The smart way to transition from salaried work to running a business
Valerie Khoo, founder of the Australian Writers’ Centre, gives her tips on transitioning from a salaried position to running your own business.
Are you currently employed full time, but want to take the leap into running your own business? Then you could be a ‘wantrepreneur’! It can seem daunting, especially if your full time job allows you to feel financially comfortable.
Many people don’t take the plunge into the uncertain world of entrepreneurship for this very reason. However, it doesn’t have to be scary. Here are four practical tips to make the transition as financially pain-free as possible.
1. Work on a slow transition
One of the scariest concepts is the idea of quitting your salaried job and facing a life of two-minute noodles in order to survive. It doesn’t have to be this way.
Work on a transition plan where you cut down to four days a week, then three days a week – until you reach a point where you can ditch your day job altogether and embrace your business full-time.
When I decided to start my own business, I secured a three-day-a-week gig so that I was earning a regular income. That made sure my bills were covered and I had four days to work on my business.
Yes, you read that right – four days. When you’re trying to get a business off the ground, the traditional idea of a five-day week followed by a weekend goes out the window.
If I had stuck to that old paradigm, there would have only been two days a week to focus on my new business. By including the
weekend, I was practically working a full week on the new business, which really gave it the momentum it needed to get started.
Eventually I cut back to working two days in my job. Soon, I was able to say goodbye to my part-time salaried position, work five days a week on my business and get my weekends back.
2. Know your numbers
It’s vital to know your numbers. I don’t just mean to have good accounting procedures but, specifically, to understand your margins and what it really costs you to provide your product or service. That includes what you’re spending your time on.
Too often, I mentor business owners who tell me they are making a profit on a particular product. But when we drill down into all the expenses associated with providing that product/service, their margin turns out to be next to nothing – sometimes they’re even making a loss!
This isn’t sustainable. Make sure you’re aware of your invisible costs, like the time it takes you to drive to and from the post office to fulfil an order, or the lengthy admin that might be associated with a particular service. If you undercut yourself from the beginning, you’ll never get ahead of the curve.
3. Get creative
In the corporate world it can be easy to get stuck in traditional ways of doing things. But, sometimes, you need to get creative as an entrepreneur, especially if cashflow is tight.
When I first started my training business 11 years ago, I didn’t have two cents to rub together. Despite this, I needed to secure a venue in order to run my training courses. Usually, venues insist that you to pay a deposit well in advance of your booking – and if your event doesn’t go ahead, you lose that deposit.
That was a big risk for me at the time, because I didn’t know how successful my courses would be. However, I knew that if they were I’d become a regular customer to the venue.
So I explained this to the venue manager and he was kind enough bend the rules for me for three months. If I filled the course, I’d pay for the venue in full. If I didn’t, I wouldn’t lose my deposit.
You also don’t necessarily need to follow the usual conventions when it comes to payment. As cashflow was tight, I insisted on pre-payment for all our products/services while many of my competitors would invoice their customers and receive that payment after the products/services were provided. Hardly anyone baulked at the idea of pre-payment and that gave me the cash I needed to expand.
4. Find a cheer squad
Being a business owner can be lonely and isolating – especially if none of your friends are in the same position. Find like-minded people as soon as you can. Join small-business networking groups or online forums. Not only will you become part of a community of people who relate to what you’re going through, their informal advice and tips can be invaluable when you’re starting out.
I have learnt so much from the groups and forums I’m involved with. It can be incredibly handy to pop into your forum and ask people anything, from which internet hosting companies they recommend, to whether they know a good PR person, or if they can help out with a tech issue.
Entrepreneurship doesn’t have to be lonely. When you can tap into the collective brains of other owners, this can really help you to fast track your business.