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Many people dream of taking the leap from employee to entrepreneur, leaving their jobs behind and striking out on their own. However, it’s not something to be done recklessly or on a whim. Self-employed takes months or years of careful planning to be successful. Establish a game plan before finally turning in that two-week notice.
The appeal of self-employment is obvious. “Be your own boss,” many say. “Set your own work hours,” or “Answer to nobody but yourself,” are other popular selling points. Ultimately, bootstrapping one’s own company and having complete control of his or her destiny is a slice of the great American Dream.
However, the cold reality of self-employment can be little or no money, no direction, self-doubt, and a lot of second guessing. Taking the time to think about financial preparation, building a team of advisers to guide you along the way, and learning from the past experience from others can help a new entrepreneur avoid a disastrous result. The following are some tips on how to successful transition from employee to entrepreneur.
Leave Your Old Position Gracefully
While it’s likely that any worker has at one time or another fantasized about resigning from their job in a blaze of glory, telling their co-workers and or management how they really feel about them while triumphantly strutting out of the office, it’s generally a really bad idea.
At some point along the way, old colleagues and/or managers may end up crossing your path again in the future. Surprisingly, despite the initial awkwardness of leaving, those old work contacts often can be a great source of references or even referrals for new business. Burning bridges can come back to haunt former employees down the road.
Below are some useful pointers on how to navigate through the process of resigning from your job with grace and dignity:
- Draft a formal letter of resignation. A letter can help organize and articulate one’s thoughts in a clear and polite manner.
- Be ready for a face-to-face discussion. Writing a letter will help structure your talking points, but be prepared to expand on your reasons for leaving in person. Remember to be diplomatic in the approach.
- Be ready for a potential counter-offer. Many times, an employer might react to a letter of resignation by offering a raise in hopes of getting the employee to stay. Think about that possibility and decide if there are incentives or a specific amount of monetary compensation that would change your mind about leaving.
- Succession planning. Consider that aside from your need to make plans for the future, your employer will also need to find a replacement. A willingness to help facilitate that transition for your employer will earn a lot of good will that can pay dividends down the road.
Financial Preparation
With entrepreneurship, there’s no such thing as a steady paycheck. Some months there is too much work and other months there’s not enough. That is why eliminating debt and having a savings cushion is essential before resigning from a full-time position. One prominent author and small business consultant urges clients to make paying off all credit card debt and car loans their first goal. That frees up the budding entrepreneur to save a year’s worth of living expenses before becoming his or her own boss.
Because banks rarely lend money to new businesses without a track record, people with a goal of self-employment may have to turn to resources such as crowdsourcing in addition to tapping their own savings account. Keeping expenses to a minimum is essential and will take some creative thinking, such as bartering for professional services rather than paying for them.
Don’t Go It Alone
Working with a coach or consultant can help budding entrepreneurs set goals and be accountable to someone else for meeting them. It’s also a good idea to spend time with people who have already made the successful transition from traditional employment to working for themselves. Asking plenty of questions and observing them in their business helps the still-employed person develop a realistic sense of what to expect after parting ways with his or her employer.
Some people have a burning passion to become a freelancer, but are unsure of exactly what they want to pursue. This is something a coach or consultant can help them to clarify.
On the Job
New entrepreneurs make a lot of mistakes early on that can cost them money and business. These tips from a successful freelance engineer can help the newly self-employed reduce the learning curve when starting a new company or consulting firm:
- Devote time each week to making connections and networking. Industry meet-ups, social media, and word-of-mouth are some simple and effective ways to find new business. Don’t forget to follow-up with connections shortly after meeting to determine the next steps.
- Regardless of the industry, self-employed people must provide all of their own equipment. This can be costly at first, so consider using free public resources, joining a warehouse buying club, or becoming part of a co-working space where certain tools are available to all members for a monthly fee.
- Communicate with clients frequently and professionally. If the project is taking longer than expected to complete, clients need to know this as soon as possible. Answer every inquiry in a polite manner, even if it seems redundant. Professionalism goes a long way in landing the next gig.
- Research industry pricing and ask others in the same professional circle how they quote and bill before doing so for the first time.
Self-employment is not without its challenges, but the rewards of controlling their time, choosing which projects to work, and eventually earning more money makes it worthwhile for most entrepreneurs.