The new year is a time where many couples look toward the future. People tend to feel more ambitious or ready for a fresh start when they leave the last year behind and launch into the new one. Often, professionals take a hard look at their careers and decide whether they want to stay the course or try something new. Sometimes, the idea of starting a business is enticing, and they decide that now is the time to get started. But launching a business can be tricky. If you want to figure out if 2020 is the year you should take the leap, here’s what you need to consider.
Your Financial Situation
First and foremost, you need to take a hard and honest look at your financial situation. What does your debt situation look like? Do you have your startup costs covered? How much money do you have in savings after those expenses? Could you float the business for the first few months or years? Will you maintain other income sources?
You need to ask yourself all of the questions above before you considering starting your own business. If your financial situation is already unstable, 2020 might not be the right time. Instead, you may want to focus on bettering your circumstances. Then, you can revisit the idea in 2021.
However, if you have a small debt load, a substantial amount in savings, and other monetary factors going your way, you might be ready. In many cases, you need to be prepared to support your business for several years, as it may take time for it to become profitable. Just keep in mind that your financial situation is only part of the equation, but it means you have at least one thing going for you.
Your Business Projections
Even if your financial situation is sound, that doesn’t mean you should run off and get a business license just yet. Instead, you need to assess your business’s potential expenses and profits. Consider the various costs, such as supplies, utilities, equipment, software, marketing, licensing, and anything else you’ll need to cover. You need to understand these costs in detail. That way, you can create a realistic budget.
It also helps to learn which expenses are deductible. Certain costs can lower your tax liability, so research what may fall in that category so that you can plan accordingly.
Finally, you also need to understand how much you’ll likely earn initially. This can be complicated, depending on what kind of business you’re starting. However, a bit of research can get you a long way.
Usually, it’s wise to do some market testing before you launch a business. Even if your product or service is great, it won’t succeed if there aren’t buyers who want it. It’s better to figure out whether there’s any interest or demand well before you take the leap. Similarly, you need to get a gauge on the competition and, if any exists, how hard it is to gain market share. If you’re up against well-established players, it’ll be challenging.
Just make sure you aren’t overly optimistic. It’s better to assume you’ll make less and be happily surprised when you bring in more than outshoot your potential earnings and be unprepared for reality.
Your Feelings About the Venture
When you start a business, you need two things going for you emotionally. First, you need to have a significant amount of passion for your new venture. In nearly all cases, there will be at least a few hard times or obstacles as you get going. If you don’t genuinely believe if what you’re creating, you’ll struggle to weather the challenges.
Second, you need to be comfortable taking on a lot of risk. If risk makes you anxious, it’s possible starting a business isn’t a great choice. About 20 percent of small businesses fail during their first year. After five years, between 45.4 and 51 percent are still standing. Once you hit 10 years, only one-third still have their doors open.
The reason small businesses fail vary. However, some common causes include not investigating whether a market for the product or service exists, failing to create a realistic business plan, and not having enough money to sustain the business. But even if you get those areas largely right, that still doesn’t guarantee success; it just increases your odds. If you aren’t comfortable with that, then you might not want to start a business.
Ultimately, launching your own business isn’t easy. But, if you get your ducks in a row and understand what may lie ahead, it can certainly be worthwhile. Just make sure that you don’t make the decision on a whim. You want to make sure you are genuinely ready. That way, you can increase your odds of being able to successfully start a business in 2020.
Are you thinking about starting a business in 2020? What makes you feel that it’s the right time? Share your thoughts in the comments below.
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