How smart is starting from scratch to start your own business?
I’ve worked in the corporate world for the past 15 years and recently went back to school for my law degree. I now want to quit my job and start my own law practice. I have just a couple of cases right now (including one really good one that could bring in lots of cash when/if it settles) but know I could bring in a lot more work if I devoted myself to practice full stop. I have great connections with lots of other lawyers and know a couple that would let me work out of their space. Anyway, I don’t have much cash saved and my credit is weak. I’m thinking of selling my house and my car and taking an apt. in the city where I will practice. This would cut down bills alot as well as my current 2 hour round trip commute. Has anyone done something similar- shed a lot of your assets to finance a dream? Or is it better just to repair my credit and try to get a loan? Borrowing from family or friends isn’t really a realistic option.
After 20 years in international corporate waters, I cashed out my retirement funds, relocated to Europe and started a small consultancy business. I’m now 4 years in and still struggling, though I haven’t starved yet.
How smart is it? Depends on how smart you approach it. The rewards can be big, will probably be mixed and can be devastating. You’re throwing away a safety net and everything you do will depend on you!
First of all, don’t bet on one sure revenue source to start a business. I bet on two and neither materialized. Have 3 revenue streams identified at least!
Secondly, running a company takes a fair portion of your time. Don’t count on devoting less than a day or 2 per week on the bureaucratic and administrative stuff for a while, or until you can afford to hire someone to offload it.
Third, don’t go overboard on expenditures. We made the mistake of renting a “representative office” with conference room that we didn’t really need (we thought we did) and it cut months of safety off our cash flow.
Fourth, RESEARCH. A company (a limited or full c-corp) may allow you to find credit/loan facilities that your personal credit wouldn’t dream of attaining. Remember, wiser men than we have said it’s always better to spend OTHER people’s money! Also, research for support resources (small business administration, local programs, state development funds, etc.).
Fifth, consider finding a partner. Not a light decision…you should have VERY good reason to trust this person, but it does help lighten the burden of the risk and the overhead and the administration.
If I had it to do over again, I’d have done it smarter, but I WOULD HAVE DONE IT. I don’t regret striking out on my own, but I do wish I’d done more research.
Whatever you decide, once you decide, make it happen. And good luck!
Danny Wallace’s How to Start Your Own Country Anthem
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