your business.
- Having a job eliminates the stress that comes as a result of running low on money.
2. Enroll in a health insurance plan.
Even if you are young and healthy, you should be enrolled in a health insurance plan. When it comes to health emergencies, anything can happen. One serious car accident or catastrophic illness could rack up hundreds of thousands of dollars in medical debt.
When researching health insurance plans, here are a few things to consider.
- Monthly Premiums
- What’s Covered
- Deductibles
- Patient Responsibilities
- Health Insurer Responsibilities
3. Boost the amount of money in your savings account.
There are fewer things more stressful than not having money when you need it. This is especially true if you have financial obligations such as a mortgage, rent, car payment and student loans.
The first thing to do is determine the exact amount of money you have in your savings account. It’s a good idea to have at least 6 months of expenses in the bank. Emergencies can and will occur. Always be prepared for them.
Is your savings account low on funds? If so, commit to saving a larger percentage of your paychecks from now on. Consider getting a second source of income if you are currently living paycheck to paycheck. That way, it will be easier to save the money you need to finance your entrepreneurial journey.
4. Pay off (or pay down) your consumer debts including car loans, credit cards and bank loans.
Debt and the lack of a steady paycheck can be a recipe for disaster. If you get into a financial bind, it can be tempting to skip your consumer debt payments altogether. Defaulting on your financial obligations can ruin your credit and prompt companies to file lawsuits against you.
5. Set up a legal business structure.
When you work for yourself, you should operate a business with a legitimate business structure. The most common types of business structures are:
Be sure to apply for and maintain your state and/or local business licenses. File and pay your taxes on time – every year. These actions will keep your business in good standing with local and federal authorities.
If you are determined to start a business, go for it. There is so much you can gain throughout the experience. Applying these tips can help you build a business with a strong foundation.
Want to start a profitable business? The following resources can help.
- Mind Your Business: A Workbook to Grow Your Creative Passion Into a Full-time Gig by Ilana Griffo
- Small Business for Dummies by Eric Tyson
- The $100 Startup: Reinvent the Way You Make a Living, Do What You Love and Create a Future by Chris Guillebeau
About Corporate Counsel Men of Color
Our mission at Corporate Counsel Men of Color (CCMC) is to foster diversity and inclusion in the workplace. We provide a support network for men of color in all professions including (but not limited to) legal, finance, education, medicine, healthcare, law enforcement, sales and insurance. Join CCMC to participate in career events and networking opportunities. Corporate Counsel Men of Color is a subsidiary of Corporate Counsel Women of Color.