Catch22?

wantsout

Hi, this is only my second post so please forgive me if I'm in the wrong place.

I'm in a full time Job but would like to leave to start my own company.
start up costs for the company are quite small about 7k but in the industry I work in its normal practice not to get paid for up to 6 months.

This is my dilemma even if I left tomorrow and started working right away how would I pay my mortgage and bills for 6+ months while I wait for the payments.

saving up six months bills and paying them would take a years

I can take a mortgage break but then there are still living expenses.


I'm sure the answer is simple even if it's one I don't like.

has any one else been here before?

thanks in advance

easyhost

wantsout wrote: »

Hi, this is only my second post so please forgive me if I'm in the wrong place.

I'm in a full time Job but would like to leave to start my own company.
start up costs for the company are quite small about 7k but in the industry I work in its normal practice not to get paid for up to 6 months.

This is my dilemma even if I left tomorrow and started working right away how would I pay my mortgage and bills for 6+ months while I wait for the payments.

saving up six months bills and paying them would take a years

I can take a mortgage break but then there are still living expenses.


I'm sure the answer is simple even if it's one I don't like.

has any one else been here before?

thanks in advance

can you not start your business part time while still working until you build up a good cash reserve

pitkin2020

As above. You only really have 3 options and 1 of those will depend on your living circumstances
1) Take out a business loan, if you have a good business plan, good financial history etc then it shouldn't be a major issue
2) Start the business part time. Either just by doing the hours you can around your current job or reduce your hours/find a part time job to supplement your income
3) If you have a partner that could cover living expenses etc

What have you got that you could sell?? i.e If your driving around in a new(ish) car sell it and buy a cheaper car giving you a cash injection. If you believe in the business and you know it will work you will find a way to make it happen. I have known people sell everything they could to start a business leaving them sitting on the floor and sleeping on a mattress with the belief the business would work, most went on to buy top of the line gear again when the readies started to roll in.

paddyrg

Hmmmm *maybe* cash in 6 months, the bank would get nervous around that as a revenue stream. If you mean that work you invoice now is paid in 6 months, offer inflation-beating discounts/incentives for quick payments?

Instead of a mortgage break, can you squeeeze more equity out of the house? Or use what equity there is to underwrite a loan?

Are you setting up in the same sector as you are currently working in? Does your contract have any no-compete clauses? Or would they consider dropping you to 2 days/week, say?

mizzbiz

So you have a two fold problem, as I see it (correct me if I am wrong)

You need c. 7k to start up
You need six months living expenses

So when you start the business, things are going to be pretty tight anyway. Wait six months, in this time saving up every spare penny you can. During this time, set up the foundations of the business in your spare time, business plan, finances, marketing, cold-calling, getting clients. Do whatever work you can get in in your weekends/evenings. Don't give up work at the setting up stage - it's a dry period. You can still get your salary whilst you try to generate interest and save up.

After six months, you should have a fair bit in the bank, ready-to-go customers, a fully set up business and the choice of whether to resign at this stage or continue building slowly. If you're lucky, you might get a few months garden leave.

Whatever you do, don't resign then set up - it's a dead period with no money coming in. Many, many business starters use their paid employment to fund this spell.

As for the 7k start up costs, what is this for? Is it really neccessary? Unless you're leasing a shop or setting up an office from scratch, I can't see why you need this much for a fledgling business.

COOLTRIKERCHICK

lol... I waited 2 years plus before i started having a wage...

as i didnt want my buisness to have a cashflow problem... so the business could go and develop without the strain of drawing a wage... this way... the business had a good start..

So please dont think in 6 months your profits will automatically be able to sustain your wage.... the cash might be in the bank, but if your profit isnt there, then you will just be bleeding the business dry....and this is one of the major downfall of new businesses..

I would try and start your business part time.. and run it alongside your current job.... ok it might take alot longer to get established. Just remember the story of the hare and the tortoise;)

paulwf

It sounds risky to me, giving credit for 6 months means you are very exposed if a company goes bust. Chances are you'd get nothing back or only pennies in the pound. That could quite easily wipe out any profit.

Companies go into administration more often than a lot of people realise as they often continue trading under new ownership, but the original creditors don't get paid.

wantsout

Thank you for all of your advice. all very valuable. I have started to do a lot of research and slowly set up whilst trying to maintain my work.
unfortunately i'll be selling my service to large advertising agencies and its standard practice for them to take a long time to pay. on the plus side I can charge hundreds an hour for my service and with very low overheads the profit will be instant when i get that first bacs payment, its just getting there.

my current employer would not tollerate it if they found out so i'm treading very carefully.

thank you again
you have given me some good ideas.