Transitioning from employed to self-employed takes guts. It takes patience. And perseverance, and planning, and a range of other qualities that are enough to keep many aspiring entrepreneurs from ever getting past go.
If you really want to leave a steady 9 to 5 to follow your dreams, then you’ll want to make it a well-planned transition and not just a decision on a whim.
- Feed the pig – There’s no such thing as being too financially prepared to start your own business because there are no certainties in a free market environment. Even the best ideas and brightest people are better off with a stash of cash.
- Start at home – Make sure you have enough personal savings (most experts say at least 6 months’ worth) to keep a roof over your head and food in the pantry if things don’t go exactly as planned. It’s a good bet they won’t.
- About the benefits – Some people hang on to jobs for no reason other than good health insurance coverage. Think about your current employment benefits and what impact leaving will have on you and your family, and plan accordingly.
- Line up help – Talk with your financial advisor about your plans. Work with a local lender who has small business experience and can help you set some target thresholds for debt to income, and arrange the financing you’ll need, if any, to get your business up and running.
- Go slow or go home – It’s tempting to go all in and try to make hay right away. But even the most spirited entrepreneurs know the value of deliberation. Pick up some side work to test the waters in a low-risk way. Make some extra money or just volunteer. Learn some new things but most importantly, see how you like it. See if you do well. See if the image you have in your head matches up with reality. Remember the fable of the tortoise and the hare? Aesop knows his stuff.
- Entrepreneur by day, pizza delivery by night – If you’ve lost a job or need to leave a demanding full-time job to work on your business, consider taking on something part time, especially if you’ve got mouths to feed at home. Maybe you can dedicate your daylight hours to building your business and earn a steady income by night doing something that won’t get you arrested (Breaking Bad is not real life). Make it a short-term plan. You’ll know when the time is right to abandon your temporary job and fully transition to self-employment.
Financial risk would top most entrepreneurs’ lists of early anxieties. Alleviate them and there is still some due diligence that applies to most every situation.
- Talk with your partners – If you have one or more business partners, you need to be in lock step from day one about how and when the business gets off the ground. Communicate early and often, and set it up so you share risks and responsibilities.
- Network – It’s never too early to build your professional contacts. Go to a local Chamber of Commerce meeting. Join professional networking groups. Find a mentor. In the Nashville area, for instance, the Nashville Entrepreneur Center, Jumpstart Foundry, the state-funded Startup Tennessee accelerator program and a range of other organizations offer resources to help launch and grow businesses.
- Plant some seeds – Start identifying potential customers. But do it above board – don’t leave your job and immediately poach your former employer’s clients. It’s not a good way to start your business, even if you don’t have a non-compete on paper. Try to identify some clients so you have work in the pipeline when you go full bore. Keep a database of contacts that you can continually update, expand, and use for marketing.
There is always uncertainty about whether a small business will take off, and how quickly. Some intentional planning will make for a smoother transition and increase your odds of success.