Dream of being your own boss? Have a plan in place

Being your own boss means being in charge, right? While that’s true, that control comes with strings attached, financially speaking.being your own boss

Highlights from a new RBC Survey conducted by Ipsos Reid:

  • Seventy-nine per cent of respondents feel like being a small business owner gives you more control over your finances than working for someone else, while 92 per cent feel like they’d have more control over their career
  • With current entrepreneurs, what made them decide to strike out on their own? Sixty-four per cent of current business owners say that the opportunity presented itself; 41 per cent had a great business idea
  • Thirty-four per cent said they started the business because they needed more income; only 17 per cent waited until they had the money saved in order to start their business

“While working for yourself can yield great rewards financially and can be very satisfying, entrepreneurship can be risky if you don’t approach it in a financially responsible way,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.

“Like with other financial decisions, you’ve got to make this one with your head and not with your heart, even if you are passionate about your business idea. Don’t rush into anything and make sure you’ve done thorough research about the business and about financing, so that you aren’t overloaded with debt just to get going,” says Schwartz.

If you are thinking about starting up your own business, here are some points to consider.

What’s your motivation?

Are you striking out on your own in a knee-jerk reaction because you are unsatisfied with your current employment? That could be an in-the-moment decision that you may regret.

On the other hand, have you developed a product or solution that fills a need? Is it something unique? Do you have any business data to back up the viability of your business? Or maybe you’re a really innovative soul who is drawn to this kind of development opportunity?

Your motivation towards becoming an entrepreneur may dictate the likelihood of success. If you’ve spent time planning and have the tools in place (financial and otherwise) you’re more likely to see your business grow.

Risk vs. reward

Ask any entrepreneur and they will tell you that there are definite perks in being your own boss. Yes, you generally have more control over your schedule, finances and career path, but you are assuming all of the risk, which you don’t have to shoulder when you are the employee of someone else.

Also, although you likely have flexible hours, you may find yourself having to work more if you work for yourself, especially when you are trying to get your business off the ground. And in terms of having more control over your finances? While that is true if your business proves to be successful, it may be months (or in some cases even years) before you can really reap the financial rewards.

The money question

When it comes to business, you need money to make money. Where is that money going to come from? Reduce your financial vulnerability by keeping debt obligations to a minimum and by examining all of your options.

Depending on what province you live in, there are a number of small business grants available. You could also draw on savings for seed money or bring family or friends on board as partners. Take out business loans if you must, but be conservative in how much debt you take on to fund your venture.

If it works, why not keep your “day job” while you get your business up and running? That way you don’t have to do without income as you start to ramp up your new venture. Even a short period of limited or no income means taking on debt that you should avoid if possible.

Are you trying to get your debts in order so that you can start on your career path? The first step can get the wheels in motion. Call our trained counsellors at 1-888-294-3130 or visit our free online debt analysis.

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