5 Easy Steps to Determine Your Financial Status So You Can Break Free of Your Job Sooner
It doesn’t have to be unpleasing or disorganized, but it does have to be accomplished. You may be okay on your course to building a full-time home-based business or may just be tossing the idea around right now, but having a clear insight of your current and future financial burdens will play a MAJOR role in your strategic agenda for business success.
As a home-based business owner, you wouldn’t wake up one day and declare, “Yeah. I’m resigning my job, and going to start a home-based business.” There is usually a course of time for consideration, investigation, making the conclusion, creating a strategy, and then finally starting to implement steps within the plan to accomplish the final goal.
Before an employee is in a safe position to quit their job and start a new life as a full-time entrepreneur, it could take anywhere from several months to several years before an employee comes in a situation to quit her job and begin life as a full-time entrepreneur.
Being financially accountable is critical for making the financial buffer needed to transition from an employee to a full-time entrepreneur besides for home-based business success.
Comprehending your present financial situation is compulsory and doesn’t have to take time more than an hour if you follow these five fundamental steps:
1. Estimate how much funds you currently have sitting in bank accounts, real estate, registered retirement savings plans, investments, GICs, etc. If you were to quit your job today, would there be any form of payout?
2. Determine how much you make every month either through rental properties, employment, dividends, child support payments, your present home-based business, etc.
3. Don’t ignore your monthly household expenditures. Note them down. Some examples for you to get started are:
- utilities (water/heat/hydro)
- property tax/house and mortgage insurance
- yard maintenance/snow removal
- groceries and household supplies
- vehicle fuel, maintenance costs, and insurance
- entertainment (movies/sports/books/plays)
- personal care (hair/nails/clothing)
- child care
- club memberships, publications, etc.
4. Document your monthly business expenditures, for example:
- phone (separate business line)
- shopping cart
- long distance
- web hosting
- office supplies
- bank fees
- coaching services
- part-time help
- shipping/postage, etc.
5. Determine your outstanding liabilities such as:
- personal loans
- credit card balances
- lines of credit, etc.
When you estimate your incomes and revenue on an annual basis and subtract your personal and business expenditures. How much remains in your hands at the end? Can a share of this be put aside to create your financial buffer?
If your current business revenue isn’t enough to cover your business and personal expenses and if you were to quit work today, how long would you be able to endure on your other income sources or savings and assets, taking into consideration your monthly expenses?
Have you considered all unpredictable expenses that could arise in the next year or two?
Is your automobile running on its final two cylinders?
Has your furnace nearly surpassed its life expectancy?
Is your vacuum cleaner barking at you?
Is your partner’s job secure or do you expect unbalanced times ahead?
I am not intending to scare or discourage you by any means doing this exercise. Financial stability is an area that needs to be handled so you can maintain your feet firmly implanted and plans realistic as you build your home-based business.
Comprehending where you are standing now and what is likely to come ahead will definitely help you make reasonable financial decisions as you plan your strategy for the future.
After passing through these five steps, you may learn that your plan to quit your job might take a year longer than anticipated, or you may realize that in order to move forward at a faster rate, you may require to bring in a partner or investor or learn to leverage your time, money and effort more efficiently to expedite advancement.
Whatever results you generate, don’t let them discourage you. Comprehending exactly where you are financially will enable you to make informed, practical conclusions so you can make your perfect future.
To improve your level of success in a home-based business, make certain you are in touch with a financial advisor and accountant as part of your success team.