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Over the last couple of months, I have interacted with a fair number of women in business. Some of them are running their own enterprises on a full time basis while for others, they use it to supplement their main source of income.
The one question I hear asked over and over again is 'how do I know when to leave my full time employment gig and go into business'.
Unfortunately, like of most things that are of true value in life, there is no easy answer to that question. However, there are some items to consider in your checklist before you make the big leap.
Savings Are you the main breadwinner in your household, do you have a spouse who is able to supplement income on your low months, do you have enough savings to rely on to both build your business and continue to take care of your basic needs like rent, school fees, household expenses etc? When planning savings keep in mind that it always takes longer to land deals or get payment and therefore always make sure you have at least 6-9 months of living expenses before you make the leap, and more depending on how easy it is to get clients.
Access to credit Regardless of how interesting or exciting your idea or concept is, it is easier to access a credit facility when you are in employment than when running your own business. If your business is cash intensive, say for example inventory-based, you need to evaluate whether your current sales are high enough to support stocking up without long delivery times or stocks outs. If sales are on credit, and your customers take 30 or more days to pay, are you able to maintain a constant enough cash flow in the business?
What if in a certain month you're not able to collect on the debts owed to you, what impact will this have on say, overheads such as rent, salaries etc? Facilities like invoice discounting are valuable but if your business is a startup you may be unable to have built up the track record to access them. Until you have a steady cash-flow, it may be wise to hold off on leaping just yet.
TIPS - Service based businesses have different needs from product based ones. Do your research to evaluate your cash-flow. - If your sales are on credit ensure that you have a good handle on your debtors and due dates.
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