Planning key when turning passion into a full-time job
MY BUSINESS partner and I work full-time and run a mobile application development business after-hours. What advice can you give on quitting our full-time jobs and taking the plunge to running the business full-time? We want the business to be in a sound financial position and stand on its own two feet, but also support our incomes.
MY BUSINESS partner and I work full-time and run a mobile application development business after-hours. What advice can you give on quitting our full-time jobs and taking the plunge to running the business full-time? We want the business to be in a sound financial position and stand on its own two feet, but also support our incomes.YOU'RE absolutely right. Before quitting your jobs and jumping into a start-up, you want to make sure that your decision will support you. There is nothing worse than choosing to follow your passion and ending up in distress over a bad decision. Also, never lose your cash flow! Too many new business owners end up buying themselves a job. Here's what you need to ask yourself:" What is the part-time turnover compared to your current income?" Will ramping up operations subsidise your current pay?" Do you see growth within your existing client base?" Will running the business full-time mean you'll need to expand, and if so, are you prepared for the associated costs?" Are you prepared for the extra hours, responsibility and risks?" Are you both fully committed to the business and on the same page?" In the event that your plan doesn't work out, do you have savings that you can rely on?The current market is a tough one to start a business, so the most important thing you can do is be prepared. Take the time to create a proper business plan that takes all costs into consideration, from equipment and operations through to marketing. Do a competitive analysis to ensure there is enough demand in the market for your service. Mobile apps are huge right now but with popularity comes competition. Look at all aspects of the market and your own strategy before taking the plunge.I own a modern Middle Eastern cafe/restaurant. We've been in business five years and have a loyal client base. I own 50 per cent and two non-operative partners each own 25 per cent. The business is debt-free, has consistent revenue growth of 15-20 per cent per annum and is making an operating profit of 8-10 per cent. We want to expand and need $400,000-$500,000. The company directors are prepared to re-invest $200,000 and we've begun to seek finance for the rest. Do you have any advice?Banks aren't that receptive to cash flow loans for small businesses at present but yours sounds like a good one. However, it may be tough to get a large lending institution on board. Going back five years, business owners had an easier time getting access to finance because the banks were making lending decisions locally, and the bank manager often knew the applicant. Now that many banks have centralised their decision-making process on a corporate level, there isn't as much personalisation and trust and the "man on the ground" manager has less authority.Your profit growth is great although your margin looks a bit low, so it might be a good idea to look at how you can boost your current business before jumping into a second location. If you're set on expansion and are having trouble getting finance from the banks, you might want to look into private investors or private financiers - but be careful with the latter.If you don't have any debt and you own your home, you might consider taking out a loan against it, but that comes with its own risks. Your best bet might be to keep growing and saving and fund it yourselves.Mark Bouris is the executive chairman of Yellow Brick Road, a wealth management company and small business advisory offering products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax through its national branch network. www.ybr.com.auIf you have a question for Mark Bouris, email it to MySmallBusiness editor Larissa Ham at email@example.com.