Determine your financial position before starting your own business.

So, you are thinking about starting your own business from home, or you are already well on the way? But, one of the very first things you need to do as part of the process is to look at our finances and know what your financial standing is ...because you may well be giving up a salary and having your own business or any kind of work from home does not make you rich right away, you cannot even rely on the same regular salary.

Maybe you have taken lots of steps towards starting to work for yourself, or maybe you are at this stage just thinking it could be a good idea, but wherever you are at on the journey, to have a clear knowledge of your financial position is crucial. Home workers do not usually just wake up one morning and decide they are leaving their job at the end of the month and starting to work for themselves and then get rich in a few weeks … indeed, it is possible to make money quickly but the point is whether or not it will be consistent enough to make giving up a regular salary possible and enable you to pay the bills. It can take, weeks, months, even years before you can be totally self-supporting as an entrepreneur.

Knowing your financial standing is not difficult, need not take that long but can help you avoid a nasty shock for which you are unprepared.

Look out your financial papers and see where you have money sitting, maybe even some forgotten accounts …check any investments, pensions etc and what you may be entitled to if you leave a job you have now ...such as unused holiday pay. List your income and whatever sources it comes from, any you will keep and those you will lose, examples are employment and salary, rent from property, alimony, interest from savings and then list your expenses ...your outgoings.

Examples might include ~

- mortgage/rent

-service charges

- insurances
- Council tax

- utilities (heat/water )

- phone/cable/satellite/Internet

- groceries and household supplies

- vehicle fuel, insurance and maintenance costs

- medical

- child care /school fees

- personal care (hair/nails/clothing)

- entertainment

- club memberships, publications, etc.

-loans, bank charges, credit payments

Once you know your weekly or monthly income and outgoings, is there anything over that can be set aside to fulfil your dream to start working from home or start a business. If you stopped salaried employment today, how long would you be able to survive on savings etc until you started to make good money.

Do you have enough money for unexpected things that may not seem big but even so are expensive if you do not have enough money to cover the cost easily …such as a new washing machine?

This is not intended to put you off starting to work for yourself, but it is being realistic about what you need to think about before starting a home based business ….

Once you have thoroughly looked into this, you may realise that your hopes of giving up your paid job may take longer than you would like, but you will be better prepared. You may be able to look into and get investment and or funding to help you start your business…Maybe really looking into your finances has even made you think that maybe you need to get advice on debt and money management ….an informed decision, even if it is one that is not ideally what you wish for is better than a nasty shock or starting off knowing that you are being unrealistic. Determine Your Financial position before starting your own business.

Valerie Hartland