Ready for Entrepreneurship? What to Know Before You Quit Your Job
June 18, 2015
Deep down, you’ve always dreamed that one day – when the timing was right – you’d go solo and start working for yourself. No more bosses and no more frustrating corporate bureaucracies – just you in charge of your financial future.
But no matter how excited you are, you may, unfortunately, find that many of the people in your life aren’t supportive of your dream. It can be difficult for people who have only ever worked traditional jobs to understand the appeal of the wide-open schedules, unlimited travel opportunities and exotic work locations you’re envisioning.
Of course, as with so many things in life, what you imagine when you think about solo work doesn’t always translate to real world experiences. Just like any career option, entrepreneurship has its own pros and cons. Familiarizing yourself with these challenges before you make the leap will make your transition much more successful – and help you prove to nay-sayers that you’re up to the challenge.
Here are seven considerations you need to take into account…
Your Newly-Unstable Income
Yes, you’re probably already aware that entrepreneurship doesn’t come with a steady paycheck, but have you truly looked at what that might mean for your finances?
What would you do if your fledgling business earned no income for three months? For six? For an entire year? How would you pay your bills? What expenses would you cut, and how would this affect anybody else – like a spouse or child – who relies on your income?
Having savings can help you feel more comfortable, but unless you’re independently wealthy, they can be exhausted. Don’t plan your finances around your wildest entrepreneurial dreams – plan them around your worst case scenarios. Know what you need to make to survive, and have a cut-off point where you’ll abandon ship to avoid irreparably damaging your finances.
- Get comfortable with your finances. If you don’t already have a budget, set one that tells you what your expenses are, when they’re due, and what income you’ll need to cover them comfortably.
- Try to pay off any consumer debt, tax liens or past-due bills before making the leap to freelancing.
- If possible, try to put at least three month’s expenses into a savings account to cover you as you grow your business.
Your Legal Organization
Forming a company isn’t as simple as buying a website URL with your desired name and calling yourself a business. There are steps you’ll need to take to make your entity legal and to ensure you’re paying all applicable fees and taxes associated with owning a business in your city or state.
Before officially launching, you’ll need to have all of the following ducks in a row:
- Your business registration
- Your operating agreement
- Your business licenses (if applicable)
- Your tax registrations
- Your business bank account
- Your Employer Identification Number (EIN), if you intend to hire
Drafting some of these documents requires the involvement of a small business lawyer, which will result in expenses. If you aren’t willing – or able – to pay these costs, you’ll want to seriously consider whether or not entrepreneurship is right for you.
If you come to entrepreneurship from a background of traditional employment, you’re probably used to a division of labor. The office manager distributes the mail, the accountant makes sure bills are paid, the sales team lines up new clients and so on.
Well, guess what? Unless you’re running an extremely well-capitalized startup, you’re probably flying solo. All of those different needs – and more – now rest upon your shoulders (which, you may have noticed, are already carrying the work you expected to be doing as a freelancer or entrepreneur).
Ultimately, you have two choices. You can take on all of these responsibilities yourself, or you can delegate them to others. Certainly, your budget and network will play a role in this decision. For now, though, what’s important to be aware of is the additional demands that come with running a business. Prepare ahead of time for how you’ll manage them so that you aren’t blind-sided in the future.
- Make a list of the business tasks you feel comfortable handling, and those that would be better delegated elsewhere.
- Research different providers for the tasks you’ve identified as potential delegation opportunities.
- Solicit quotes from your top providers so that you can account for these expenses in your freelancing budget.
Your Work Space
Speaking of differences between your former life as an employee and your new entrepreneurial journey, where are you going to work?
If you’ll be working from home, do you have a designated area that will serve as your office? Will you be able to be productive in this space, or will the demands of others in your home – or the lure of the nearby sofa – draw you away from your work? If you plan to rent an office, what will your costs be and how will you afford them? What type of office is best for you?
Don’t wait until you’re on the clock as an entrepreneur to settle the question of where you’ll work. Get comfortable in your new space ahead of time so that your location won’t interfere with your forward progress once you make the leap.
- Research different work space options in your area.
- Test different options to see where you feel most comfortable working.
- Decide where you’ll conduct the bulk of your business and practice getting work done in this space to make your transition to freelancing as smooth as possible.
On a similar note, too many would-be entrepreneurs look at a business owner’s schedule as some sort of free-for-all. Sure, they’ll work in the mornings, but then there’s golf at noon, picking the kids up from school at three or networking over happy hour at five.
Interestingly, some experienced freelancers and entrepreneurs find this unlimited freedom to be more restricting than a 9-to-5 schedule. When you don’t have standard office hours, you’re never actually off the clock. You may find yourself checking email when you first wake up or working on a project into the night – either way, you’ll never experience the sense of relief that comes with leaving work behind unless you make a set schedule a priority.
You may not feel this way, but you’ll still benefit from setting an established schedule that keeps your work from overtaking your personal life. For best results, build this schedule around your naturally productive times to get even more done.
- Spend a week paying careful attention to your energy and focus levels.
- Note any natural peaks and lulls you experience throughout the day.
- Set a freelance working schedule that gives you regularity and consistency around your internal clock, while also allowing for the flexibility that so many freelancers seek.
Another surprise most new entrepreneurs encounter is the isolation that comes with losing your work community. Sure, you may think you hated your former coworkers, but with no workplace camaraderie and no common office villain to rally behind (like your boss or the person who never filled the empty coffee pot), things start to feel a bit lonely.
The best solution to this challenge is to be sure you’re making up for losing your workplace community by building relationships in other ways. Join a networking group, a social club, a meet-up group, or a sports league – anything that gets you out of the house and talking to real people again.
- Make plans to keep in touch with any former coworkers whose presence you enjoy socially.
- Find social groups in your area and commit to attending them on a regular basis.
- Commit to getting out of the house at least once a week as a preventative measure to keep loneliness from setting in.
Finally, I’d be remiss in ending an article on the challenges that come along with entrepreneurship without mentioning that you’ll be working harder than you ever have before in your life.
That might sound scary, but it’s also rewarding and exhilarating. As a solo worker, you’re in charge of your destiny. Whether your company succeeds or fails, you can’t blame anyone else – and nobody can take credit for your successes. It’s an incredible feeling that makes the hours upon hours of hard work you’ll undertake worth it.
- Make use of the many different productivity tools – both online and offline – that are available.
- Experiment with a time blocking system like pomodoro tracking or Pagan patterns to break up your workload.
- Set a “Top 3” list of tasks that must be completed every day and work on those items before any others. Doing so will help prevent burnout while ensuring that progress is made on your workload.
Do you have any other pieces of advice for the would-be freelancers and entrepreneurs reading this? Share your recommendation by leaving a comment below!