Black small business profiles: 'Ask the Money Coach' founder teaches you how to start your first business
When CEO and founder of Askthemneycoach.com, Lynnette Khalfani-Cox, was laid off in 2003 after ten years with the Dow Jones media company, she turned the layoff into the opportunity to start the business she had dreamed of.
First, have three to six months of cash on hand to get you through the first few months of starting your business. Cox insists that you must have the financial wherewithal to sustain yourself from launch to profit. If you don’t have cash on hand that shouldn’t stop you. You may have to find a part time job or some other means of keeping you afloat for the first few months – but start working on your business now. Soon enough, you’ll make it through those first eight months, which is typically the roughest period of starting a new business.
Keep in mind — Cox says people often think that if they have a large presence on social media, a large number of Facebook or Twitter followers, for example, that this will help them through the first few months of business. She explains that your online image has to align with your new brand in order to be used a tool to promote your business. “If your online presence is contrary to your brand, your online community can’t help you.”
Second, know where you want to take your business and how you’re going to get there. Create a plan, treat it like a countdown, think ahead and make sure everything you do is going to get you where you want to go. Take essential steps first, such as registering and trademarking your business. Having things in order administratively will allow you to focus on selling your product or service. Without a plan, Cox says, you can run ragged. “Passion and enthusiasm are great but you have to strategize,” she explained.
Three, if you are selling a product ask yourself who you are selling to. It’s helpful to build a call list and talk to vendors before you attempt your first sale or secure your first client. Also, try to build relationships with entities that buy in bulk. Landing a larger account so you can sell your product in bulk is much easier than trying to sell one-on-one to the consumer in a down economy.
Four, looking for financing during an economic recovery can be difficult for large, established companies. When banks aren’t lending to established businesses with a proven track record, hoping a bank will fund your new business is unrealistic. Cox suggests turning to peer-to-peer lenders. These are lenders or communities of people that come together to fund a project. Prosper.com and Lendingclub.com are two online resources that Cox says are trusted in this arena. “If you’re struggling get creative and figure out what you need, develop partnerships with other businesses or do an apprenticeship,” Cox said.
Lastly, if you are concerned about leaving corporate America — fearing that you’ll be leaving behind health care benefits or an established 401(k) — Cox told theGrio that there are plenty of resources that allow you to create your own benefits package that is just as good as what your employer offers. Worried about your 401(k)? Once you start your business, you can create a solo 401(k) for entrepreneurs. Solo 401(k)s often have higher contribution limits and allow greater freedom with what you can do with your money. You can also purchase your own disability insurance. Purchasing a supplemental life insurance policy can be done for as little as $30 a month. Cox recommends that your supplemental life insurance have a payout of at least five to ten times your annual income.
Following these five steps before you start your business tremendously increases the odds that you will have a successful and lasting company. Simple strategies and basic organization will help you avoid the costly mistakes that cause most small businesses to fail.
Gaining your independence from an unpredictable job market brings more than just the possibility of financial success. Cox says the most important thing she learned from her lay off was the value of the freedom she gained when she became her own boss. “It’s freedom, not money,” Cox says about the best benefit of owning her small business, “although I make a good living and I’m happy with that.”
Another benefit? The potential to earn as much as you are truly worth. “You’re capped when you work for someone else,” Cox related about the potential of capitalizing on your talents. “Your employer has a limit to the value they’ll place on you. Working for yourself provides you with more choices and options.”
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