Embracing the Financial Challenges of Entrepreneurship

planning to become an entrepreneur

I’m a young entrepreneur. It sounds so cool, right? At one point or the other, I’ve heard a ton of people talk about how much they’d also love to be their own boss and how they dream of making it on their own like I am.

Then I mention the non-steady pay, crazy hours (I’m writing this article at 9:10 pm on a weekday), and general uneasiness that you have financially for the first few years of being out on your own, and they instantly go back to loving their day job again.

I’ll never forget the day that I walked in and quit my job as a high school band director so I could run a website that hadn’t made any money. I hadn’t slept much at all the night before, and I’m 99% sure I had my first panic attack while I was wondering what the heck I was doing. Who is crazy enough to leave a good, safe job, right? I thought about that over and over.

I had started MillennialMoneyMan.com as a side project when I was paying down $40,000 of student loan debt, and I was insanely passionate about it. I worked 60 hours a week at my teaching job and then came home to write and learn how to build websites. I knew I wanted to run M$M full-time, but there was no way I thought I could bring in enough money to replace my salary.

I kept writing after I paid off my student loans. After the debt was gone, my wife and I were able to save up $50,000 (about a year of my teaching salary) by living WAY below our means. Once we hit that number I made the leap of faith and quit my job to run my website. I haven’t looked back since.

Getting the courage to quit is just the beginning…

Even though I had enough cash in the bank to last a year, it was still scary in the first few months. My wife was a teacher, so we basically had to make ends meet on just her salary in the beginning of my new “career.”

Unfortunately, I learned pretty quickly that blogs don’t make money overnight. I HAD to get creative or else I literally wouldn’t make it. I had a reader who needed someone to manage the marketing for his business, so out of desperation I started a digital marketing company and took him on as a client.

Now we’re on to the future.

Thankfully things have settled in a bit for both of my companies, and just like any entrepreneur, I’m already thinking about growth. One of my long-time dreams has been to own commercial real estate properties. It’s an awesome way to build real wealth, but it can be VERY risky…especially if you don’t buy right.

We aren’t quite ready to jump yet – and for good reason: it’s a freaking expensive buy-in and would require a massive shift in our approach towards finances.

When I left my job to start my online businesses, my wife and I prepared the best way we knew how: with cash. After college we rented a room from her parents so I could pay off my student loans. Even after the loans were gone, we stashed away the majority of our paychecks every month for years.

Most of that cash-hoarding was for the sole purpose of leaving my teaching job. I wanted to work for myself and wasn’t happy with my career choice. But I knew that most new businesses fail and having a year’s worth of my salary in cash would be the only way I could sleep at night.

We drive old, paid off cars (mine cost $6,000 cash), refuse to pay for cable, and absolutely will not buy something if we can’t write a check for it. We don’t even have life insurance because we just can’t justify the expense yet. There’s nothing to really protect yourself against when you have no debt and a pile of cash. We also don’t have kids yet; that would have been a game changer in the decision for life insurance when I quit my teaching job.

That’s why real-estate is a major decision that we are taking our time with. A commercial real-estate purchase would literally take every ounce of our savings that we have worked so hard for and leave us open to financial risk that we’ve never had to face. It’s also a ton of debt, which is terrifying for us even if it helps us build wealth. And with that debt, we’ll need to make new financial decisions. Life insurance will be one of them because neither of us want to be stuck paying back that considerable debt, if one of us were to die unexpectedly.

Life insurance needs aren't one-size-fits-all.

Calculate your needs

Entrepreneurship is all in the planning.

I get a ton of readers every month that are ready to quit their job and do a lot of the same things that I have. I love seeing the entrepreneurial spirit – but I make sure to give plenty of caution to would-be job quitters.

If you don’t plan well, you can completely screw yourself (and your family) over.
Take the time to make sure you are set up financially. Save up cash, make a business plan, be patient and make sure you are considering the appropriate “safety nets” if something goes awry. As awesome as “leap of faith” sounds, it should really be called “doggy paddle into the deep end with a good financial foundation”. It just doesn’t sound as cool.

Bobby Hoyt is a young entrepreneur who runs MillennialMoneyMan.com – a personal finance site for millennials. He has been seen on Reuters, Forbes, International Business Times, Marketwatch, and many others.

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