Thinking of venturing out on your own? Ask yourself these questions first.
There are plenty of good reasons to start your own business and work for yourself. For one thing, you might boost your income by going this route. Furthermore, you'll get to enjoy the freedom of not having to answer to a boss.
But let's face it -- right now, the economy isn't exactly in a stable place, and the coronavirus pandemic is still raging. As such, it's a challenging time to kick off a new business venture, so ask yourself these questions before diving in.
1. Will the pandemic result in restrictions that hurt my business?
If you're planning to open a web consulting business where you do your job from home, the coronavirus outbreak may not impact operations all that much. But if you're trying to open a bookstore or cafe, you may encounter capacity restrictions that limit your ability to earn money.
Even if capacity limits don't apply, there are other considerations to think about. Keep in mind that many companies are trying to cut costs right now and may not have room in their budgets for the services you want to offer. On top of that, people's lives are different at the moment. Say you'd like to start a dog-walking business. It could be a lucrative venture in normal times, but right now, many people are working remotely and don't need assistance taking their dogs out during the day.
Think about how current circumstances could impact your business, because it might pay to take that plunge at a more opportune time.
2. Do I have a healthy amount of money in savings?
It often takes new businesses time -- months or even years -- to become profitable. As such, you may need to fall back on your savings account until business picks up. Make sure you have enough money to cover a good six months' worth of bills, or possibly a bit more given current economic conditions.
3. What will I do for health insurance?
The great thing about working for a company is getting access to employer benefits, which often include health insurance. If you start your own business, that perk goes away, so you'll need to be prepared to cover that expense on your own. It's never a good idea to go without health insurance, and during a pandemic, that's just about the worst mistake you could make.
Visit healthcare.gov to get a sense of what it will cost to buy insurance on the open marketplace. Of course, if you have a spouse, you may have the option to get on his or her health plan -- but make sure that's possible and see what it will cost you before falling back on it.
4. Will this make me happy?
Some people start their own businesses because they're frustrated with their existing jobs and think it's the best way to facilitate a change. But owning a business is a major commitment. You may, in fact, end up putting in much longer hours once that venture kicks off, and your work-life balance may suffer. Before you start a business, make sure you're up for that challenge and that it's what you really want. You may find getting a new job or moving to a different industry will solve your problems better than working for yourself.
While 2021 may not seem like a great time to start a business, with the right plan and approach, you could enjoy a world of success. Just be sure to think things through carefully before you submit your resignation letter and venture out independently.
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