Self-employment is a dream for many Americans. When people get the urge to leave Corporate America and start their own business, personal finances can stretch to the breaking point. Having a fully funded emergency fund and part-time income can make the transition to self-employment less stressful on a family.
I have long dreamed of running my own business. I can even remember the exact moment I thought of my first idea in a Chicago winery in November 2007. Unfortunately, the road to self-employment is not an easy one. I wanted to run my business with no debt and tried to build my business on the side while continuing my full-time job. I knew I was not alone. A 2010 Conference Board survey showed 55% of Americans were dissatisfied with their jobs. In the words of career coach Pam Slim, I wanted to “Escape From Cubicle Nation“ and rely on my own skills and passion to fit my work into my life instead of the other way around.
My road to entrepreneurship is taking an accelerated detour. I left a job with a Fortune 100 manufacturing company in January 2011 to take a “transition job” with a business focused on accounting services for small businesses. I was looking forward to learning how small businesses work and how this type of business delivered value. Unfortunately, I never received the chance. In May, my prior employer indicated I was out of a job. I faced an uncertain future and anxiety about the next step in my career. As I write this article, I still struggle with my next step. I have applied to several companies for full-time positions. I have also discussed non-traditional working arrangements with companies where I could use my strengths in finance and business planning.
Most importantly, I am finally seeing the first signs of sustained success in my own company, Whiteboard Business Partners. Since separating from my previous employer, I have secured two customers and am building a strong pipeline of future business. For the first time in over three years, I feel like I am building momentum in my dream of self-employment.
Why has my unexpected job loss not become a moment of panic for my family? The primary reason is I have a family who believes in me. I could not be walking this path without my wife, Stephanie, and my boys Thomas and Garrett. However, our financial future is more secure because of two activities.
An emergency fund eases fear
I’m not going to lie. Losing a job is a scary experience. When we work, that regular paycheck is a source of comfort and security – or so we think! Increased competition, lower overseas labor costs, and investor demands are forcing many large companies to reduce wages and jobs. Unfortunately, our consumer-driven economy focuses more on spending than saving. The April 2011 personal savings rate was only 4.9 percent of disposable income, far below rates of nations like Japan. We live at, or too often above, our means.
Two years ago my wife and I attended Dave Ramsey’s Financial Peace University at our church. Our goal at the time was to align our financial goals, but I also wanted to learn more about how to set up my personal finances for an eventual run at entrepreneurship. The most important lesson was to have a fully funded emergency fund of six months operating expenses. Stephanie and I made a commitment to contribute 30% of our take-home pay to an emergency fund or other “sinking fund“. The sinking fund was earmarked for a kitchen remodel. It’s now our “war chest” as I consider launching my business full time.
Working part-time as a safety net
Ever since I was in college, I have had some type of part-time job. When I started in the workforce in 1998, I umpired baseball. I switched to soccer officiating in 2003, and I currently work part-time as a personal finance instructor at St. Ambrose University in Davenport, IA. Before my job loss, I was using my part-time pay to fund my business expenses and coaching investments. I also teach several accounting continuing education classes for another organization. Having my part-time work gives me some level of income to contribute to living expenses as we face an uncertain future. I have always loved teaching, so this part-time work is a labor of love as opposed to something strictly for extra money. However, this work is now a key part of my family’s safety net as we explore the next phase of our lives.
Job loss and dreams of self-employment are regular parts of life in America today. The last four weeks have been a roller coaster of emotions and decisions for my wife and me. Because we know our personal finances are sound and we still have income from her full-time job and my part-time work, we face this important decision from a position of strength. I do not know what our future holds, but I’ll be sure to outline the thoughts behind any decisions in a future article here on Debt Free Adventure.
Dallon Christensen runs Whiteboard Business Partners, a business coaching and training firm helping businesses transform ideas into outstanding results. Dallon has never considered himself a traditional accountant. A 1998 graduate of the University of Illinois, with a bachelor’s degree in accounting, Dallon also earned a joint MBA (Finance) and MS (Strategic Management) degree from Indiana University’s Kelley School of Business in 2008. He holds Certified Management Accountant, Certified Public Accountant, and Certified Information Technology Professional certifications. Dallon is a 2009 graduate of Financial Peace University and serves as a part-time personal finance instructor at Saint Ambrose University in Davenport, Iowa. A proud Illinois Fighting Illini fan, he also enjoys spending time with his wife Stephanie and sons Thomas and Garrett. Dallon also blogs regularly at www.whiteboardbusiness.com.