There are a number of reasons for wanting to start your own business after a divorce. It’s a bold, and often rewarding decision, but starting something so significant after ending a marriage can be especially tricky.
Below are some important things to consider before you make that leap into the entrepreneurial pool.
1. You Won’t Have More Time
One of the appealing aspects of venturing out on your own is the perception of having greater flexibility with your schedule. Although in theory this may be true, you are responsible for being the chief strategy officer, marketing aficionado, business developer, accounts payable and receivable, and handling an entire host of new responsibilities that you didn’t necessarily take into consideration. It’s very easy to spend your entire day working on these menial yet necessary tasks.
Also, if you have kids, depending on your parenting arrangement, you need to prioritize the time that you spend with them, especially when they’re younger.
2. You Must Be Passionate About What You Do
Chasing greater flexibility or your first million-dollar paycheck can be great incentive, but not if you don’t love what you do. Don’t leave a decent paying job, only to fall into another job that has a lot less job security and makes you feel trapped. Ask yourself, “would I be prepared to do what I’m doing for free?” If the answer is yes, keep at it and the money will follow.
3. It Will Take Longer Than You Think To Make A Profit
How much time will it take you to start making money with your new business? Now double your expectations. The reality is, most business owners underestimate how long it takes to start generating income. When you have a lot more money going out than coming in, it can take its toll on your financial and mental wherewithal. You need to remain optimistic yet be conservative in your estimations as to when you’ll start the journey towards profitability.
4. The Bank Is Not Your Business Partner
Many think they can go to a bank to get a business loan or increase their working capital. While that may be true, the banks will not do so without having some form of personal security, like guaranteeing your home. Banks will compete vigilantly for your business, but they will not take uncalculated risks.
Many business owners have a love-hate relationship with banks. They are there offering you the world when you don’t need their cash, and they’re nowhere to be found when you do need their cash.
5. Know The Difference Between Sole Proprietorship And Corporation
While there are pros and cons to both structures, you don’t need to make that decision right away. Operating as a sole proprietor isn’t a bad option while your learning the ropes. But, if you’re looking at growing into a multi-national conglomerate at some point, you may want to consider incorporating sooner than later.
There are some greater tax advantages in incorporating, but you also have to deal with a separate tax filing, and this option adds a layer of cost and complexity that you may not need when starting out.
6. A Business Plan Isn’t Complete Without A Business Budget
Your business plan is your template for what you see your business becoming. The plan in your head usually becomes a malleable document that needs to accommodate change and flexibility. One of the most important aspects of a business plan is an anticipated budget. Given the fact that you likely will be cash deficient for the first number of months, it’s important to predict with some degree of accuracy what your cashflow will be like until money starts coming in.
7. Be Mindful Of Your Mental Health
Although running your business can be truly exhilarating, not being prepared for the physical, financial and emotional demands it can place upon you can leave you feeling anxious and stressed.
You cannot completely avoid stress, but you do need to ensure you prioritize your health by exercising regularly, eating properly and having a close friend to lean on when the days feel unbearable.
8. Have A Mentor
You’re in uncharted territory, and you’re going to encounter questions that you never thought about. It’s important to have a resource network that you can turn to in those times. They may not have all the answers, but it may give you a necessary sounding board on those days when you are feeling overwhelmed, deflated, or just needing reassurance that you’ve made the right decision in going into business for yourself.
As exciting as the prospect of starting your own business may be, doing so as someone who is divorced can add a whole other layer of complexity to the equation. You don’t have the luxury of a spouse’s salary to rely upon as part of your fixed income. Your time will be divided between your new business and your newly divorced life, which will often entail children. You will experience some high highs and quite a few low lows.
Many people think the life of an entrepreneur is filled with opportunity and wealth. The reality is, there is a considerable amount of risk and uncertainty that one must take on. You must feel comfortable feeling uncomfortable for an extended period of time.