The views in this article are those of the author and may not reflect the opinions of Quicken Loans and its team members.
You may be sitting in your cubicle daydreaming about entrepreneurship – how you can earn more, be more in control of your life. Or, you’re (semi) retired and looking for a new challenge, whether out of boredom or the need to shore up your nest egg.
Regardless of where you are in your career, if you’re wondering about reinventing yourself from employee to entrepreneur, how do you know you’re ready for that big leap? Take this short quiz and see how you do:
How Entrepreneurial-Ready Are You?
You’re tired of watching co-workers get the pink slip and wondering when your time is coming.
__ Yes: The lack of job security is a big incentive; you’re sick of the anxiety and lack of control over your own destiny.
__ No: Fear of change is foremost; you’re best to stay put (for now).
You have some level of comfort with risk-taking.
__ Yes: You’re realistic about the difficult nature of the first year of a new business.
__ No: Although you can minimize risk with a new business, you still need to take a (well-thought-out) leap of faith.
You have honed business skills in your career that will help you transition to entrepreneurship.
__ Yes: Your work experience gives you an advantage in setting up a business.
__ No: The less you know about the work world, the harder you’ll find entrepreneurship.
You’re driven, organized and an independent thinker.
__ Yes: Congrats, you’re a natural entrepreneur! You can comfortably go it alone.
__ No: Consider partnering with someone with that personality to own/operate a business together.
You’re concerned about having enough money for the retirement you want.
__ Yes: You’re unimpressed by the poor return on investment on Wall Street for your IRA or 401(k).
__ No: You’re content to keep your retirement dollars in conventional investments.
You dream of giving back to the community through work and/or pursuing passions beyond the weekend.
__ Yes: You’re tired of spending so many hours on work that doesn’t excite or motivate you.
__ No: Entrepreneurship doesn’t seem like the right vehicle for your personal interests/hobbies.
You’re fed up paying Uncle Sam taxes for everything.
__ Yes: You love the idea that a self-directed 401(k) lets you invest pretax dollars in your business, which means you can write off a lot of expenses.
__ No: You feel that taxes are an unavoidable fact of life.
You have enough money in your retirement plan and/or other savings to start your business.
__ Yes: This is an ideal situation for quick growth and return on investment.
__ No: Starting a business with a lot of debt will cripple your cash flow.
A self-directed 401(k) (also known as ROBS [Rollover as Business Startup]) is a less commonly known way to finance a new business. Instead of going into debt to finance your entrepreneurial venture, you rollover your retirement dollars – IRA, 401(k), SEP, SIMPLE IRA, 403(b), 457 or other eligible plan – to invest in your own business. Like all tax and investment plans, you’re well advised to work with a professional to make sure the IRS is satisfied.
How did you do on the Entrepreneurial Readiness quiz? If you checked Yes more than you checked No, you may be suited for entrepreneurship. For a more thorough assessment of your preparedness, take a more detailed quiz at YourBestBoss.com/Quiz/.
William R. (Bill) Seagraves, president, CatchFire Funding, of Parker, CO, is the author of the Penguin Random House book, Be Your Best Boss: Reinvent from Employee to Entrepreneur, released in February 2016. Learn more at YourBestBoss.com.
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