The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

Can You Afford to Become An Entrepreneur?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Entrepreneurship
Reading Time: 3 mins read
Entreprenuership
10
SHARES
173
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Everyone has good ideas.  Some of them may even be million dollar ideas, but if you live from paycheck to paycheck or way beyond your means, you may never be able to quit your job and start a business.

As the Smallbizlady, often I get emails, facebook messages and DM’s on Twitter from people asking me to help them start a business.  My first three questions are usually something like this.

  • What is your business idea?
  • How much money do you have saved?
  • How much money do you think it will take to launch this business?

If question two brings on a case of stuttering, I start shaking my head.

You should have three pools of money before your start a business.

  • An emergency fund for the household
  • 12-24 months of budget to run your household
  • 12-18 months of money to launch and operate the business

Now hear this, “Your ability to save has everything to do with your ability to start a business!”

Money is not everything.  It’s just a tool, but it is certainly the beginning of a business plan.  Banks rarely, if ever, loan money to start-up businesses.  Banks will typically not deal with you for a loan or line of credit until you’re been in business 2-3 years and can show growth in the business with your financial statements and business tax returns.

There are some franchising opportunities that will provide some working capital, but 30-50% of the money will still come from you. And by the way, you will need to have significant net worth and assets to collateralize the loan.  Think of it this way, no credit = no business.  When you are first starting out in business, you are your business’s credit.

So what do you do if you have a great idea and no money? There are other sources of funds to start your business. There’s the 3 F’s Family, Friends, Fools.  Your family loves you and hopefully believes in you enough to invest in your business.  If you are fortunate enough to have a family that can afford to invest in you– you are fortunate, but beware.  Your rich Aunt Sally may think she’s your boss and might call you up every 30 days to check on how her $50K is doing.  You may not want that kind of pressure in your new business.

Then there are your friends. Nothing can kill a friendship faster than borrowing money that you can’t pay back.  I have a rule.  I do not loan money to friends, I give it to them.  I make sure that I do not give away any money that I cannot afford to lose.  Would your friends do that for you?  If so, they could be an option.

Every once in awhile, a hungry entrepreneur will come across a rich guy who’s an idealist about business, who falls in love your idea but doesn’t wish to run the business.  That is an angel investor— who will invest money in the company for an equity stake and lend his or her network to help you.  Do not get your hopes up about finding an angel investor in this economy.  It can happen, but let’s just say you are better off using your own funds that you save to start your business.  Family, friends or an angel investor can be fools for investing in a half-baked business idea.  Invest your time, to make sure you have a sound business plan before you take anyone’s money.  And do have a plan to show them—for when and how you think you’ll pay it back.

If you do have assets, you are in a different situation.  You can borrow against your 401K, you can take out a home equity loan, you can sell your home or rental property, you can cash in a Roth IRA.  The money must come from somewhere—its best when it comes from your own coffers.

It’s essential that you start your business from a position of financial security. Otherwise, you’re finished before you get started.

Melinda F. Emerson, SmallBizLady, is one of America’s leading small business experts, whose mission is to end small business failure.  Forbes Magazine recently named her one of the Top 20 women for entrepreneurs to follow on Twitter where she hosts #SmallBizChat, Wednesdays 8-9pm ET for emerging entrepreneurs. She publishes a resource blog www.succeedasyourownboss.com and is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media)

Tags: Angel investorBusiness planEntrepreneurSmall Business
Previous Post

8 Things Small Business Owners Can Do Now to Save Money!

Next Post

Finding The Money To Start Your Small Business

Related Posts

Asian women working in the office, young Asian business women as business executives, founding and running start-up executives, young female business leaders. Startup business concept.

Popular Ideas For Starting Your Own Business

by AskTheMoneyCoach

Entrepreneurship involves identifying a need in the market and developing a product or service to meet that need, resulting in the creation of a new company. Many businesses are shifting their focus towards launching online businesses due to technological advancements and the growth of e-commerce. As a result, companies are...

Startup or small business entrepreneur,Make a note of the delivery address from the customer,order management in online stores, shopping on the internet,Selling online on the Internet,SME,e-commerce

How to Make an Income From Home In 2023

by AskTheMoneyCoach

Working from home comes with many benefits like peace of mind, better time management, fewer expenses, etc. There are plenty of opportunities out there, and with a little effort, you can find one that’s perfect for you. Here, we’ll share some tips on how to make an income from home...

Cubicle And Office Furniture In Office Room

Were You Fired or Freed? Dealing with Job Loss

by Lynnette Khalfani-Cox, The Money Coach

https://vimeo.com/manage/videos/802135733/privacyTranscription by Rev   Lynnette Khalfani-Cox, The Money Coach (00:02): Hey everybody. It's Lynnette Khalfani-Cox, The Money Coach. I want to talk to you today about your job and specifically the job you might not have. I know there's been a lot of talk lately about layoffs, especially in the tech...

Social Media Poster

How to Find a Great Social Media Job

by AskTheMoneyCoach

Social media jobs provide an opportunity to stay connected with the ever-evolving world of online marketing. There is a wide range of roles available, from content creation to analytics and strategizing. Companies are increasingly turning to social media managers to help keep their brands relevant in the digital age. These...

Madam_CJ_Walker

5 Financial Lessons From 5 Great Black Leaders w/Video

by Lynnette Khalfani-Cox, The Money Coach

February is Black History Month and while we celebrate the accomplishments and achievements of many African-Americans, we also recognize that there's so much more to do -- especially economically. In the spirit of uplifting the financial status of the Black community, here are five financial lessons from 5 great Black leaders. James...

Are You a Woman Business Owner? Here are 6 Business Tips for Success

by Guest Blogger

Forty percent of U.S. businesses are female-owned, and they generate $1.8 trillion a year in revenue through different business plans including Benefits Membership Revenue Strategy. While these numbers are stellar, data shows that there are still opportunities for improvement.  A survey of over 3,000 entrepreneurs found that men are almost...

Oprah and Lynnette Khalfani-Cox

3 Lessons I Learned From Meeting Oprah

by Lynnette Khalfani-Cox, The Money Coach

Ten years ago, I had the good fortune to be featured as an expert on The Oprah Winfrey Show and to meet the all-time queen of daytime talk TV. That life-changing experience led to many more connections with Oprah’s vast production network of TV shows and spinoffs, not to mention...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1378 shares
    Share 551 Tweet 345
  • What to Do if Your Spouse Stole Money From You

    1167 shares
    Share 467 Tweet 292
  • What to Do If You Can’t Afford to Leave Your Spouse

    1104 shares
    Share 442 Tweet 276
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1011 shares
    Share 404 Tweet 253
  • What Do All Those Strange Codes In My Credit Report Mean?

    815 shares
    Share 326 Tweet 204
  • Do This Now If Your Wages Were Not Reported

    745 shares
    Share 298 Tweet 186
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    724 shares
    Share 290 Tweet 181

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist