For those considering making the leap from the safety of a full-time job to the unknown of becoming an entrepreneur, there are several factors to consider first. Although ideally you’d be able to quit your job one day and start your own company the next, in reality there are many more important steps to take along the way.
Here are 8 handy hints to help you navigate this major career transition.
#1. Crunch the numbers
Before founding any new business, it’s vital to carefully consider the financial viability. As you brainstorm your new business idea, you’ll need to also create a company budget and business plan. This may be sketchy at first, but it should include a basic breakdown of salaries, product costs, marketing costs, and other important fundamentals.
How would you access this start-up cash? Do you plan to find investors, or will you be dipping into your savings account? Do you have enough money currently in savings to also cover your living expenses while you wait for your new business to start making money? The amount you need to save will depend on the size of the venture and your eventual goals, but this is all something to consider before you get any further in the process.
#2. Consider the mental toll
Ditching the 9-5 grind in favour of creating your own schedule and working from home may sound appealing at first, but have you thought about the day-to-day reality of running your own business? In most cases, you’ll be working more hours than you did as an employee, and you’ll have layer upon layer of added stress and responsibility.
Becoming a self-made entrepreneur is a dream for many but it realistically involves a lot of rejection along the way. It can be helpful to branch out and speak to other entrepreneurs or mentors first to get a better idea of what you’re in for before you take the plunge.
#3. Don’t burn your bridges
When founding a new business, all you have to start out will be your reputation. Without having had time to build up a devoted client base, your integrity helps form the first impression that you make on colleagues, peers, and future clients.
With this in mind, you want to keep it classy as you break ties from your current business. It may sound satisfying to go out in a blaze of glory if you’re not happy with your current role, but maintaining a courteous professional relationship will avoid any future drama that could hurt your new business. You may even be able to work out a deal that allows you to continue as a part-time employee while you get your business off the ground, which can be helpful for financial and personal reasons alike.
#4. Interview potential clients
You may have put a great deal of time and effort into crafting the perfect product or service, but until you understand your target demographic you’re not ready to start selling just yet. Conduct market research by interviewing potential clients, asking them what they’re looking for and what they think of your current idea. This can be vastly beneficial when it comes to tweaking your product and creating a marketing plan.
#5. Research the competition
Along these same lines, you’ll also want to research your top competition. Find out what they do right and what you would change, and use this to formulate your marketing strategy and website. It doesn’t hurt to reach out to competitors as mentors at first to learn more.
#6. Perform a skill assessment
While as an employee you probably performed very specific tasks that you were trained to do, as an entrepreneur you’ll need to become a jack of all trades. A typical workday could find you researching the competition, collating data, balancing your books, and devising a new marketing strategy. As a result, you may find that your skills are stronger in some areas than others.
While basic business studies courses can be a big help during this transition, this article suggests that many budding entrepreneurs also take courses specifically in the field of “entrepreneurship.” A formal course may or may not be necessary in your case, but it’s a good idea to carefully assess your strengths and weaknesses to see where there is room for improvement.
Don’t neglect the world of free online seminars, blogs, and forums, which can also be useful as educational tools and cost nothing.
#7. Set up your company structure
As you get closer to your launch date, there are a number of practical issues to pin down. One of these which can have enormous implications for the future of your business is the type of company structure you plan to register. This will impact your tax status, so be sure to research options carefully. Will you be creating a partnership, operating as a sole trader, or forming an LLC?
This should be done legally, so it’s worth hiring a professional to help you set up the correct legal structure for tax purposes to get everything off on the right foot. This is the sort of thing you don’t have to think about as an employee!
Many new entrepreneurs also start out as consultants with their former employers becoming their first clients. If you go this route, you’ll need to think about registering as an independent contractor.
#8. Do a test run
Becoming an independent contractor at your current place of employment is one way to dip your toes in the water of consulting or running your own business. Maintaining part-time work status is another. If it’s possible to launch your business on a smaller scale at first while still working in your current capacity, this gives you a chance to test your ideas out before making the big leap. That way, you’ll be able to identify potential trouble spots right from the start and smooth them over before you transition to full-time entrepreneurship. If everything runs smoothly and you start building a base of return clients, you then know you have a winning idea.
Leaving the security of a steady paycheque is no small feat, so be sure to take all of these factors into careful consideration first before making this exciting transition!
Images: “Author’s Own“
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