Are you contemplating quitting your full time job so that you can concentrate on your embroidery business full time? Do you think that by spending more time on it, you can make it happen quicker and be able to make enough money to live on?
I have many students that are currently learning how to run their embroidery business while working their full-time jobs. Some have plans to use their business as their retirement income and others are just anxious to have a thriving embroidery business and want it as soon as possible.
Before you walk away from your job to run your embroidery business full-time, you need to make sure that you are financially stable enough to survive without a weekly pay check for several months. I usually advise my students to have at least 6 months to a year in savings in order to be able to live comfortably without that weekly paycheck. This is the same information that I give my students that want to move out of their home and into a retail space. Either way, it costs money and you must be totally prepared for either scenario.
You may be well on your way to building a full-time home-based embroidery business or you may just be tossing the idea around right now, but having a clear understanding of your current and future financial needs will be plays a MAJOR role in your strategic plan for a successful embroidery business.
Home-based embroidery business owners don't normally wake up one day and say, “Yes. I'm quitting my job today and starting my home-based embroidery business.” There is usually and should be a period of time for contemplation, researching, making the final decision, creating a plan, and then implementing the steps within the plan to achieve your final goal.
The process can take anywhere from several months to several years before an employee is in a position to walk away from his or her full-time job to begin life as a full-time entrepreneur. This is a totally different life style. Having a financial cushion is critical to be able to transition from being an employee to a full-time entrepreneur.
The First Steps To Determine When You Are Ready!
If you will follow the 5 easy steps below, you can figure out what your current financial position is and be ready to start planning out your new venture. This is a very important first step before you even think about creating a plan to leave your current full-time job.
- Calculate how much money you currently have sitting in bank accounts, investments, retirement savings plans, Guaranteed Investment Certificates‚’, real estate, etc. If you were to leave your job tomorrow, would there be any form of payout such as sick plan credit, pension plan contributions, unused holidays, anniversary pay, etc.?
- Determine how much revenue you are receiving on a monthly basis either through employment, child support payments, rental properties, dividends, your existing home-based business, etc.
- Record your monthly household expenses. Some examples to get you started are your Mortgage, Property Taxes and Insurance, etc. all of the expenses that you incur on a monthly basis pertaining to your actual living expenses
- List your monthly business expenses, for example your Internet Expense, Phone, Emailing system, Office Supplies, Supplies such as threads and backings and every other expense that you incur in your business on a monthly basis.
- Identify your outstanding liabilities such as: Credit Card balances, Personal loans and Lines of credit.
When you total your earnings and revenue on an annual basis and deduct your personal and business expenses, how much do you have remaining at the end of the year? Can part of this be set aside to start building your financial cushion?
If your current business revenue isn't enough to cover all of your business and personal expenses, how long would you be able to survive on your other revenue sources or savings, taking into account your monthly expenses?
- Have you also considered unexpected expenses that could occur in the next year or two?
- Will your car need to be replaced within the next year or two?
- Are all of your household appliances in great working order with little chance of needing to be replaced in the next year or two?
- Does your partner have a secure job or does his or her position seem to be unstable?
Going through this exercise is very important. You really do need to plan for any unexpected expense that can pop up. Financial stability is an area that needs to be on the forefront of your mind in order to be able to keep your feet firmly planted and create realistic plans as you build your home-based embroidery business. Having a good understanding of where you are and what potentially lies ahead will help you make sound financial decisions as you plan for your future.
After going through these five steps, you may see that your dream of leaving your job might take a little longer than expected. Maybe it is time to seek professional guidance to help create the plan that will move you quicker towards your goal. Seeking the advice of a financial advisor or an accountant will help you succeed much faster!
Knowing exactly where you are financially can be very scary at times but it will help you make more informed decisions as you plan for your future. Whatever your results are, good or bad; do not let this exercise put a damper on your dreams! You must keep your dreams alive and having all of your finances in order is the very first step towards making those dreams a reality!