How To Know If You Are Financially Ready To Start Your Own Business

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I have lots of clients who have the “intent” to start up, a business venture…. …. selling handbags….selling burgers…. selling health products….

A lot of interesting, fun and lovely ideas….

Some seek my point of view, if they should sell away their house, to fund their dream business…

Some seek my point of view, if they should quit their job, to start their dream business…

Some seek my “money”, as a form of capital to start their dream business…

I met a lot of entrepreneurial people.

My advice to all is that, if you want to set up your own business, you need to have contingency funds that can last you at least for 1 year.

You need to have enough money in your bank account that can last you 1 year, if your business doesn’t generate money.

If not, don’t even think of quitting your job, to start that very business that you aspire.

Yes…Have at least 1 year of contingency funds.

When I meet my clients, I will always do the cashflow statement for them.

Cashflow statement comprises of 2 main elements.

First is inflow, means money going in. Usually, it is a combination of your disposable income (take home pay) and your passive income (money that comes to you, without you actively working for it).

The second broad element is your outflow, which means money going out.

Outflow is divided into 2. One is Fixed Outflow. These cash outflow is something that you cannot control. Every month, there will be a fixed amount going out. Example: Insurance premiums, money given to wife or parents etc.

The second outflow, is called Variable Outflow. These are cash outflows that you can control. Example: Food, Entertainment, Holiday, Transport and Miscellaneous
I will highlight to all these entrepreneurs to be, to have at least 12X their total outflow.

Yes…12X….

This is the bare minimum. A strategy for anyone to have more savings, is to reduce their variable outflow components each by 10%. This is easily achievable, and most will find that saving that extra, few hundred dollars is very pragmatic and conceivable.

So guys, if you would like to set up a business, and want to quit your very job today, have at least 12 months of your expenses in your bank right now!

Written by:
Helmi Hakim
[email protected]

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8 COMMENTS

  1. Well personally its not just about the Money. One needs to develop himself/herself to be an Entrepreneur. This requires mind shifting paradigms.

    Hence one needs to start reading relevant books, attend the right lessons/seminars and mix with the right people.

    And as a Muslim Entrepreneur, your mission and values must be towards a God Conscious ideology. To serve and to help while generating the income that you wish to acquire.

  2. Salam Bro Helmi

    Thanks for the sharing : )

    I must admit I’m a Dare Devil absolute Risk taker when it comes to biz.. I started my biz with mini savings and with the “help” of maxing out all my credit cards, quitting my job and jumping in without any know hows whatsoever!

    It was a plunge of Faith & Passion.. The Results?
    Catastrophic!! 😛

    Banyak kena bandage sini sana : )

    I ended up with a failed 1st biz venture, and over $80K in debt.. which I took 3 years to clear..I remembered my final payments to the bank felt like my ticket to my freedom from the prison of being hunted every other day by these bank officers asking for payment… aka the “Modern Tailong” 😛

    After I picked up the pieces, I ventured again ( Stubborn as an Ox!! ) with zero capital again…

    I did of course took a BBA crash course..
    Not the typical BBA, but a lesson in

    B = Beg
    B = Borrow
    A = Ask

    I score distinctions in it measured by how thick my skin can be : )

    With that BBA, I got some funds re-started again and 2nd time round managed to gross past the 7 Figures in 2 years…

    But,, ada lagi But..

    With the cash surplus in hand, I dabbled into Investments again with Zero know hows.. Konon2 nak jadi macam Warren Buffet lah..

    I started buying and investing into other people’s businesses.. and I lost a quarter million in that overzealous attempt…

    But taking a grain of salt from Donald Trump famous quote “I Don’t think about Failure; I Learn from It”, I pulled myself back together, and re-created my biz again from the ashes…

    My only asset is my Mind & Spirit, come what may, one thing that Money can’t Buy is an endearing Fighter Spirit and Mind that Believes in Possibilities..

    Having learnt my Most expansive MBA lesson from the University of Hard Knocks, I learnt my lessons well. So TI vow that from now on I’m picking up new skills in Investments and the Nuts and Bolts of turning from a B (Business Owner ) quadrant into a I ( Investor ) quadrant…

    I’m still the Crazy Risk Taker & Adventurer of Life, still tenacious & stubborn in that I choose not to Give up & Rebuilding my businesses again only this time, wiser & for Faster results….

    I differ in opinion from your article where you mentioned to save enough before starting a biz and not quit the job until all is steady..

    My opinion is very radical and perhaps most won’t resonate with it…

    I believe in Burning the Bridges that creates the comfort zone and safety net..

    One needs to be Super Hungry to succeed.. ( Tony Tobbins )

    It’s what I learnt from all my mentors such as Umar Hamid, David Neagle, Tony Robbins & other crazy ones who did the “Burn the Bridge”, They sing the same tune “Quit your Job if you want to Start Your Biz”

    Bucky M said, there are 3 most important words in life, IN, OUT, AROUND

    It’s either you are IN it, or OUT of it or AROUND it…

    I’ve seen some who start a biz while working they belong to the “AROUND” Half leg in Half leg out

    Some wanting to start but tak start start , They are in the “OUT”

    Some Burn the bridges to be fully IN the biz, regardless of the circumstances, They are “IN”

    Those “IN” according to him will Get the Fastest results, Fail Fast & Forward..

    The rationale is, once the bridges and safety nets are burnt, stripped with nothing, the human spirit arises burning with desire and Hunger to get out of pain, that is where magic happens..

    But please, don’t just take this out of context. There must be other mental preparations before one does the “Burn the Bridge” Craze! Too long a topic to discuss here : )

    Those interested can learn more from Entrepreneurs who have Burnt the Bridges and have made Millions by doing so.. I’ve posted a Video Link at the end for your Learning pleasure 🙂

    I do however, concur with elements of your article, ie, if I could turn back the clock, what I would have done 1st is get myself educated in cashflow management, pick up solid business fundamentals such as taking up courses or meet up with a Wealth Consultant like you : )

    I would certainly suggest to anyone wanting to start their biz to have coffee with Brother Helmi & pick his brains for some great tips on Wealth Management, Wealth & Health Protection Strategies etc..

    I believe you wrote an excellent book on this issue right?

    Kudos to you for your efforts to Help Educate our Community and Fellow Aspiring Entrepreneurs on Wealth Management Education!

    Our Community need proactive Wealth advocates like yourself to bring us to a new Height of Understanding re Managing $$

    Towards Your Success!

    Suria

    PS: The Video that Gave me Triple Goosebumps!! Why Burning the Bridges is Good for Biz..( No its not a Horror Video ) http://tinyurl.com/nggzfr

  3. Salam all…

    Interesting view on finance and entrepreneurship albeit very rational and safe. I think maybe a couple of years back my thoughts would have been the same as yours ie you should have a safety net, enough money for back-up, education all the way to university etc…

    Now, I agree more with Bro Fadzuli though. It’s about you being mentally prepared for what’s to come. And yes, start reading, mixing with the right people, going for seminars and “brain-washing” yourself to accept the difficulties, failures and even more importantly success.

    I think if I had waited to save for one year’s worth of safety net, I wouldn’t even be close to doing my own business. I will forever be saving saving saving until… I don’t know till when. I mean, this is just me because again perhaps the knowledge in money management is still very shallow. When I had my first baby, it became worse because every single dollar we had left went to our kid.

    I agree with Puan Suria on burning the bridge. It’s dangerous, sounds sensational and probably brink on being crazy.

    I left fire-fighting when I was at the top of my career. I just had a promotion which means a good pay raise, attained very good results in all my proficiency tests, was about to receive my retention bonus worth $10K in Sept and great working relationship with my colleagues and officer. To leave all that, especially my stable monthly income of slightly more than $2.5K was unimaginable.

    But I know if I held on to the JOB, the outcome of the business will differ. Because at the back of my mind, I know that if I should ever fail in business, there’s always a JOB I can turn to. Then it becomes a reason, an excuse and something to fall back into. Too safe.

    So I quit. No more net, no more bridge and definitely no 12 months of savings. I was armed with just a month’s worth of pay and my credit cards.

    So far, I am definitely happier, more time for my family, no more complaints about too much work and doing something I really enjoy! In fact, we’re even having a second child amidst all these!

    But I do know my method has a very niche market of fans. It’s not for everyone. 😉

    And like Puan Suria mentioned, it would be good to have money management knowledge too. Every effort to pass some wisdom is always good.

    Live Life Smartly!
    Masrina

  4. Hey guys!

    I think I’m doing something similar…

    I’ve decided to delay my University education to pursue my passion
    and run my business and just like Kak Suria, I’m
    in the “burn the bridges” club!

    WOO HOO!

    And trust me when I say that you grow more than
    you can ever have when you’re IN the business
    rather than AROUND it.

    I’ve grown so much more over the past two months
    than I have in the past 2 years! =)

    Play The Lead Actor of Your Life!

    Saiful Rizal
    Click here to watch a video of me revealing one man’s secret of earning $100,000,000 with one product alone!

  5. Salam Nawaz

    While she is searching for job opportunities,

    Does she has any other skills that can be turned into a home based biz such as

    – Sewing
    – Baking
    – Editing
    – Design
    – Book Keeping
    – Sales
    – Writing
    – Beading
    – Dance
    – Craft Work

    If not there are many Non Profit organizations providing the above courses/skills for Free. They are usually short courses that can be completed within 4 – 6 sessions.

    I’ve conducted one such course at the Jurong PPIS centre.

    Can also check with Family Service Centres for available programs/courses

    From the article she seems quite a go getter, and I believe she would be able to source out for a suitable training that could get her off her feet independently in a Home Based Biz.

    With such skills, she can approach schools head of Enrichment and offer her services during the school holidays or be a part time instructor for students in schools. Example: Dance coach, teach about 2 hours X 3 times a week after school usually 2.30pm – 5.30pm for $60 – $80 per hour.

    Or She can offer Simple Make up Courses to Schools Dance Clubs, teaching students how to put on make up for concerts, charging per hour rate or per head rate.

    Or she can be an independent marketeer promoting other people’s products/services online or offline.

    My organization is looking for a Strong Sales Team to do marketing for our education programs.

    We have paid $5,000 to our affiliate for one deal.

    She can earn between $400 – $5,000 per transaction.

    Work at own time own targets. We pay based on results.

    She can email her interest at [email protected]

    Fadzuli and I are also looking for active online affiliates for our VA Diploma course. Each referrals is $200. We are issued our 1st referral cheque this week. Get more info at [email protected]

    I’ve done sales before at age 13 and I was able to make my first $450 quickly. Its not about age, gender, qualifications etc. It’s about the will and willingness to try something new and explore NEW opportunities.

    My mum age 75 is now drawing a monthly salary of $1200 a month doing simple cleaning work.

    She says…
    “Bukannya susah kerja, sapu kasi bersih, Kerja buat betul2 sampai sempurna, supervisor happy, lepas tu boleh relax kat swimming pool, ada kawan, dengar radio…”

    She refuses to stay at home no matter what me or my siblings say to her.

    She Takes Massive Actions by walking shop to shop and condo to condo instead of sending resumes! and easily gets offers in a few days..

    She cant read and write and age 75!! She would walk around Geylang and within a day land herself with a job, selling kuih2 or cutting onions at a food stall!

    And the best part is she would come home telling me how she would “reject” the job offered coz they did not meet her terms! This makes me laugh! She will set her own working time and off days and if the company offer meets her requirement she would go for it else she rejects them.

    “Dorang tak nak kasi aku off hari Minggu, aku kata tak nak lah, tak apa banyak lagi tempat lain ada” Well at least that’s how she puts it! That’s an Amazing Positive mindset to start with!

    When she gets bored with the job, she walks around condominiums and ask for cleaning job and in a week she would get 2 offers!

    Imagine a job hopping 75 year old : ) That’s my mum! : )

    She takes full self responsibility, by taking good care of her health by eating well and exercising.
    She cycles and sometimes walk to work and packs her own food from home & NEVER eats out coz she says Its good for her health.

    These are lessons learnt from a 75 year old woman who can’t read or write and yet takes her life to her full responsibility and go create opportunities than waiting for them to happen for her.

    Although I disagree with her philosophies in life ie “You have to Work Hard to Earn $$” I salute her for her will to take massive actions.

    I choose to believe “You don’t have to Work Hard for $$, Just need to Work Smart” and I choose to believe that “Money is easy when you Move from being an employee to self employed to owning a biz to eventually be an investor where we make our Money Work Hard for us”

    Well, that’s a different topic altogether!

    Anyway, for a start here’s what your friend can do given the above suggestions:

    I’d say
    – Change her way of thinking. Do daily affirmations “There are plenty of opportunities for me everwhere”
    – Set her own working terms and be firm about it. Reject those who cant fit her bill and keep looking
    – Explore NEW job opportunities such as independent sales, online marketing, helping out at canteens/food stalls, or cleaning work like my mum. (Kalau tak cerewet lah!)
    – Take up Home Biz courses that gives skills to start home biz..

    So I guess I’ve listed better things for her to do rather than keep going back and forth doing the same things.

    Like Einstein says “Insanity is Doing Something the Same Way, Expecting a Different Result”

    My Best Wishes to Her!

    She can contact me or Fadzuli re the opportunities we have for her at our emails or FB account.

    If she has no internet she can call my office direct at 67414344 or SMS 8126 7755 speak to rumi for Mass Interview re the Openings we have.

    Believe, Act & Prosper
    Suria

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