Starting a business isn't as formal as you might think.
After nearly 10 years working in a traditional corporate world, I realized my social media dream: I quit my day job and turned my side hustle into a full-time job. I went against conventional business advice and built a six-figure business from nothing.
According to U.S. Census Bureau data, 5 million businesses will be founded in 2022, and more and more corporate employees are considering leaving traditional career paths to start their own companies.
I invested my own money so I didn't need a formal business plan.
The first thing we learned in business school about starting a company was that you had to write a formal business plan — a lengthy document that you would show to a bank, a venture capital fund, or even your family to borrow start-up capital.
If you’re planning on leaving your current stable job, it definitely helps to have a few ideas in your head, but I’ve personally coached many aspiring entrepreneurs who get overwhelmed with business plan ideas and never get started at all.
I started my current business, a company with the sole purpose of traveling as a speaker and teaching financial education in front of large audiences in the same way that I paid off $300,000 in debt in three years.What could go wrong?
That was January 2020. The COVID-19 pandemic hit and I had to quickly pivot to a new business model. Now in my fourth year, my financial education company has generated over $500,000 in revenue and thousands of students have participated in my programs.
I had never written a formal business plan at the time, but I waited until my personal finances were in order so I could be my own investor instead of borrowing someone else's money. Looking back at how 2020 has unfolded, any new business plan I wrote would have quickly become outdated.
Without a plan, you need to evaluate your risk tolerance
According to KPMG's Women's Leadership Survey, only 43% of women are willing to take the big risks that come with career advancement – and this isn't just in the uncharted territory of entrepreneurship, but in a stable corporate career.
Being debt-free allowed me to start my business without extensive planning because it took a lot of pressure off of how much money I had to make in the early stages. It also trained me to think more creatively about how to cover my business expenses, similar to how I covered my personal expenses when I paid off $72,000 in student loans a year after graduating from my master's program.
It can be helpful to use available tools to assess how much money you're willing to sacrifice for your business (also known as your investment risk tolerance) and then take that quiz once a year to see how it changes over time.
I personally took the Rutgers University quiz and realized that my investment risk tolerance was below average, which motivated me to take other steps on my personal finances to calm my own fears while also scaling my business.
Get your personal finances in order to leave room for the inevitable trial and error in business.
Besides paying off debt, I was able to reduce my financial risk by pausing credit cards, streamlining big budget items (like selling my car), and setting aside emergency savings.
I'm not saying you have to do this, but I'm taking an aggressive approach to paying off my mortgage by 2020. This has given me the mindset of, “Even if my business fails, I'll still have a roof over my head.”
It wasn’t until December 2020, almost a year after founding our company, that our path to revenue became clearer and we were consistently making $10,000 per month. Before that, we had been testing (and failing) different versions of our products and services.
Having a low cost of living has really helped keep me grounded during the pandemic as others seek mortgage forgiveness or forbearance.
My financial education company has since generated over $500,000 in revenue, more than I ever made in a full-time job. Becoming self-employed not only helped me stay debt-free, it also enabled me to become a millionaire in my 30s, travel the world, and achieve my financial independence goals.
I am glad that I didn't wait until I had the perfect plan to start my business, and I am grateful that I had the financial resources in place to invest more time, money, and energy into expanding my business. The hardest part is mustering the courage to try.
