Question
An aspiring business owner from Ascot, Queensland asks:
I began a part-time business venture 14 months ago whilst keeping my day
job. Though the business needs more sales, it produced a gross profit of
$37,500 last year which is a nice little money earner to supplement my
$94,000 annual salary. However, I’ve hit a ceiling because I’m not
operating it full-time. As a single mother of three with a mortgage,
it’s scary thinking about leaving my safe job. Though ambitious and
wanting to branch out, I am afraid.
Answer
Kenelm Tonkin, Chairman, Tonkin Corporation answers:
People handle the “entrepreneurial leap of faith”
differently. Prospective entrepreneurs often jump. Others plan. Yet
others perpetually analyse without acting. Some, like you, test the
waters but baulk. Personal and financial commitments make this
understandable.
Here are 5 risk-minimising tips in relation to this “entrepreneurial leap of faith”:
First, set a deadline. Resolve that if you don’t cover your costs by a
deadline, including your pay, you will return to a job. Now you can
launch with zeal knowing that your time and financial exposure are
limited.
Second, fund your own safety net. Capping your financial exposure by
imposing a deadline means you can calculate the salary you would forgo.
Why not save this sum to fund your personal expenses rather than
drip-feed your savings to fund direct expenses? You will discover that
creating your own safety net first will actually accelerate your
business growth.
Third, construct an external safety net. Introduce yourself to hiring
managers in companies you like and ask them whether their company
values entrepreneurial flair. Share your planned adventure, adding that
you’d have tremendous experience to offer their company in the unlikely
event the business doesn’t go to plan. I guarantee, they will remember
you. Cultivate these contacts.
Fourth, understand job security is a fiction. At best, job security
is qualified by the requirement that customers value a product. Even
then, job safety is uncertain. One difference between employees and
entrepreneurs is that entrepreneurs have a direct interest to make the
product-to-customer process work. Another is that, if that process has
hiccups, the entrepreneur is the last to lose her job. Employees go
first. Who has the job security now?
Fifth, know your income replacement score. Yours is 39%. The $37,500
generated from your part-time business is 39% of your full-time, $94,000
salary. If you can already achieve this in those harrowed moments
between a 9-to-5 job and raising children, imagine the possibilities
full-time in business. The additional $56,500 needed to replace your
salary seems probable.
If none of these realities moves you to act, I recommend you retain
your business as the supplementary income source it is and live with
thwarted ambitions.
