Leaving your day job to go full-time entrepreneur is as much a financial decision as it is a Business one. Will you be able to support yourself during the transition? How will you manage both personal and business finances? Can you successfully navigate the complex world of business accounting and taxes? These might not be the questions you are thinking about when you decide to become an entrepreneur, but they ARE the things that can literally make or break your small business.
We wanted to get an expert’s opinion on these topics, so we spoke to Dave Ramsey, THE name in personal finance, who is the founder and owner of the multi-million dollar business Ramsey Solutions, the author of 10 best-selling books, and the creator of the Financial Peace University. In our interview we talked to him about leaving your day job, business debt, the biggest mistakes Business Owners make, and more.
1. When Should Someone Leave His or Her Day Job to Work for Themselves?
Unless your name is Mark Cuban, start slowly on your venture, meaning part-time. Keep your day job while dipping your toes into the entrepreneurial waters to see if your product or service will sell. Hundreds of well-known entrepreneurs began this way. Billionaire Sara Blakely, the founder of Spanx, is a great example. She stayed up nights stuffing orders into padded envelopes until she could afford to launch her company. Come up with an income goal that is a percentage of your salary, then work like a crazy person to get there. Owning your own business can be one of the most thrilling, joyful things you’ll ever accomplish. But no matter how much you want to get started, be wise and wait until the time is right, ensuring that you’ll not only have independence but success, happiness, and a future for your family.
2. Business Debt vs. Personal Debt: Is Business Debt for Expansion (or Other Reasons) Good or Not?
The best way to grow your business is to take a lesson from The Tortoise and the Hare. Slow and steady always wins the race. You don’t need to borrow money to make it big. Instead, save for what you need and then expand. It lowers risk and minimizes mistakes. While you’re budgeting and saving for your expansion, consider renting until you can pay cash, outsourcing, or buying used instead of new.
Tips for #entrepreneurs from @DaveRamsey on #finance & when to leave the day job.
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3. What are the Biggest Mistakes You See Every Business Owner Make?
Accounting, taxes, and shiny new toys. I don't care how much you hate diving into the numbers, business owners who don't stay on top of their accounting fail and close shop. Don’t mess with the tax man. He gets paid, even when you don’t. You should have a monthly tax savings account, where you can set aside 25% of your profits to pay your quarterly IRS estimates. Treat the money in that account as untouchable. And when you start making a decent profit, avoid the trap of running out to get the latest gadget or electronic gizmo—all in the name of increased productivity, profit, or client approval. The most successful businesses don't buy nicer things, and toys without surplus funds and they never go into debt for them.
4. In Looking at Business Owners Who Are Successful - Why Were They?
The most successful business owners understand that the very things they want from a leader are the very things the people they’re leading expect from them. They have a dream, a vision, and a goal and they are intentional about serving their customers and their teams with integrity.
5. What's Something About Your Business That Not Many Know That I Can Share to Help Our Audience?
We started as an idea and a dream on a card table in my living room, and today, Ramsey Solutions is a Multimillion Dollar Business with close to 600 employees. We’ve done some things right and a lot of things wrong over the years and we share our company’s entire playbook for winning in the book EntreLeadership: 20 years of Practical Business Wisdom from the Trenches.
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