How to Know You’re Ready to Start a Business

Editor's note: This piece was written by Charlie Javice, the founder of Frank, a financial services startup, and a member of the Forbes 30 under 30 list. Since its launch, Frank has helped 300,000 users apply for financial aid.

So you’ve got a great idea you’re convinced is going to change the marketplace. What’s next?

Before you jump into creating your company, take a moment and remember that ideas are only ideas until they have an execution strategy, and luck can only get you so far without a foundation. The statistic that most startups fail is true, so you want to stack the odds in your favor by being prepared and doing your homework before you take on such a big financial risk.

As the founder of Frank, a startup dedicated to helping students pay for college and redefining how they apply for financial aid, I’ve learned that building a great lean team that can move efficiently on the company’s business strategy is the key building block that brings your idea to life. If you have that entrepreneurial bug, consider this checklist before you quit your day job.

Recruit two or three people who are truly passionate about the idea and are committed to working with you on a consistent basis. This core team will be your support system and sounding board as you build the business, and will lay the groundwork for your company as it grows. Seek out employees who share your core values but also have different areas of expertise that will allow you to create a well-rounded unit.

If your immediate circle isn’t the right fit, consider researching other startups and introducing yourself to people you admire—one of them could be your next employee. There are many famous quotes about hiring people smarter than you, and they’re all true.

What’s your financial runway? Don’t expect to start a business if you don’t have two to three years of living expenses covered, because it may take that long before you start to move from being in the red to being in the black.

Starting your own business is rarely the road to a quick profit, and it’s crucial for an entrepreneur to understand their business’s finances and risks. It’s important to free up as much money as possible when it comes to your day-to-day expenses. Rent is typically the biggest expense, so if you have the option to live with a roommate or your parents while you get your company off the ground, save your money.

This will be your North Star as you put together marketing and business plans, mock-ups, test products and anything else that you can show to potential investors and employees. Validate that the problem exists in the marketplace with research, surveys and fieldwork, and know that it may take a couple tries until you find the right approach for your company. Solidify your differentiating factor: Figure out what makes you the best person to execute your vision and why this is the right time to get started.

A business is a nexus of contracts, and it’s important to make sure your basic housekeeping is in order. Incorporate your company, file taxes, run a trademark name check, apply for an Employer Identification Number (EIN) and create employment contracts. Most importantly, if you have co-founders, make sure the equity is clear-cut and vested. You never know how the relationship will turn out, and you want to make sure everyone is protected.

Starting your own business guarantees high stress levels and long hours, and you’re going to need your support system more than ever. If you have people who encourage you, who listen to your rants about setting up payroll and who are understanding about last-minute canceled plans, make sure you let them know you appreciate them.

Read more: How Mongolian Goat Herders Inspired a New York Cashmere Startup