You dream about joining the ranks of mompreneurs, those unicorn ladies that also run their own business while spending enough time with the kids and having a Pinterest-ready home when they return from lavish holidays?
It will take a lot of financial planning and some military-rank grit, but you can achieve it in only a few years as long as you don’t lose sight of your goal and retain the initial determination.
Starting your own business requires you to get your finances in order first so that you are aware how much you can invest in your business without taking a toll on your lifestyle. The things you need to pay attention to include debt management, having a backup fund, creating alternative benefits solutions, and thinking about retirement.
Starting a business while in high debt is unsustainable and dangerous. It can have repercussions both on the health of the company and the entrepreneur’s peace of mind. You need to take some time and realistically evaluate your spending patterns and existing debt, as a family.
List all your credit cards, loans, mortgages and other obligations. Could you pay them, at least for a few months from a single income? Do you need to keep your job while you transition to entrepreneurship?
While your house mortgage will probably be around for at least a decade or more, you should strive to get rid of student debt as soon as possible. If the amount is overwhelming and you could use some extra money to invest in your business now, there is also the opportunity of refinancing your loan to get better terms like an extended term or a decreased interest rate, especially if you have a very good credit score. Read more about this opportunity here: https://aaacreditguide.com/refinance-student-loans/.
Entrepreneurship is a rollercoaster. You can have $5K earnings in a fortnight, or you could be on dry land for several months, and sometimes it’s not even your fault. Remember the financial crisis of 2008? Before heading into the unknown take some time to create a substantial cushion. Have in a savings account enough money to last you for at least half a year before resigning.
This includes your share of the loans above and debt as well as day-to-day spending. The good news is that if your business is a success you can always use some of the money to fly your kids to Disneyland.
Alternative Benefits Package
Sometimes it’s not only about the paycheck, but the benefits package. Don’t sign your resignation and build your empire before you put in place some solutions regarding healthcare, dental care, and children’s healthcare. Check with your partner if you and the children can be included in their plans, at least for a while.
If piggy-back riding your husband’s benefits package is not possible or he is also an entrepreneur, it’s wise to shop around for alternatives. Learn about governmental programs as well as private offers.
If you have some dough set aside from your corporate years, you should ask about your options to rollover your savings to an IRA or a personal 401(k). Avoid the temptation to use the money saved so far to fund your business so that you don’t have to pay early-withdrawal penalties.
Talk with your bank or retirement funds manager about the options that are available to you once you become self-employed. Try to get a package that comes with additional benefits and educate yourself about tax exemptions and benefits.
Just like marriage and starting a family, entrepreneurship is all about the right timing, energy and having the best people by your side. Don’t take any rushed decisions just to get out of the rat race.