Manage episode 316774122 series 3244175
When you dig into the numbers about two out of three small businesses fail. Considering I have three kids at home that have an entrepreneurial spirit that means two of them might not ever move out of the house. There are a few common areas I coach people around that come into the TSBDC. Most entrepreneurs have some level of fear of failure they have to overcome. The next is how to translate their skills into entrepreneurship. Then the most common area is finances, most businesses I see are undercapitalized. The last area is planning, while they may have an idea they are excited about they fail to create a plan that outlines how the business will run and make money.
The reason I like coaching people that already have a side hustle going is they have a proof of concept. Regardless of the size of the business, they turned an idea into a product or service that people are paying money for. Also, growing your business on the side while you continue to work your day job is a great way to ensure when you do make the transition that you will still be able to pay your bills. Because your time is more limited with a side hustle you also have to learn more quickly how to automate manual redundant tasks. Which unlocks scalability that is essential to making it when you pivot to full-time entrepreneurship.
When it comes to creating a financial plan for your business I tell people to focus on replacing a percentage of their income in year one, in year two double it, and so on until they reach the point they can make the career switch and still live life. Funding a start-up isn’t easy because banks know there is a lot more risk with a new business. The most important number any business needs to be successful though is not funding but cash flow. Most banks won’t even consider lending to a business that’s less than 2-years old because they want to see a history of cash flow.