We’re talking about some of the key questions entrepreneurs should ask before deciding to start a business. In the last post, I discussed figuring out how much cash do you have to invest in your new business? In this post, I want to discuss how much cash you need to survive while you’re starting your business.
It many cases, it can take a year, two years or more to get your business stabilized and paying you a regular and adequate salary. Can you survive for a year, two years or more without a salary? Maybe you have a spouse that can fully support the financial needs of the family while you start the business. If so, you’re very lucky. If not, how much money do you need to have in reserve to live on for one year? You should plan to have a reserve fund available that will support your personal financial needs for at least one year. After you work on your financial projections, you might decide to lengthen that period based on what you expect for your business.
Prepare a family budget, determine your cash needs and figure out how you’ll survive for the next year or two if you don’t bring home a salary. Remember, entrepreneurship is not for sissies!
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