ACTUAL CASE HISTORY: For over twelve years, Diana had been employed in the executive recruitment field. She found the work both challenging and rewarding. By a combination of perspiration and perseverance, she’d worked herself from entry-level researcher to become a highly-respected and well-connected recruiter with a specialty in the placement of healthcare executives. No matter how hard Diana worked, though, no matter how much revenue she brought into the company, and no matter how she tried to negotiate for herself, when it came to getting her fair share of compensation and the security of a partnership, every year she was told “maybe next year.” Diana felt that, eventually, she’d run out of “next years.”
More and more, Diana began to resent the way she was treated. More and more, she found herself wondering if she could simply “go out on her own.” In her own business, Diana felt, she would be able to do things the way she wanted to do them. In her own business, Diana felt, she’d enjoy the rewards she deserved. And in her own business, she felt she’d be building up some lifetime security, something that she might one day sell, or even give to her children. Diana’s determination grew until, one day, she simply decided: she’d do it.
But “how” was the problem: there seemed to be a million things to do. And she wasn’t at all sure if she had the savings to get her through the months – or even years – until “Diana, Inc.” would turn profitable. And there were many questions she couldn’t possibly answer: Would any of her clients follow her “out the door?” Would her bosses try to enforce the “non-competition” agreement she signed? She’d always been a great employee; would she be a good-enough boss to her own employees?
Drawing on our own experience, and the experience of our clients we’ve helped navigate the process, we counseled Diana to divide her “essential things to do” into a 10-step plan, to consider her 10-step plan very carefully and soberly, and eventually to follow her 10-step plan for an initial one-year commitment period. By breaking down the seemingly endless tasks, problems and worries into ten distinct steps, the process seemed less overwhelming and more manageable. Less frightening and more friendly.
Well, she did it, and it’s now been three years. It really didn’t take long to become profitable, but Diana’s probably worked more hours, had less days off, and more sleepless nights, than she did as an employee. Overall, though, Diana’s doing exactly what she’d hoped: doing things the way she wants to do them, getting the rewards she actually earns, and building up some real security. Finally, she’s not waiting until “next year” to get what she’s due.
LESSONS TO LEARN: With today’s rampant job insecurity and increasingly difficult relations between employers and employees, more and more people are considering going into business for themselves. It’s a daunting task, full of more risks and potential crises than you can imagine. But the rewards – financial, emotional and otherwise – may be great, as well. For those who can turn frustration into determination, anger into personal “rocket fuel,” and an idea into a reality, anything’s possible, even untold success. But make no mistake: for success in business, sober and careful planning are an absolute necessity.
WHAT YOU SHOULD DO: Planning is essential. In addition to preparing a business plan, consider these to be part of your navigation plan to Self-Employment, “Your 10 Critical Steps to Going Out on Your Own.”
1. Introspect: Are You Really Ready for This Life and Lifestyle? – Being your own boss also means being your own employee, and at times it seems like your own slave. It really calls for a very serious, and long-view commitment. There really are no “paid” vacations, and there are no vacations from thinking about what needs to get done tomorrow, next week and next year. Look yourself “in the mirror”: are you really ready for the change in lifestyle?
2. Determine Your Product: What, Precisely, Are You Going to “Sell?” If you’re contemplating going into the exact same business you’re presently employed in, this should be easy. However, if you’ve come up with a new idea, or a new way of doing something, make sure it’s completely thought-out. Put your idea into writing, and share it with friends. Is it clear to them? It must be, or it won’t be clear to others, either.
3. Determine Your Customer: Who, Precisely, Is Going to “Buy” From You? Even if you’re going into the same business that you’re presently employed in, don’t expect that the same customers are going to buy from you. Why should they? You’ve got to give them a reason. If you’re doing something “new,” that isn’t being done elsewhere, or in the way you’re planning, then this goes doubly for you. Don’t forget: “pioneers” rarely have an opportunity to sit back and enjoy the scenery.
4. Consider Promotion: How Will You Promote Your Business? If Coca Cola has to spend a good part of its resources hyping its products, then you do, too. How are you going to let people know “you’re out there.” Traditional advertising and media are very expensive. So is mailing. Not only do you have to tell people you’re in business, but you have to continually remind them so long as you’re still in business.
5. Budget: What’s Your Worst-Case-Scenario First-Year Budget? It takes a while to bring money into a new business’s coffers, often a lot longer than you’d expect. And profitability takes even longer. Creating and following a budget – and a realistic one at that – has to be high on your “to-do” list.
6. Count and Recount: What Are Your Financial “Dependable” Resources and Obligations? A necessary step in the process is to make an honest assessment of the monies that you can devote to your business, and also use to support yourself and your dependents, in the interim, before profits start to flow. Don’t forget that using IRA and other deferred income accounts may result in substantial penalties.
7. Retain Advisors: Who Will Be Your Necessary Professional Resources? You’d be wise to locate an attorney and an accountant who you can call on with your sure-to-come legal and accounting questions. Make sure they’re business-oriented (you don’t really want the advice of a personal injury attorney) and that they’re used to dealing with smaller businesses (an accountant whose firm only services Fortune 500 businesses is surely not for you.) Ask local small businesspeople who they use, who they like, and who they’d recommend. Ask for a free introductory meeting.
8. Set Goals: Make Three-Month, Six-Month and Twelve-Month Goals. Though it’s not possible at this time to know exactly where you should be headed in how long a timeframe, it’s still a smart idea and a healthy discipline to set what you believe are realistic goals for your new business. Yogi Berra’s advice, “Unless you know where you’re going, you’ll never know if you got there” is never truer than it is in this context. Each three months, or six months, take a look back to see what’s transpired, and what’s next to do. And keep your goals updated, as time moves forward.
9. Resign: How Can You Best Leave Your Job? Carefully. Yes, it’s important that, when leaving your job, you do so with the greatest of care and forethought. If possible, don’t burn bridges. Obtain the most health care insurance you can on the way out, as well as the most pension credit. Be careful about non-competition agreements, and never take trade secrets or confidential information with you. Depending on the circumstances, your former employer may be able to send business your way, or even to be your first customer. Consider buying a copy of “Sklover’s Guide to Resigning from Your Job” from our website or from Amazon.com.
10. Hustle Like Never Before: Some say that success in business is simply a matter of “Biting off more than you can chew . . . and then chewing like mad.” Yes, it can be viewed as that simple. Work as hard as you can, never look back, and damn the torpedoes, full steam ahead. Give yourself the opportunity and trial of one solid year of good, solid work. Unless you try your hardest – and smartest – you’ll never know how successful you can be.
Being your own boss is exhilarating, and exhausting, it’s liberating and enslaving, and it’s the best thing and the worst thing in the world. But for more and more people, it’s the most rewarding, the most challenging and – yes – even the most secure thing they can imagine doing. If you’re considering entering the ranks of the self-employed, don’t forget that planning the transition carefully and thoughtfully may make the difference between success and failure.
We offer a great Checklist for Going Out on Your Own from Employment. To obtain a copy, just [click here].