How Much Money Do You ACTUALLY Need To Start A Business Or Side Project?
I had about $8k in debt when I started Holisticism.
I'll save you the long story of how I accrued said debt. The narrative is as surprising — I've been employed for at least 40 hours a week since I was 21, often working two or three jobs at a time — as it is uninteresting. 77% of Americans have some debt — on average $38,000 — so you probably can relate.
Starting a business was not in my game plan for life. In fact, I very much did NOT want to be an entrepreneur. Freelancer? Sure. Contractor? Yep. But CEO? Nah, I'm good.
Although I'd started Holisticism as a side-project "for fun," it quickly snowballed into something that required much more from me. I remember calling my dad and saying, "I think I need to make this an actual business because things are happening." At that point, I got the lousy advice to work with a lawyer to register as an LLC and get my EIN number.
I wish that someone would have told me that using a lawyer would cost me thousands of dollars while using LegalZoom would basically be sufficient for my needs (and cost WAY less).
I don't regret starting my business when I did — although it would have been really, really nice to have more money in my checking and savings account at the time. In fact, if I'd waited to start my business until I had 6 months worth of savings, I'm not sure I ever would have done it. The truth is, I probably would've lost my nerve and found something else to focus on. I had the perfect storm of momentum, excitement, and real traction in my corner to propel me into action.
But is that how I'd recommend someone else do it? Nah, probably not.
Do you need to get rid of all your debt to start a business? No, definitely not.
Is it helpful to have six months of savings in your bank account and be debt-free when you start a new project? YES, ABSOLUTELY. Especially if you're going to quit your job to pursue that project full time.
It's not exactly necessary to save half a year's worth of paychecks to start your side project if you're going to continue to work on other income streams while you start up your new business or project.
However, I'd be irresponsible if I didn't tell you that starting a new business, project, or idea requires being well-resourced. Because, shit, does it require resources. Here's the thing, though: Resource doesn't always mean cash money. (Although oftentimes it does!)
Well-resourced simply means that you have support and wiggle room at the same time. I think it's necessary to be well-resourced to start a business because it requires so much of you.
If you go through the list below and can't check off a single item, then right now might not be the best time to start a new gig — but that doesn't mean it's not in the cards for you. It just means that it might be a good idea to wait for a tick — until you're more supported — to get going with your bad self and your genius business idea.
Keep scrolling for some examples of resources that you may or may not have already considered as you decide whether you should start your next thing.
money
Obviously, money is a tangible resource that we can use to support ourselves during a time when life is in flux. It's nice to know that if something went terribly wrong and you were very unemployed (or unprofitable) for six months that you'd be OK to cover the basics, like food and shelter.
If you're planning on cutting off all other income streams to start your business, a good rule of thumb is having six month's worth of savings in your bank account. If you're cutting back on work to make space for a new thing, but still maintaining some form of incoming revenue, you can probably get away with closer to two month's worth of rent in savings as long as you're covering your basic needs with the income that's coming in.
And if it doesn't completely deplete you energetically or crush your soul, continue to work full-time while also working on your side project or business.
time
Time is another tangible resource! We only have so many hours in the day. If you're well-resourced with time, that means you have spaciousness in your days or weeks that affords you the chance to focus on developing something new. Don't underestimate the resource of time — having extra time on your hands to work can keep you going for a long while.
A personal example: For the first year of building Holisticism, I spent from 5a-9a every day working on the brand, building content, sending emails, and meeting people. I also usually dedicated an entire weekend day to working on it, and often was up late at night finishing up Holisticism work. I held down a full-time job that whole year, which gave me more money to play with to build Holisticism and host events. After a certain point, I had to leave my full-time job because working on Holisticism required more of me. I knew the tipping point had come when I realized that I was spending "on the clock" hours doing personal work.
inspiration and connection to intuition
An intangible, invaluable resource: Inspiration. If you are overflowing with inspiration, then you are a lucky one, my friend. Inspiration drives focus and attention and tends to make us more potent when we do sit down to work. Instead of spending precious moments brainstorming or problem-solving, we can get right to the heart of what we're trying to build, say, or create.
Being deeply connected to your intuition is extremely helpful in staying inspired. When you're listening to your intuition, it's so much easier to take the next best step for yourself and your business. Trusting your own intuitive knowing is a lifelong practice, but there are a few things you can do to speed up the intensity and frequency of your "intuitive downloads" — those winks from the Universe or the Muse or some external intelligence that comes from beyond you.
emotional health
An undervalued resource that is especially important while you're going through the stress of starting your own jam. You don't need to be 100% emotionally clear, healthy, and perfect to start a business. Far from it. But, we've all likely been through epochs of our lives where we were decidedly emotionally unhealthy — times when adding on another layer of complexity in the form of work stress would have been a dangerous decision. I'm specifically thinking of times like when we're working through trauma.
I think there are also moments where we aren't necessarily emotionally unhealthy, but we are emotionally distracted or distant. That's fine, but you need to have the emotional bandwidth to handle whatever comes your way while you begin your own thing. Building a business is the ultimate personal development move — it kicks up all your shit and your limiting beliefs and your fears and throws them in your face. (Fun, right?) But starting a business also offers you an excellent opportunity to work through those obstacles, if you have the emotional bandwidth to do so.
physical health
I don't think you need to be in peak physical condition to start a business, but in many ways, entrepreneurship does feel as grueling as a marathon. New stress taxes your nervous system differently, you often need to work long hours on limited sleep, and there's an inevitable energetic recalibration that occurs when you first get started on your big idea. Often, the first energy "suck" to get crowded out of your entrepreneurial life is exercise or physical upkeep.
Fun fact: I went from running 10-ish miles every day to zero miles a week when I started Holisticism! Yes indeed, I was actually an ultra-marathon runner just a few years ago. But my work eventually became a more important priority than moving my body every day, and definitely meant more to me than looking a certain way. (Which is not necessarily correct, but hey, it's what happened!)
In any case, physical wellness is an incredible resource because you need energy to make things. Being in good physical health allows you to focus on what you're trying to make because you don't need to apply extra energy just towards getting back to a baseline of well-being. If you're on a healing journey, I can't stress enough how much I recommend focusing on getting your physical health on track before you start pursuing a creative or business project.
mental bandwidth
Similar to emotional health, but slightly different. Like, the difference between an almond milk latte and a coconut milk latte. Subtle.
Mental bandwidth means you have white space in your brain to dream. If you're in survival mode, often the first thing to go is our freedom to create. Other things, like paying for food and figuring out rent supersede the luxury of creative daydreaming.
Sadly, it's often a privilege to have mental bandwidth. The vast majority of entrepreneurs are white — 78%, to be exact — and that's certainly not because white people are bolder, smarter, or more innovative. Consider that marginalized groups who are faced with daily discrimination and carry deep ancestral trauma may not have the luxury of mental "white space" and downtime — and even if they do, they may not have the financial resource around them to alchemize dreams into action.
It's absolutely possible to get dreaming and creating if you live in survival mode, but it is much harder. That's not meant to dissuade you if you're reading this wondering about your mental bandwidth. Instead, I bring it up to remind you to be gentle with yourself if you're down on yourself because you "can't even come up with a good idea." Maybe instead, start with freeing up 1% of your mental bandwidth every day. See where that takes you.
supportive relationships
Like everything on this list, not 100% necessary, but certainly important.
Being a pioneer is lonely. And that's what you're signing up for when you start something new, create something from scratch, or dream up something no one has ever thought of.
Your current crew of friends and fam might not get where you're coming from — they might question your drive or your vision. That's OK. Not everyone needs to understand. But if you can get one key person in your corner it makes all the difference. It's nice to have someone to call when you're feeling isolated or sad, someone to run ideas by, someone to text when you have an exciting little win.
I have a few female entrepreneur friends who have been my constant cheerleaders and supporters from day one. I am so in gratitude for them.
My partner also happens to be my biggest fan, which feels fantastic. At first, I tried to keep work separate from my personal life — he'll even tell you how I banned "work talk" from our conversations for the first few months of our relationship. But eventually, Holisticism crept into our conversations because it is one of the things I care most about in the world! I've come to realize that having a partner who admires my passion for my work and can share in my process is really important to me.
But, it's not a make or break for everyone. So if your significant other doesn't care much about your Google Analytics numbers, no biggie. Just find someone who does who you can have those conversations with.
conclusion
It takes a lot more than money in a bank account to successfully start something new. Trust me, if money were all it took, SO MANY MORE PEOPLE would be entrepreneurs and creatives!
Starting something new does require being well-resourced, but resources look different for all of us. Don't be reckless and totally ignore your financial situation if you're struggling to make ends meet, but you don't necessarily need to feel the pressure to save six months of your salary just to get started.
Just my two cents, as a woman who's made a lot of mistakes … and also done a few things right :)