Hi Ruth,
I’ve been dreaming about starting my own small business and finally doing something I’m passionate about. But when I think about the financial side, like writing a business plan or managing cash flow, I start to feel out of my depth. I don’t have a business background, and the money stuff feels intimidating. How can I take those first steps with confidence?
I feel you. I never intended to start a business for precisely the reasons you mention. Yet, here I am, nine years in, successfully and happily running my own small business with more passion than ever.
If you’re dreaming of building something meaningful, then yes, absolutely, you should go for it. But let’s be honest, nothing kills passion faster than small business administration and having to write a business plan, cost out expenses or keep the government tax department sweet.
Let’s start with the money side, then take a step back.
The process of turning your passion into reality may take some time. While you’re still developing your small business ideas, there’s no harm in slicing off a small portion of every pay and moving it into a separate bank account for your business, aka a Sinking Fund.
Self-funding shows you believe in yourself. It also allows you to build a simple business; my favourite kind of word. Taking on debt in the first stage of a new business adds my least favourite business word: stress.
Keeping your business money separate from personal money is a habit best started from the very beginning. It is also the only way to see whether you’re making a profit clearly.
The ‘money stuff’ will feel far less intimidating and be less risky, when you are using your own cash.
If you already have a core idea in mind, which I suspect might be the case, I challenge you to pitch it to 10 people you genuinely believe could be your ideal customer. Ask them for honest feedback. Would they pay for it? Would they commit to buying it today? Are they hot, lukewarm, or cold?
Seek constructive feedback from people whose opinions you respect — especially those with business experience. Ignore sound advice at your peril.
You mentioned business plans and cash flow, likely because you’re thinking about borrowing money. My advice? Don’t.
Keep your day job and build your business on the side using your current income, and as little of it as possible. You’re not gambling everything; you’re testing an idea. One day, your business may outgrow your day job. Then the transition from one to the other will be seamless.
That’s how I did it. You can too.
If your test customers are encouraging, it’s time to get clear on the basics:
Don’t overwhelm yourself by trying to learn everything at once. Focus on the job at hand. For example, if your business idea is jam-making, you might need to plant fruit now! But sourcing jars and labelling can wait.
If you are certain you have a customer base, then start exploring the business case.
Talk to other small business owners. They’ve walked the path ahead of you and will often freely share their time and tools.
For example, a couple recently asked to pick my brain about podcasting. Over coffee, I shared everything I’d learned. That’s a free resource right there — people with lived experience.
Look beyond your own circle too. Government resources like business.govt.nz offer excellent, free information. Local councils often host groups for startups. Join them. I even started a monthly “Remote Workers” meetup to connect with others in the same boat. We regularly bounce ideas off each other, share problems, and brainstorm solutions.
If you’re doing this solo, consider meeting monthly with another local businessperson to chat about progress. You’ll feel less alone and more supported.
Every product or service you add to your small business increases your costs. The more you spend, the lower your profit. So, keep your operation lean.
I manage everything in-house for as long as I reasonably can. When I hit a tipping point — and only then — do I outsource it. That’s why I don’t recommend hiring a business mentor or forming a company structure just yet. It’s expensive and premature.
The same applies to expensive accounting software. Just like you manage your personal finances using PocketSmith, you can use it to track your business income, expenses and cash flow. Plan for your taxes, monitor your profitability and track key tasks and payments with your calendar.
From the outset, your business should aim to be profitable enough to pay you a regular income. That income may be modest at first, but consistency is key. Set yourself a fixed weekly payment from your business to your personal account that leaves plenty in the business to grow and cover expenses.
Much like you would in your personal banking, leave plenty of cash in your business account too. This prevents the ‘feast or famine’ cycle that many a small business suffers from.
How do you know if your business is working? One word: profit.
After all your expenses have been paid, are you making money? If not, it’s a hobby. Hobbies tend not to pay the bills.
Use PocketSmith to track profit month to month. The more data you collect, the clearer your picture becomes. There are ‘check-in’ points along the way where you can monitor your progress. Re-evaluate at six months, and again in a year.
You’ll figure out what success means to you as you go.
You already have the skills — and the heart — to bring your idea to life. Funding it with your own money means you’re backing yourself, and growing at what Dave Ramsey calls “the speed of cash”, giving you space to learn and adapt without pressure.
No one will be more thoughtful with your money than you, and no one is better placed to shape this business than you are.
Keep learning.
Keep going.
And always come back to your “why”, the dream that started it all. You really can do this, and the world just might need what you have to offer.
Got a burning money question for Ruth? Send them through to [email protected]!
Ruth blogs at thehappysaver.com all about how she and her family handle money. What’s the secret? Spend less than you earn, invest the difference, avoid debt and budget each dollar that flows through your hands. She firmly believes that if you can just get the basics right, life becomes easier from there on in.
