Budgeting Tips for Aspiring Entrepreneurs Leaving a Stable Salary
- Akino Davis
- Nov 17, 2024
- 7 min read
"Becoming An Entrepreneur: Beginner's Guide" helps you launch and grow your business. Learn branding, finance, and scaling in an all-in-one essential guide. Available on Amazon. Get your copy today! Becoming An Entrepreneur: Beginner's Guide
Start your day with motivation! "Mindset Mugs" are crafted to inspire aspiring entrepreneurs, featuring quotes to spark belief and confidence. Get your dose of inspiration with Mindset Mugs now at SME Shop
Have you ever felt torn between wanting to finally start your dream business and being chained to the security of a steady paycheck? It's a frequent dilemma for professionals like you who want to start their own business.
The big question is: how do you take this jump without jeopardizing your financial security? I understand; it's a difficult decision, made considerably more difficult when you consider the costs and duties that accumulate each month.
The Struggle of Leaving a Stable Paycheck
When considering starting your own business, the freedom and fulfillment of being your own boss may sound enticing. However, for many ambitious entrepreneurs, one of the most significant impediments is the fear of losing a consistent income. It's difficult to deny the comfort of knowing exactly how much money you're making each month. Whether paying off a mortgage, school loans or simply managing everyday costs, monthly income can feel like a safety net that's too essential to lose.
Throughout the rest of this article, I’ll tell you a story about a previous client of mine. For her privacy, we’ll call her Jessica and change a few identifiers of her profession. Jessica was a marketing manager with a good salary. She had always wanted to establish her own branding agency, but every time she contemplated it, the dread of an unreliable income held her back. She'd consider her rent, vehicle bills, and savings, and it seemed virtually hard to quit her career for an uncertain future.
Common Approaches (And Why They Don’t Work)
Many people faced with this difficulty turn to certain often advised remedies, which, regrettably, do not always work for prospective entrepreneurs. You may have heard suggestions like "Just save for a few months, and you'll be OK!" or "Get a business loan." Let's look at why these solutions aren't always effective.
Saving for a Few Months: While saving three to six months' worth of costs sounds like smart advice, it rarely takes into account the fact that establishing a business might take much longer to become profitable. When Jessica took this technique, she discovered that her savings were quickly draining due to unanticipated startup fees before her business even generated consistent revenue. This is advice I share with my clients but it entails so much more layers of which I carefully take my clients through.
Taking Out a Loan: Another typical option is to obtain a company loan. However, regardless of whether your new business is profitable or not, business loans must be repaid. For Jessica, the prospect of beginning her entrepreneurial adventure in debt was intimidating and increased more stress than it relieved. It became evident that relying on a loan would not help her financial situation.
A Smarter Approach: Thoughtful Budgeting and Financial Planning
So, how should you budget when shifting into entrepreneurship? Instead of relying on short-term fixes, it is critical to plan comprehensively and realistically. Here's what I offered to Jessica and what I currently recommend to my clients.
1. Create a “Survival Budget”
One of the first things you should do is calculate your basic expenses. I call this your "Survival Budget." Unlike your current budget, which may include pleasures such as dining out or purchasing the latest electronics, a survival budget is about the basic minimum you require to live comfortably and meet non-negotiable expenses. This includes identifying rent, groceries, transportation, utility bills, insurance, and any other significant financial obligations.
Jessica and I collaborated to reduce her spending to the fundamentals, and she was able to eliminate superfluous expenses to create a safety net for herself. This enabled her to determine precisely how much she needed to make from her business or part-time jobs in order to cover her basic living expenses.
2. Build a Bridge Income Plan
Quitting your job and beginning your business without a revenue stream can be daunting. That is why I propose developing a bridge income strategy; that is, a way to earn money while working on your business. This might include consulting part-time, freelancing, or even working fewer hours at your existing employment if your company permits it.
Jessica was originally concerned about losing her primary source of income, so we discussed how she could use her existing skills to take on freelance branding tasks. This not only provided her with bridge income, but it also allowed her to expand her client base and test her business concept on a lesser scale before completely launching.
3. Separate Business and Personal Finances
Another tip is to keep your business and personal costs separate. When you first start, it's tempting to blur the lines between personal and business expenses, but keeping separate accounts allows you to keep track of how much you're spending and earning. For Jessica, this meant having a separate business bank account, which allowed her to determine whether her business was truly lucrative without depleting her savings.
4. Automate Savings for Safety
One of the most difficult tasks for ambitious entrepreneurs is sticking to a budget while starting a new business. The thrill of beginning your own business can sometimes lead to overpaying for items that are not strictly necessary. Automating savings is a good method to protect your financial health during this change.
Jessica set up a percentage of her freelance income to go directly into her savings account. This helped her stay on schedule, even when business costs arose. Savings automation provides peace of mind, knowing you are always growing your safety net.
Jessica’s Success Story
So, how did everything turn out for Jessica? Well, I'm pleased to announce that Jessica has successfully shifted into full-time business. Jessica left her work with confidence after drafting a clear survival budget, a bridge income plan, and automating her savings.
Today, her business is sustainable, and she enjoys the independence that comes with being her own boss. But, more crucially, she made the change on her own terms, avoiding the drawbacks of traditional methods such as taking out loans or depleting her savings too rapidly.
Your Path to Financial Freedom as an Entrepreneur
The journey from employee to entrepreneur is as much about mindset as it is about practical planning. If you’re thinking about leaving the comfort of your stable paycheck, I want you to know that it’s completely possible—with the right plan in place.
Here are a few actionable steps you can take right now:
Create Your Survival Budget: Write down your essential monthly expenses. Be honest and clear about what’s truly necessary.
Identify Potential Bridge Income: Consider how you can use your current skills to bring in money while starting your business. Freelancing or consulting are great options.
Separate Your Finances: Open a business account and start separating your income and expenses. This is key to understanding whether your business is sustainable.
These steps are designed to help you confidently step into entrepreneurship while protecting your financial health. Budgeting isn’t about restriction; it’s about giving yourself the space to grow your business without constant financial anxiety.
Why Financial Planning is the Key to Your Entrepreneurial Success
It's easy to become overwhelmed when considering giving up a steady salary. I've seen so many bright people put their aspirations on hold just because they’re afraid of financial uncertainty. But I want you to know that you can prepare to face these concerns. Proper financial planning is more than just statistics; it's about giving yourself the courage to venture outside your comfort zone and create something truly gratifying.
Consider financial planning to be your safety net. It helps you accept the required risks of entrepreneurship while limiting the negative consequences. And, like Jessica, with the correct strategy in place, you can successfully transition from employee to entrepreneur.
Final Thoughts
If you've been considering starting your own business, now is the time to make plans. Don't let money problems keep you from living the life you genuinely want. Budgeting may not sound like the most fun aspect of the journey, but it is the foundation that will allow you to get there effortlessly.
I hope you found this budgeting advice useful and that you feel more prepared to pursue your entrepreneurial goal.
Subscribe to my weekly newsletter, The Entrepreneur Spark, at www.smedigital.biz/blog for additional insights, suggestions, and strategies to confidently move into business. Let us take this trip together!
Whenever you are ready, there are three (3) ways that I can help you:
Want to grow your audience, showcase your expertise, and establish yourself as a thought leader? My Content Writing Service delivers engaging LinkedIn posts and Articles tailored to your unique goals. Stay consistent, save time, and build your authority with content that resonates. Learn More Here
Unlock your business potential with Startup Business Plan Writing Services. From customized business strategies to expert business plan writing, we provide aspiring and new entrepreneurs with the tools needed for success. Schedule your consultation today and take the first step toward achieving your business goals. Learn More Here
Professional to Entrepreneur in 90 Days! Ready to leave your 9-5 and start your own business? In just 90 days, the Becoming An Entrepreneur Coaching Program provides personalized, step-by-step guidance through weekly 1:1 coaching sessions. We’ll help you plan, brand, and launch your business with confidence. Learn More Here
Join Us On YouTube
Not Yet Subscribed to this newsletter?
Learn How Professionals and EmployeesTransition Successfully into Entrepreneurship
Join My Weekly Newsletter with Strategies, Guides, and Tactics That Helps New and Aspiring Entrepreneurs Save Money and Stress Launching Successful Businesses.
Comments