How to plan your finances before you take the leap into entrepreneurship

Creating an adequate reserve, reduce the risk in your investment portfolio, and buy sufficient life and health insurance

August 21 was World Entrepreneurs’ Day. On this occasion, many people in salaried jobs must have mulled over their plans for starting their own ventures. Before taking the plunge, however, potential entrepreneurs must plan their finances carefully.

Myriad challenges

The key challenge a potential entrepreneur faces is building a large-enough reserve that will sustain both his business and his family until his venture starts generating adequate cash flows.

Take the instance of 37-year-old Shahab Alam (name changed on request), who works in Mumbai. Recently, he acquired the CFP (Certified Financial Planner) certification and now wants to start his own financial planning firm.

Echoing the