Lynda Moore says the temptations of starting and running your own business need to be assessed with a clear, calculated and honest assessment of what it will do for your cashflow, time commitment, and lifestyle

Over the past few months I’ve had a number of people approach me wanting to buy a business and asking if I would put my accountant’s hat on and have a look at the figures for them.  

I’m more than happy do that, but with my Money Psychology hat firmly on as well, I’m also very interested in the “why” part as well.

I’m sure many of you reading this have also read Gerber’s E-Myth, and like me, you may have had the entrepreneurial flash, that thought, "I could run my own business better than my boss."

I took that leap when I was six months pregnant with my daughter, who has just turned 36.  Wow, that’s a lifetime ago, and my business journey has certainly had it’s ups and downs over the years. But I digress, let’s get back to Gerber.

It’s tempting, isn’t it? That moment you realise you’re tired of building someone else’s dream and you start wondering, “could I just run my own business instead?”

You’re not alone. I hear it all the time from people who are ready for more control over their lives, more time with family, and more meaning in their work. And I get it, the pull towards business ownership is strong.

You can agree or disagree with me here, but I tend to see it more in a stronger economy. The tradie who decides to go out on their own, as there is so much work around. The senior executive who takes the golden handshake and either becomes a consultant or buys a small business or café.

When times are tough, it can be forced upon you. You lose your job and needing to do something, you hang out a sign that says what you do, and hope that customers find you.

Whatever the prompt is that gives you the nudge to become a business owner, here’s the part no one tells you:
Quitting your job is the easy bit. Building a business that actually gives you the life you want? That’s the real challenge.

Let’s start with the Lifestyle Business Myth. We’ve all heard the phrase:
“It’s a lifestyle business — work for yourself, set your own hours, live life on your terms.”

Sounds dreamy. But for many, what that actually means is…

• Longer hours than they ever worked in a job, certainly at the start when you are trying to fulfil all the roles in the business
• Constant financial pressure; doing the work is fine, but then you have to get paid for it!
• No separation between “work” and “life”. The term ‘balance’ that gets bandied around doesn’t exist for many small business owners

If you’re not careful, the business ends up owning you.

Having lived on a lifestyle block for a number of years, I rephrased the term lifestyle to ‘no life and no style’ and that’s what it is often like in business as well.

You are left wondering where the lifestyle bit is when you are sending out invoices to customers at 10pm at night, as you won’t have time to do it tomorrow as you have more customers to see, or more admin to do, or more jobs to go and quote.

But it’s not all bad. There are many business owners who have managed to find the balance between lifestyle and business, and they are the ones who put in the work to build the business in the early days, and have also put in as much time working on the business as they have in it.

They have built a business that gives them:

• Clarity – You know exactly what you’re doing, how it works, and what it’s worth
• Control – You have systems, data, and breathing space. You can take a day (or maybe a month) off without the whole thing falling apart
• Potential – There’s a realistic path to the income and freedom you’re aiming for

Let’s go back to the start. Before you take the leap, be honest with yourself with these questions

If you can’t clearly answer them you’re not ready — yet:

• How much money do I need to live on to meet my baseline needs? This may be less than you are currently earning
• How long can I go without paying myself? In other words, what do I have in reserve that can pay the household bills if the business can’t?
• When will this business pay me what I actually need to live? How long am I prepared to sacrifice lifestyle and income to build the business?

This is the initial number crunching you need to do as you start your business search.

Then you need to dig deeper into “why” you are making this decision. This is where you consider the impact on your family, and your life in general.  Age, and stage of life come into the equation here too.

You need to get real and have the conversations to make sure that your partner is onboard with the idea both financially and timewise.

You need to know that they have your back when it comes to school pick up and you suddenly can’t make it. Or the Sunday family brunch that you can’t make either.

This is the reality of being in business. There will be short term sacrifices you need to make that will impact those around you, including your friends.

If your family isn’t by your side supporting you, it can be a very stressful journey. You don’t want to look back in 20 years' time and realise you have the money in the bank, but somewhere along the way you lost your family in the process.

Starting or buying a business can absolutely be one of the most rewarding things you’ll ever do. But the right business doesn’t just replace your income, it gives you back your time, your purpose, and your life.

Don’t swap one stressful job for another that you happen to own.

Don’t let excitement make the decision for you.

And please, make sure you do the groundwork before you leap.

*Lynda Moore is a Money Mentalist coach and New Zealand’s only certified New Money Story® mentor. Lynda helps you understand why you do the things you do with your money, when we all know we should spend less than we earn. You can contact her here.