How do I plan my financial security during the start-up phase?
March 27, 2023 | 40,00 EUR | answered by Isabel Müller
Dear tax advisor,
I am Gerald Weise and currently planning to start my own business. I am aware that financial security during this phase is crucial in order to mitigate potential risks. Currently, I am in the situation where I will be leaving my job as an employee to start my own company. This means that I will no longer have a regular income, and I am concerned about how I will cover my ongoing expenses such as rent, groceries, and insurance during the startup phase.
I am aware that many new entrepreneurs struggle with financial difficulties in the first few months or even years. Therefore, I would like to establish a solid financial foundation from the beginning to minimize these risks. What specific actions can I take to plan for my financial security during the startup phase? What insurances would be sensible to protect myself from unforeseen expenses? What financial reserves should I build for the launch of my business and how can I best build them up?
I look forward to your professional advice and thank you in advance for your support.
Sincerely,
Gerald Weise
Dear Mr. Weise,
Thank you for your inquiry regarding your start-up and the associated financial security. It is very understandable that you are concerned about your financial situation, especially if you are leaving your job to start your own business. It is important to establish a solid financial foundation from the beginning to be able to mitigate potential risks.
To plan for your financial security during the start-up phase, there are various measures you can take. Firstly, it is important to keep a close eye on your ongoing expenses and create a detailed financial plan. This should include your monthly expenses such as rent, groceries, insurance, and any loan repayments. This way, you will have an overview of how much money you need to cover your ongoing expenses.
To protect yourself from unforeseen expenses, I recommend taking out certain insurances. These may include public liability insurance, professional indemnity insurance, health insurance, and disability insurance. These insurances can help you safeguard against financial risks and provide protection in case of illness or accident.
When it comes to financial reserves for starting your business, it is advisable to plan for a reserve of at least six months. This means that you should have enough money set aside to cover your ongoing expenses for a period of six months, even if your business is not yet profitable. These financial reserves can help you bridge financial gaps and make your business successful in the long run.
To build your financial reserves effectively, I recommend regularly setting aside money and creating a clear separation between personal and business finances. For example, you can open a separate business account and transfer money regularly from your business account to a savings account to build your financial reserves.
I hope this information is helpful to you and I am available to further answer your questions and support you in your start-up.
Best regards,
Isabel Müller
