It doesn’t have to be unpleasant or messy, but it does have to be done. You may be well on your way to building a full-time home-based business or may just be tossing the idea around right now, but having a clear understanding of your current and future financial commitments will play a MAJOR role in your strategic plan for business success.
Home-based business owners don’t normally wake up one day and say, “Yep. I’m quitting my job today and starting a home-based business.” There is usually a period of time for contemplation, exploration, making the decision, creating a plan, and then starting to execute steps within the plan to achieve the final goal.
The process can take anywhere from several months to several years before an employee is in a position to walk away from her job to begin life as a full-time entrepreneur.
Being financially responsible is critical to not only home-based business success, but to create the financial cushion required to transition from being an employee to a full-time entrepreneur.
Understanding your current financial position is mandatory and doesn’t have to take more than an hour of your time if you follow the five basic steps below.
1. Calculate how much money you currently have sitting in bank accounts, investments, registered retirement savings plans, GIC’s, real estate, etc. If you were to leave your job today, would there be any form of payout (ie. sick plan credit, pension plan contributions, unused holidays, anniversary pay, etc.)?
2. Determine how much you earn on a monthly basis either through employment, child support payments, rental properties, dividends, your existing home-based business, etc.
3. Record your monthly household expenses. Some examples to get you started are:
- mortgage/rent
- property tax/house and mortgage insurance
- utilities (heat/water/hydro)
- phone/cable/satellite/Internet
- yard maintenance/snow removal
- groceries and household supplies
- vehicle fuel, insurance and maintenance costs
- medical
- child care
- personal care (hair/nails/clothing)
- entertainment (movies/sports/books/plays)
- club memberships, publications, etc.
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