Here’s how to know if the time is right for you.
- An improving economy could make 2022 a good time to start a business.
- You’ll need to make sure you’re up to the challenge and have a plan for pulling it off.
In the course of the COVID-19 pandemic, many small businesses got hammered. And some are still trying to stage a recovery.
But these days, the U.S. economy is stronger. If you’ve been contemplating the idea of starting your own business, 2022 may be a good year to get the ball rolling.
But is the time right for you to start your own business? Ask yourself these questions to find out.
1. What do my savings look like?
It can take time for a small business to become profitable. That means you could end up going many months without a paycheck while you get that venture off the ground.
That’s why it’s important to go in with a healthy sum of money in your savings account. If you’ve socked away enough cash to pay for six to 12 months of essential living expenses, then you may be in decent shape to move forward and absorb a massive pay cut for a period of time.
2. Do I have the money to kick-start this venture?
Some businesses cost more than others to get off the ground. If you’ll be operating your business from home and you don’t require much in the way of equipment or supplies, then startup costs may not be a huge consideration. But if you need to rent commercial space and invest in supplies and equipment, you’ll need to make sure you have the money for that — or the ability to borrow it.
To that end, you have options. You could borrow against your home equity, or you could try to take out a small business loan. But it’s important to know how your startup costs will be covered.
3. How will owning a business impact my work-life balance?
Owning a business is a big commitment — one that could have you putting in more hours, at least initially. You’ll need to make sure you’re okay with that potential hit to your work-life balance.
If you’re going through other changes, such as having a baby, now may not be the best time to start a business. But if your children are getting older and more independent, you may feel more comfortable with the idea of signing up to run the show.
4. How much help will I need?
If your small business will require you to hire a bunch of staff members, you may encounter some hiccups. A lot of companies are grappling with labor shortages these days, and as a new business, you might really struggle to hire. Be sure to assess your staff-related needs, and prepare to offer up higher wages if you’re going to have to bring new people on board.
5. What’s my backup plan in case my business fails?
Nobody starts a business with the thought they won’t succeed. Unfortunately, it’s estimated that 20% of small businesses fail within the first year. Before you make the decision to start a business this year, you’ll need to come up with a backup plan in case things never take off.
That backup plan could be returning to your former employer or dabbling in a new field entirely. But it’s important to think through the worst-case scenario before moving forward.
With the economy being stronger than it’s been in years, now may be a good time to start the small business you’ve always dreamed of. Just make sure to tackle these essential questions before taking that leap.