“I can’t start a business. I don’t have enough money.”

This is the most common excuse I hear from corporate professionals trapped by golden handcuffs. But let’s be honest, it’s not entirely about the money. Sure, money is a very important consideration in starting a business, an essential one actually. If you don’t have the resources to start and sustain a business, in other words to get it off the ground until it provides enough for you, you can’t succeed.

But financial reasons are often only part of the picture. Another key category of reasons are psychological. And a lot of these psychological hesitations are as a result from societal and corporate programming. The marketing machines of the Fortune 500 companies spend in excess of $1 Trillion per year to shape how people think. And underpinning it all are the ideas that consumerism equals happiness and the best and most secure way to buy the things you think you need and want are by having a corporate job.

The notion of job security is a huge selling point. The idea that your paycheck comes every two weeks as well as that quarterly or annual bonus or commission. The discounted health care you get and other benefits. And yes they do show up, and they are real. Until they aren’t. But people don’t think about that. They don’t think THEY’LL get laid off. The think their paycheck will last forever. And this security is addictive, like a narcotic. Once you become used to it, it becomes extremely painful to give up.

People envision in their minds that entrepreneurship is risky. They see mental movies of 3 AM panic attacks as they think about losing their steady salary. They feel a sick feeling in their stomach in visualizing them telling their family that they’re giving up that “good job.” The terror of failing and having everyone say “I told you so.”

In other words, it all comes back to fear.

You’ve built a life around that predictable paycheck. Every two weeks, the same amount appears. Safe. Secure. Soul-crushing, but secure. Meanwhile, that business idea you’ve been nursing for years is still just an idea. That vision of being your own boss is still just a fantasy. Another year passes. Then another. The money excuse keeps you frozen while life keeps moving.

So then the question is how do you get yourself unfrozen? How do you tackle this fear?

Obviously it’s a multi-faceted problem and will require a multi-faceted solution. But one key way to address the elephant in the room, money is to do the work and run the numbers. Well before you quit your job.

You need to understand finances both from a the standpoint of your proposed business as well as your own personal financial situation. We’ll touch on both here.

The Real Cost of Starting Different Business Types (And How Much You Actually Need)

As you begin to tackle the question of whether you can afford to start a business, you first need to determine what kind of business you are looking to start and what implication this has on how much money you need up front.

According to a MBDA/Kauffman Foundation study the average cost of starting a new business from scratch is just over $30,000.

That being said many businesses can be started for significantly less than this. Others will require significantly more up front capital. Starting a 1 person consulting business you run out of your house is obviously going to cost a lot less than opening a restaurant. It goes without saying that the actual costs you will face in starting a business will vary significantly based on the type of business you are starting, not to mention your business strategy and location.

Service-based businesses can be a good option for people afraid to risk a lot. Consulting, coaching, fractional executive services, or professional services typically need just a few thousand dollars to start. You’re selling your expertise, not inventory. According to Embroker, startups in consulting, accounting, and similar service fields are among those most likely to launch with under $5,000.

Digital product businesses require more time than money. Creating online courses, SaaS tools, or digital templates might cost several thousand to tens of thousands depending on complexity. I can speak here from personal experience. It took me an entire year to build my Corporate Liberation Masterclass. The time investment can be significant, but you can work on these during evenings and weekends while still employed.

Physical product businesses are where costs start to climb because now your business requires some form of physical infrastructure or outsourcing. Inventory, storage, shipping materials, and manufacturing add up fast. According to Sonary, if you’re buying wholesale or private label products, initial inventory alone can run $500 to $10,000 or more depending on minimum order quantities. And that’s before you factor in storage, packaging, and shipping.

Brick-and-mortar businesses are typically the most expensive up front. It’s not unusual for storefront business owners to easily spend $100,000 in their first year. And for many types of physical businesses, the actual amount may exceed 7-figures. Rent, equipment, inventory, permits, insurance, and buildout costs add up fast. According to Homebase, for restaurants, commercial kitchen equipment alone runs $40,000-$80,000 before you serve your first customer. Does this mean if you envision a brick and mortar business you should give up? Not necessarily. You just may need to look into financing options and/or partners to make your dream a reality. At the same time you need to accept and own the risk that exists with such up front investments

Planning Your Business Finances is a Key Part of Your Business Plan

Knowing what type of business you want to start is step one. Then you need to really do the work to understand the finances of the business itself. This is an integral part of the business planning process.

This means projecting your startup costs, your ongoing operating expenses, and how long it will take before the business generates enough revenue to sustain itself. A consulting business that lands its first $5K client in month one has a completely different financial profile than a product business that needs six months to build inventory before making a single sale.

Business planning is an essential tool in reducing risk, and a major aspect of your business plan are your financial projections. Comprehensive business planning around finances gives you more confidence and allows you to operate your business on “offense.” Conversely, skipping this step and rashly quitting your job with six months of savings and assuming you’ll “figure it out” is a recipe for disaster. Three months in, you realize the business needs more upfront investment than you thought, revenue is slower than expected, and now you’re making reactive decisions instead of strategic ones. You either burn through savings too fast or end up back in corporate, defeated.

My Business Planning Blueprint course walks you through building a complete business plan, all 9 sections, including financial projections, market analysis, and operational planning. The entire content of business planning blueprint is also available as one of the modules of my full Corporate Liberation Masterclass.

Your Financial Runway: The Number You Need to Know

Once you understand your business financials, the next imperative is to deeply analyze your personal finances.

First, you need to understand your current state, namely your current level of income and spending. Then you need to intelligently project your future state. You need to understand how your income will change after quitting your job as well as what spending you might be able to cut back. You need to understand this against the level of savings and financial resources you have, so you can calculate your financial runway: how long you have to ramp up your business given the resources you have.

The runway you need depends entirely on your situation. Your expenses, your dependents, your risk tolerance, your business model. There’s no magic number that works for everyone. But you do need to figure out YOURS. And if the runway you actually calculate doesn’t match what you are comfortable with, you need to understand this gap and then come up with proactive solutions to bridge it.

Starting a business with an acceptable runway for you, with a margin of safety is an essential part of planning your exit timeline realistically, while retaining your peace of mind.

My Corporate Liberation Masterclass includes a comprehensive module on personal financial planning where I walk you through exactly how to calculate your runway, optimize your finances, and create a realistic timeline for your transition.