You’ve dreamt of the moment that your name appears as owner/founder/CEO of your own business. You envision mentoring others and sharing your inspiring stories. TLC is on the phone to discuss a reality show based on your life. Hold it. Daydream over. You’re still sitting in a cubicle eating lunch at the desk. Before you give two weeks’ notice and start writing your acceptance speech for Entrepreneur of the Year, before you even think about how to start a business, it’s time to face reality and do a bit of business planning.
Karin Price Mueller, Personal finance and consumer counselor, passed along some words of wisdom to those dreaming of or actually starting a business and become the next best…whatever. “When you start a new business cash is going to be sparse,” Mueller says. “You’re going to want to invest everything in your start-up, but that’s a mistake. You don’t want to lose your business a few months in because of an unexpected cost–and there will be unexpected costs. That’s why it’s smart of have a cash cushion, or emergency fund, worth six months of expenses for your business.” That’s just the first piece of sage advice you should keep in mind before stepping away from your 9 to 5 job and the paycheck that comes with it. Add the following items to that worry list as well.
1. Get Life Insurance
You’re the key person in your business and the business is going great. With your creative mind and lots of hard work the business prospers. But what happens if you die? Just as you want to leave money for your family to be secure without you, find a way to provide insurance money to replace yourself if you’re not there to guide the company.
Read Related: Why College Students Should Also Run a Business