When you work for an employer and consider striking out alone, there are many thought processes to complete. The biggest one is running the company and then keeping all the profits. This comes in time to some business owners, but you must be willing to give up the economic stability associated with traditional jobs. There is also the fear that your dream of owning a business will meet with skepticism from family and friends, and you don’t want to let them down. Finally, there’s the notion of getting paid to do what you love but, with business ownership, this passion could quickly become a chore. Suddenly, your passion cuts into your evenings and weekends. You are working for “free” instead of receiving overtime from your employer. In this post, we consider how much passion pays first-time entrepreneurs and what happens when passion gets lost.
How Will You Get Paid?
As an aspiring entrepreneur, you will seek a profit either by selling goods or services. Some businesses may offer both. For example, you might have an A/C sales and installation business that also performs maintenance and repairs to existing systems. You might make a profit from equipment sales as well as from labor performed on all types of A/C systems. Many entrepreneurs plan to reinvest any profits made back into the company, but they need enough personal savings to cover their household expenses during that time. To determine if you will turn passion into profits, you must estimate how much income you could earn each month after covering the company’s overhead costs.
Talk to Other Entrepreneurs
The worst thing to do would be to launch a business without a plan. You’re too smart for that! However, a plan doesn’t always match what actually happens when you are out there in the entrepreneurial trenches. It helps to talk to other entrepreneurs, either through networking events or through online communities (i.e. LinkedIn) and to get small business coaching when needed. Networking means that you ask entrepreneurs with a similar business model how long it took for them to break even (i.e. to recover all of their startup costs) and to begin drawing a salary. Remember, that they are going to give you advice, but they might not share the whole, unvarnished truth. They may sugar-coat how many hours they invested in their company before earning profits or how they had to keep an outside job to cover their family’s bills until the business became successful. Entrepreneurs are a tough breed, and they want to maintain the image of a strong duck who always lets the water run down his back.
Consider Your Professional Wants and Needs
While you are still employed in a traditional job, you can also consider the wants and needs you’ve explored in the current setting and in past jobs. How many hours are you willing to work each week? How many times are you willing to work a 12-hour to 15-hour day or through the entire weekend? Can you miss important events for family and friends because customers must take precedence over them? Will you work through the holidays? Can you stay motivated without receiving regular feedback from a boss? Can you lead a team when success is not guaranteed?
Owning your own company gives you more control over your work and sometimes affords you the opportunity to keep the financial rewards of the services that you’ve provided. Business ownership is also full of unpredictability, which means that you might need a secondary income to protect your finances and keep a roof over your head. It’s possible to phase yourself into first-time entrepreneurship gradually so that you can work towards a profit margin in your company without losing the economic stability of external employment.