Being your own boss is the dream of many people, but few actually take the plunge. With today’s economic climate and technological advances, it might be the best time to consider “hanging out your own shingle”. Some people take the plunge after a layoff, while others see an opportunity and seize it.
Independent workers (freelancers, contractors or business owners) are on the rise according to the Harvard Business Review. This group is expected to rise from about 17 million in 2013 to 23 million by 2017.
Many people ask if it is the right time - and the truth is, there isn’t a perfect time to start your own company but here are some considerations:
Do you crave the idea of running your own business? – Most people who start their own company have thought about working for themselves for a while. They have an idea they have wanted to develop or feel that they could be more focused and bring a specific skill to an industry they already have experience in. Regardless of the reason, people who start their own business have a certain tolerance for risk and are willing to deal with the uncertainties of working for themselves to see their idea become a reality.
Laura was a Marketing Manager for a large corporation. She enjoyed her work but was often frustrated with the big company politics of accomplishing tasks for their clients. Being able to bring top marketing skills to smaller businesses, she believed was an underserved market and shouldn’t be reserved for big corporate marketing budgets. She dreamed of working for herself but wasn’t sure when she should step out on her own. After being laid off from her corporate marketing job, she decided to work for herself. Her biggest worry was whether she would be able to provide for herself but after working alone for just seven months she realized she had already made more money than the previous year at her corporate marketing job.
Not all people who go out on their own end up like Laura, but she was willing to work hard for herself and the financial rewards followed. Her risk paid off.
Have you done financial preparedness? – Starting a business can be spontaneous – (i.e. think layoff, job relocation) but most individuals think about the decision for a while. If you have been considering making a change, assess your financial situation. Having six to twelve months of salary saved up will help you make it through the lean startup months, while you are trying to build your business. Most entrepreneurs have rose-colored glasses and over estimate what they will make when they start out.
Evaluate the cost of starting your business, including legal, accounting and equipment to get started. Put together a business plan and have your numbers checked by an expert. Knowing the true cost of starting your business and having savings to pay for initial expenses will help you focus on getting your business up and running.
Don’t Go It Alone – Surrounding yourself with information and encouragement is helpful for entrepreneurs. Your network can include family, friends, mentors and other entrepreneurs as well as CPAs and lawyers. Have a wealth of helpful and informative people to bounce ideas off as well as paid resources who can bring expertise that you don’t possess. When you work for a company, you can walk down the hall to bounce ideas but owning your own company can leave you without certain resources, so develop a good network to help you when you need it.
Technology has opened up markets and driven down costs to starting a company – Anyone with an idea has immediate access to developing a website and marketing through social media. No longer are you required to have a brick-and-mortar presence to owing your own business. Many entrepreneurs work from home and use their own knowledge of technology to reach new clients. An entrepreneur can build a Web site, create Power Point presentations, host live meetings and Webinars as well as conference calls – all on a shoestring budget.
The founders of FoxyCart (www.foxycart.com), a custom shopping cart for e-commerce, started their company completely bootstrapped after being frustrated at the lack of good usable e-commerce software on the market. As the company took off, FoxyCart hired all their developers remotely with several working in Europe. They have been voted one of the best e-commerce shopping carts for clients, all while maintaining a virtual workforce.
AppendTo provides industry leading front-end software development, all while their employees work remotely. They intentionally built their organization to provide the choice to work from locations that foster individual creativity and productivity. They regularly use collaboration tools like online chat, video hangout and other tools to stay connected with each other and their clients.
Have You Considered Testing Out Your Market First? – Many people who start their own business do it part-time before jumping head first into entrepreneurship. If you have a hobby that you have considered turning into a fulltime job, get as much business as you can before quitting your day job. This helps you build market share while refining your product. Plus you don’t take the financial hit on lost wages if you step out before establishing a market for your product or services.
If you have developed a product, find 10 prospective customers and ask for feedback. You can save thousands of dollars before going to market by determining if there is a market for your product and refining your product and sales strategy before starting your business.
Don’t Let Go of Your Day Job Just Yet – In addition to testing out your market, it’s best to not let go of your day job. Many passionate entrepreneurs work multiple jobs, while they continue to pursue their passion. Derek Sivers refers to this as the Tarzan Technique. Have a firm grip on the new career before letting go of the old one and make sure you don’t lose momentum. There is no faster momentum killer than to not be able to pay your bills. You want to keep your hands on the vine until you have a firm grip on the next opportunity and ensuring you have an income stream is an important step in becoming a successful entrepreneur.
There are many factors to consider when “hanging out your own shingle”. The satisfaction of being your own boss and controlling your own destiny are powerful motivators for most entrepreneurs. A well though-out plan could be the ticket to helping you become a successful entrepreneur.
I would love to hear some of your thoughts and lessons on starting your own business.