Welcome to another edition of my Weekly Journal! I use this space to share a bit about jewelry, and a lot about my journey from lawyer to jewelry business owner. In this week's journal entry I want to address a question I get all the time from aspiring business owners and that's this: how much money do I need to save up in order to quit my job and start my own business? My answer has two layers to it, so let's try to peel back the layers together in this week's journal entry.
First, let's talk about how much money you might need. The answer is: it depends! I know. Sigh. You just hate that answer, don't you? But it's the absolute truth. Businesses vary in the amount of money they require and it's not hard to see why. For example, let's say you want to start a consulting business offering digital marketing services on Instagram to businesses owned by older adults who do not have a lot of experience with (or desire to learn) social media. What is required to start this type of business? Probably very little. A computer, a phone, a place to work (at home is just fine), you get the idea. Service-oriented businesses like this often require less to get started than a product-oriented business. Let me illustrate this with an example. Let's talk about grace + hudson. I required much more to start my business because I needed to invest in stones, chains, an e-commerce website, boxes for shipping my jewelry, etc. You'll have to take a close look at the type of business you'd like to run and then decide from there what might be a realistic amount to save up as an initial investment. Did you groan at the sound of that? Does that sound overwhelming? Well, welcome to one of your first activities as a start-up business owner! Your journey as a business owner is going to be FULL of overwhelming activities like this, and your job will be to break them down into digestible parts that can be accomplished. If you made another groan, you might want to take a harder look at what entrepreneurs and business owners actually do on a day-to-day basis. For instance, do you think I make jewelry all day long? Wrong! I spend maybe 10% to 20% of my time as a business owner making jewelry and the rest is spent working on growth and development, marketing, solving problems, etc. That means 80% of my time is spent doing other things besides making jewelry. I think a lot of entrepreneurs will tell you the same thing, regardless of the field they're working in. Make sure that's something you're ok with because, if you're not (and that's totally ok), you might not like being an entrepreneur.
Let's get to the second part of my answer to the question, how much money do I need to save up in order to quit my job and start my own business? You might not like this answer either but you can always count on me to deliver some truth! I want you going into business ownership with eyes wide open, not with some fairytale idea of what it's like to run a business. If you have a truthful, honest outlook about business ownership, you can make an informed decision on whether it's something you really want to spend time, energy, and money pursuing. So, that said, the second part of my answer is this: there's a major flaw in your question! In most cases, you can't just save up money to quit your job and start your own business. You're going to have to start your own business THEN quit your job. I know, another groan, right? This is the reality for most people unless you (a) just won the lottery or (b) come from a wealthy family or are married to a wealthy spouse that can fund your business and take care of your living expenses. Most people start their business while they are still working their regular job. If you're groaning, let's examine why. I think the reason most people absolutely hate this answer is because of the world we live in today. Everyone expects everything to be instant these days. Many people feel social media and the Internet have created this false expectation. But you can't just leave your nine-to-five salaried job that you've been working at for several years, start your own business the next day and be making the same amount of money. It just doesn't work that way. If it did, everyone would start their own business! But here's the "pro" to this otherwise "con." It connects to the first part of my answer. When you begin to really work on starting your own business while you have your regular job, you'll begin to get a REALLY good idea of how much you'll actually need to save up in order to quit someday. You'll get a good idea of the expenses you're going to incur in your business, the investments you're going to have to make, etc. This information will allow you to run some decent forecasts and come up with some reasonable estimates. Some people might be able to afford to quit in a few months, others might require a few years.
Let me end this week's journal with this thought: owning your own business doesn't come with a checklist or a set of instructions. I can't tell you that you need to save up $50,000 to be able to quit your job and start your own business and have guaranteed success. This is an unsettling concept for some because the jobs we've held in the past - they've all come with clear job descriptions and clear goals that need to be met in order to be promoted. There is no such thing in the entrepreneurial world. You're the only one who knows the answers and can chart the course. But if you want it and are willing to work hard for it, you can definitely do it. It's a matter of making up your mind!
Cheers to starting your own business!