Achieving Financial Independence as an Entrepreneur

One of the goals that every new entrepreneur wishes to achieve is financial independence. I define this financial independence for entrepreneurs, as receiving enough income to live without depending on additional sources, such as a paid job. Achieving this goal is not always easy and can take time, maybe months or even years. However, we have to work for this goal, as it is one of the basic indicators that we made it (or are on the way) as an entrepreneur. This is the topic of today’s post.

When we start thinking about becoming an entrepreneur, we have all this ideas and goals we wish to accomplish one day. Making a living out of this entrepreneurship should be one of our objectives, but we have to realize that this can take time. There are several things we must take into account, to make the road towards our financial independence as smooth as possible.

At this point I’m assuming you’re not a millionaire and that the entrepreneurship will become one day your main source of income. Initially you have several options to make a living during those first months or years it will take to make some money. The first thing you have to do, is analyze how much time it will take you to start receiving money and being able to pay yourself. Note that this doesn’t mean profit yet, as you might be able to pay yourself without generating any real or meaningful profit. Once you have worked out several scenarios, pick the worst-case scenario and prepare for this situation.

One of the alternatives is to have an alternate job, which can be full-time or part-time. I usually don’t recommend this alternative, as many entrepreneurships will require full-time attention from you, but I also understand that in many cases this is the only viable alternative. If you decide to take this road, please analyze the risks and how your life will become after you decide to have 2 simultaneous jobs.

A second alternative is to work and save enough money to make it trough the time you believe you won’t receive any money. The idea is to live with the minimum, so you might be forced for example to eliminate or lower your cable bill and others. With this alternative, the great benefit is that you’ll be able to work 100% on your project and the down side is that you have a limited amount of time to make it work. If you fail, you’ll probably have to find a job once more.

The third alternative is to create a big project that is backed up by some type of investors. In this case, you should receive a basic salary, not too high, but enough to make a decent living. Usually entrepreneurs decide to have this basic salary and an additional percentage income, due to the sales or profit the company makes.

These are just 3 alternatives of how you can make if through the first years of your entrepreneurship. Too many people have made it as an entrepreneur, but also a large number fail. I’m not saying you will fail, but always take into account this is an option. It might take you 2 or 3 tries to become an entrepreneur, which is quite normal (“the sooner you fail, the sooner you will succeed”).

Image taken from Flickr.com

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