Reality of becoming your own boss can make or break
Provided by RBC Wealth Management
and Dave Dupont
When you think about work, do you picture yourself in a cubicle? Or are you one who desires a home office? Whether working in an office building or your home, each option has its own challenges.
But, before you say goodbye to the office and go out on your own, it is important to consider the personal and financial implications of owning your own business.
Are you ready to be a small business owner?
Running your own business can bring great rewards. But for every successful business owner there is someone who jumped in too soon.
• How do you handle financial uncertainty?
• Who is your competition?
• What is your marketing strategy?
• How patient are you?
• How disciplined are you?
• What work environment works best for you?
If you considered the questions above and still want a business to call your own, it is time to plan.
Focus on finances
Although not the only important component of a successful business, financial considerations can often make or break a new business owner. This is where the services of a financial professional can be a good investment.
• Monthly living expenses — Err on the side of overestimating monthly expenses.
• Health insurance — You may need to adjust your expectations about the type of coverage you need and the cost.
• Start-up funding — Start up costs and extended periods without a paycheck may necessitate assistance from investors or you may need to consider a small business loan.
• Cash flow projections — The formula for cash flow is total revenue minus total expenses. Consider the effect on your cash flow during months with low sales.
• Business accounts and bookkeeping — Establishing business accounts separate from personal accounts is a must.
• Investing in your business — Know when to invest profits and when you should put them back into your business. A skilled money manager or accountant can help with this important decision.
• Retirement — When you no longer have access to a company’s 401(k) match or retirement plan, you need to take even more responsibility for your own retirement. Work with a financial professional to establish a traditional or Roth IRA or to find if you qualify for a SEP or SIMPLE IRA for small business owners.
This article is provided by Dave Dupont, a Financial Advisor at RBC Wealth Management. RBC Wealth Management does not endorse this organization or publication.
RBC Wealth Management, a division of RBC Capital Markets LLC, Member NYSE/FINRA/SIPC