Often the key reasons why transitions ashore don’t run smoothly is due to a lack of money and/or preparation. The move is also psychological and emotional. Plus, you need to think about the key financial considerations. Consider the following before taking the leap:
- How much will you need to spend to set up your company in your desired location? A yoga retreat in Bali is likely to come with very different set-up costs than a B&B in the South of France.
- How soon after launching your business do you expect to pay yourself a wage?
- From the day you leave yachting, what’s the shortest timeframe in which your business will become cash positive?
- Do you have a support network or a mentor to help you through to launch day (and beyond)? Starting a business comes with inevitable highs and lows, so you’ll want someone to turn to for advice and support.
- Where will you be required to pay tax on your revenue and wages?
Below are some of the biggest challenges to starting a new venture, so carefully consider how you will plan to tackle them.
Saving: Saving enough starting capital can make a significant difference to how successful and profitable your business venture will be. If you’re going with a high-investment venture, then you’ll likely need a loan or other financial support. It’s important to understand how you’re going to source and have funding security prior to leaving. If your business idea requires only a little capital to start, then you might consider saving this so that you can avoid any debt initially.
Where you base your business will affect how much start-up capital you need as the costs for creation and business registration differ, as do insurance obligations.
Cash Flow Management: Most start-up businesses fail for many reasons, principally a lack of cash flow. The more financial support you can build, the greater the chances of business success. Consider having good cash flow prior to leaving the industry, because your business will need significant cash flow until it turns a profit. We recommend having at least six months of running costs as cash flow, but you may want to aim for 12 months of running costs to give you peace of mind.
Track and manage all your expenses from the start, especially if you’re starting a business on your own and don’t have an accountant or bookkeeper to help you.
This column originally ran in the June 2021 issue of Dockwalk.