Any aspiring entrepreneur has had the dream of walking into the boss’ office and giving two weeks notice. The conventional idea of breaking free from the corporate hierarchy and starting something on your own terms is a worthy and noble goal. Unfortunately, that goal can cloud your judgment and make your path to your calling even more difficult.
I just finished the excellent book Quitter by Jon Acuff. Acuff is a self-described “serial quitter” who has worked a variety of jobs before landing at the Lampo Group, Dave Ramsey’s organization. Acuff admits he has significant experience at quitting jobs, and he illustrates his examples in this well-written and practical book. One of the best parts of “Quitter” is that he doesn’t advocate quitting without a solid plan of attack. While we may have dreams of giving two weeks notice and moving right into a new position, that carries great risk that may lead to heartbreak and more stress.
My professional background is in finance, and I am very aware of managing risk in any business situation. When you make the move from employment to an entrepreneurial goal, you cannot eliminate the risk in this move. However, you can manage your risk to give yourself every opportunity to succeed when you make the jump. Any aspiring entrepreneur can manage the risk of the self-employment transition with three items.
A six-month emergency fund
Everyone should have an emergency fund for unexpected expenses. An emergency fund provides a cushion for major car or home repairs. It is even more important if you’re planning to move into self-employment. The time will come where you cannot grow your business quickly until you devote full-time effort to it. Working nights and weekends is a great way to start a business, but you will face the moment when you must break free and focus primarily on your new venture. Unfortunately, there will probably be time after starting your business full-time where your income is less than your previous employment income. An emergency fund will allow you to fund your lifestyle without worrying about your next sale as you build your business.
A part-time job
Last month I attended a speaking “boot camp” in Atlanta. The conference organizer and I spent a considerable amount of time discussing my personal self-employment goals. I was pleasantly surprised to learn that he launched his own business with the help of a long-term part-time job. My friend started his business and worked part-time as a youth director until he could launch his business full-time.
I like the approach of a part-time job for several reasons. First, you have some steady income on which to live. Even several hundred dollars a month goes a long way toward having the financial freedom to pursue your goals. Second, part-time jobs often have more flexibility than full-time jobs. If you are working 15-20 hours a week, you may have the ability to structure your hours to fit with your entrepreneurial venture. Third, part-time work is generally assumed to be short-term in nature. If you experience rapid growth in your business, quickly transitioning out of the part-time job will be easier than quitting a full-time job.
As I build my 2012 goals, I am examining part-time job options should my business grow more rapidly than I expect to grow. Part-time work can serve as a very effective bridge to full-time self-employment.
A clear plan to make your escape
When you develop a plan before something happens, you take emotion out of the decision process. You can execute your plan when chaos reigns all around you. You must sit down with an accountability partner to define the milestones to achieve before making the jump to self-employment. My wife and I are doing this as I create my 2012 goals. We have already determined that I will not launch Whiteboard as a full-time venture until I have six months of financial results at or above a certain level. I will not share those results in this article, but I can assure you the income level I must achieve will be sufficient for both of us to feel comfortable about my future opportunities. This plan allows us to track actual results and remove instinct and emotion from this major life decision.
All entrepreneurs must face risk. Even the most careful planning and prudent decision making will not eliminate all risk from the self-employment decision. The three steps I have described above are great ways to manage the risk and anxiety that comes with the opportunity to be in business for yourself.
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