Every week I receive several emails/messages from young aspiring entrepreneurs, freelancers, creatives, asking myself for advice on how to get started with their respected careers.
– Here is my number 1 tip! –
Before you start to print out business cards, creating websites, social media pages, and so forth….
The first fundamental thing you should do before anything else, is create a financial breakdown survival plan, and find a job (if you do not have one already).
What is a financial breakdown survival plan?
Your survival plan is a list of all your expenses to find out your total monthly outgoings. When finished, you will discover the minimum amount of money you need to generate in order to survive!
With this new information, you can then start to come up with a strategy on how to generate that required minimum income.
Why do I need a job?
Employment, is probably the easiest way of generating a sustainable income according to the amount you need in your financial survival plan. I strongly recommend if your business is in the start-up stage you find a job to cover your survival budget. By doing this you take away all financial pressure from your business, and any money you do earn through your business can be reinvested back into the business to help grow your business. One of the major reasons for start-up failures is lack of finances, i.e your business not making enough money early on to survive, hence why you see a lot of start-ups fail within the first 6 months – 1 year. Do not sabotage your business by implementing so much financial pressure in the early stages of starting up when you can help support yourself and your business through a job! You are potentially setting yourself up to fail.
I personally recommend you do not consider quitting your job until your business is generating 3x your survival monthly outgoing balance. Do not forget – When you go self-employed full time you are responsible to work out and pay your own tax, you do not get the employee benefits of pension, sick pay, and holiday pay. You need to be putting so much away a month to cover these costs. It is often overlooked, and a common mistake people mistake when starting out. Not implementing good financial practice such as this can hurt you in the long run.
For example: If your survival budget monthly outgoings are £500. You want to be generating £1500 monthly minimum through your business before even considering leaving your job.
The Survival Budget Calculator Instructions
I have created a calculator for everyone to use for free. No marketing gimmicks, no email sign-up, it is 100% free for you to use. Fill out your monthly outgoings in the budget calculator to the left. The survival budget calculator will then simply work out how many hours you need to work a week (based on the UK national minimum wage April 2019) according to your monthly your outgoings. If you manage to secure a position at a higher hourly rate than the minimum wage, Simply replace the value in column (H4:K4) with the new hourly rate under your age group. The calculator will work out how many hours you need to work based on the new hourly rate.
For example: If you fall under the 25 and over age group, and you earn £10 P/hour, change the value in column H4 from £8.21 to £10.
The UK NATIONAL MINIMUM WAGE (ROUNDED UP) table automatically rounds up the weekly minimum hours to the 1 number unit above. It is better to round up and earn slightly more when compared to rounding down and earning below your survival budget. It is common for your employer to work out your rota schedule based on whole numbers.
For example: If your minimum hours have been worked out at 21.18467654 you want to round up to 22 hours, not round down to 21 hours. Your employer is unlikely to pay you for 21.18467654 hours. They are likely to round it down and pay you for 21 hours; which is slightly less than you need. The (ROUNDED UP) table automatically does this, making it easier for you. Therefore, in this example, if you manage to secure an interview, or need to adjust your weekly working hours you can tell your employer you would like to work for 22 hours a week for this example. Any other hours outside of 22 hours can be reinvested back into your business. I.e if you want to work a 40 hour work week, 22 hours will go into your employment, and the remaining 18 hours will be invested into your business. When your business starts to generate sustainable income, you can start thinking about decreasing your employment hours and increase the hours for your business.
You can download the calculator and more information at the following link: https://drive.google.com/open?id=1Rj_g-urapp_xlPmjeFhOJ5-gKyTDiE-8
(Google drive users can save a copy to their account and use the calculator online)
If you feel like this can benefit others, please like, share, and comment this post.
That is everything I have to say. If you need to contact me you can do so at firstname.lastname@example.org
I hope this calculator helps you.
Best of luck
P.S – If you decide to run your business full-time and just want to know how much minimum income your business needs to generate according to your monthly outgoings. Fill out the calculator as normal, and focus on the YOUR SURVIVAL PLAN BREAKDOWN SUMMARY table to find out the minimum income/profit your business needs to make daily/weekly/monthly/yearly.
It is also a great tool for students looking to earn an income whilst studying.
Daniel Hamer Audio Production