Ready but not willing to risk it

Wednesday January 27, 2016

Dear Nettie at The Safety Net,

I have a really good business idea and I really think that now is the right time to start my business but I simply can’t afford to do it and continue with my current lifestyle and pay my bills, the mortgage etc – the risk feels so big – what would you suggest I do?.

Ready but not willing to risk it!

Clare

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Dear Clare,

Let’s start with the obvious question – how much money do you actually need? Also, have you completed cash flow forecasts, one for personal expenses and one for the business? – are they realistic? Too often people underestimate their requirements for both.

There are a number of ways you could tackle this, but the first thing to consider is does your business need you to give up your regular income now or can you phase the transition?

If you have the luxury of time and can phase the transition – you could make yourself as ‘debt free and savings rich’ as possible, so that you have enough funds to last you between 6 months and a year, this would also give you the planning time required for the business and further research for your business plan.

BUT I would also suggest you think long and hard as to whether this is the right thing for you – your comment that the risk feels so big is understandable but also concerning.

Starting and running a successful business is not always easy and you need to be ready to adapt and change your plans as you go along, often on your own, not with the structure you are used to having around you as an employee.

There is also the possibility that your innovative idea could be copied by a competitor, if this is the case, you will not want to be waiting around!

Depending on your circumstances you may wish to look for an Investor and this can be an excellent option, but consider what it is you will be asking the Investor to invest in and what you would be willing to give in return.

An investor will want to invest in the growth of the company, they will look at your business plan, cash flow forecasts, the order book and the type of clients you have, they will also want to know what % of the business you will be willing to give for the Investors funds.

An investor is unlikely to invest money in your business in order for you to pay yourself a salary.

Just think – if the business idea and the timing is right – maybe you need to change your sign off to “Ready and willing to risk it!”

Good luck

Nettie

The Safety Net

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