You have always been tempted to go off on your own. Great idea. You are a copywriter in an ad agency and photography is your hobby. You considered (seriously) leaving your job and starting off on your own. Well a profession is far easier than a business but still you need to know a lot of things. Here is a comprehensive list of what all you need to know in finance if you were to do your own business (or profession).

1. Medical Insurance: When you are in a job your employer would have provided you medical insurance for normal medical emergencies, a loan for paying the bill (even if it was not going to be reimbursed), cars and other logistics support for hospital visits, colleagues to stay in hospital – now all this will be missing. You need to provide for all this in the form of insurance and friends on whom you can count. Not easy. Think about it first.
2. Life Insurance – “What will happen to my family if I died tonight” is a very important question to answer before you go off on your own.
3. Learning variable costing, marginal costing, pricing, cash flow, credit policy, collection mechanism, etc. I know businessmen who have not learnt these things even over long periods of time and have suffered.
4. Taxation – GST, Income tax, ..and whatever else is applicable. Even though you will be outsourcing this to a CA, if you do not know the hang of these things, it is difficult to be on your own.
5. How to organize your business – sole proprietor, partnership, corporate, LLP…this has to be thought of very well before you plunge into your own business. If you want to grow geographically you may need partners in different locations, if you want to grow organically in your own city you may need more people to run around – think about all that before you start.
6. Taxation and Personal Investing – business taxation is important of course, but also the investment taxation – you are surely better off going to a CA or an adviser who understands clubbing, tax postponing, tds, post tax cash flows….be careful in CA selection and adviser selection.
7. Business and Personal finance documentation – not keeping proper records as a young small businessman can lead you to a lot more trouble!
8. Budgeting – most personal finance failure and small business failure is because the entrepreneur does not like the boring detailed budget. This can kill. Most big businesses can’t run without a proper business plan, but most prop driven small businesses will mess up by not having a proper business plan.
9. diversifying your money – most entrepreneurs keep all the money in their own business. This looks smart in the beginning but by the time the business hits a recession or there is some bereavement in the family, the family has no clue what to do. Keep a diversified portfolio, it helps.
10. Documentation – business and personal finance documentation is damn damn boring and people hate doing it. Sadly there is not much in terms of professional help available to do the documentation either. So start at the very beginning and make sure that the documentation is complete and up to date.
11. Make sure that your personal financial goals are in synch with your business goals. You will not be able to disturb your working capital cycle to suddenly pay Rs. 2 crores for your daughter’s education abroad or Rs. 5 crores for a grand marriage!
12. Plan your retirement – too many business people are “hoping” that they will be able to sell their business and use that as a corpus for their retirement. Many a times this fails terribly You need a plan B, and a plan C to be prepared in real life. Selling a business is not always easy.

12 is a good start is it not?

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