Many people long to quit their jobs and move from employment to business. The reasons for wanting to go into business vary, ranging from wanting to be your own boss to wanting to create and grow a business out of something that satisfies you.
What holds most people back when they consider moving from employment to business is fear of failure or loss.
Maybe you’ve seen painful examples of family, friends or colleagues who made the jump and ended up in dire financial straits and definitely don’t want that to happen to you.
Or maybe you just don’t know what to do to make a smooth move into business without having to give up your job just yet.
Today’s article provides an action plan that will help you prepare to make the shift from employment to business. These steps build on each other so work on them one at a time.
(This post was updated on 15th May 2017)
How to transition from employment into business
1. Identify the business you want to get into
One of the easiest and most effective ways to get into business while you’re still employed is to start a business based on your talents, passion, knowledge or experiences. This way, you’ll not be starting blind.
Once you decide on the business, take time to create a vision of the lifestyle that your business will help you achieve.
Most people who fail in business don’t identify their ideal business or created a powerful life vision before stepping into business.
While you can succeed in any business you set your mind on, you will have more fun and enjoy the money more when you’re able to create a business out of something you love, something you’re good at or something you already have experience in.
Identifying your ideal business is not a straightforward thing. If you don’t know which business suits you best, check out these articles on this blog:
- Elements of a perfect business
- How to conduct a personal analysis
- How to identify what you’re good at
- How to decide which business to start
- 60 easy to start businesses
- Business Startup Checklist
Another thing that freezes business ideas at this point is doubt. You have great ideas but your mind keeps bringing up reasons why you cannot implement them.
You also doubt your ability to succeed in any of these businesses. You look at each idea and your mind comes up with a “…but…” and provides an objection.
Don’t allow BUT’s to kill your vision. Once you know the business that is perfect for you, don’t worry so much about HOW you will turn it into a success.
Your job is to figure out WHAT you can or will do as a business. The HOW will come up later. If you allow yourself to focus on the HOW now, you will get bogged down by details, lose track and let the business go.
Finally, don’t worry so much if your business idea seems huge. Keep the huge vision in place and then narrow down your business to something you can start in your free time – working only 10-12 hours a week in the business.
2. Conduct a thorough SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths and Weaknesses are internal. They are factors that relate to the business itself of the business owner.
Opportunities and Threats are external. They are factors that affect the business from outside.
The SWOT analysis will help you identify which skills and knowledge you need to acquire and/or improve.
Starting a business without conducting a SWOT analysis is a huge risk. While it may take time to complete the SWOT, the results are worthwhile in the short and long-term. If possible, ask someone you trust for comments on your SWOT as you may miss out on some important aspects.
In business startup, SWOT will help you assess how viable a particular venture or plan is. It will help you identify the help that you need. For example you may need help with accounting, website development, etc.
It will also show you what you can do and what you cannot do.
Finally you will know what this specific business requires, and the expertise that’s needed to succeed in the industry.
When you complete your SWOT, create an action plan to leverage the Strengths and Opportunities and mitigate the Weaknesses and Threats.
It’s now time to put your startup together.
a. Create a sellable version of your product or service
You can have a great business idea, but is it ready and marketable?
Money is the measure of success in business. So your product or service has to be something that people want and are willing and able to buy.
Get clear about what you will offer and create a sellable version of it.
b. Know your market
Don’t start marketing your product or service until you know what your market wants. This requires that you define your market from the inside out through market research.
For this step:
- Find out what the market wants through market research.
- Create a small version of your service or product and test it out in your target market.
- Get feedback from your market, update your service or product and test it out again.
Market research is a MUST for all businesses. It’s also a process that you will do at least once a year for the rest of your business life.
c. Basic startup “stuff”
These are the materials for marketing, equipment, furniture and other things you’ll need to conduct business. Be realistic about your business and only buy what you need.
To this end, don’t spend too much on marketing materials, equipment and furniture at startup. Just make sure you have the bare necessities needed to get started effectively. You can add new things as the business grows.
d. Legal stuff
Research the different business structures that are available in your locality. Also check out the pros and cons of each registration method before deciding about the one you want to set up.
Some businesses don’t need a complicated structure. For example, you can start with sole proprietorship and then incorporate later.
Make sure you get the help of a good lawyer – someone who understands your industry – for the more advanced registrations. If you’re getting legal help from a friend or family member, make sure you do your due diligence. This will help you avoid ending up with a registration that cost lots of money, but is not necessary at startup.
Don’t skip this step.
e. Get support
Do you know what you need in order to create your dream business? Do you know the steps you have to take and what each step entails? Completing your SWOT in Step 2 will answer these questions.
Getting support is an area where most people in business fail because they want to do everything themselves. No one can succeed alone. Although you may start the business alone, with time you’ll need to either hire help or outsource the non-core aspects of your business or the ones that you’re not good at or don’t like doing.
Your main job in the business is to concentrate on activities that bring in the most money. Be strategic and aware of where your time is best spent and plan to hand over these roles as your business grows.
Identify the areas you need help with and if you can, get other people to run these areas. Remember that your main job is to concentrate on activities that bring in the most money so spend your time wisely and strategically.
Also create a support team for yourself, which could be a mastermind group, accountability partner or coach.
Finally, start hanging out with business people so that you learn from them firsthand. Attend networking events, mentorship forums and business mixers in your free time.
All around you are people with money in their phones, wallets, purses, pockets or bank accounts. That money is looking for somewhere to go and waiting for an excuse to come to you. You have to find a way to coax it out.
4. Create your startup business plan
Your business plan need not be a bulky document. A simple 1-2 page document that covers the following information can suffice:
- A summary of your business that includes a detailed explanation of your product or service.
- Your benchmarks and goals for the next 6 months, 1 year and 5 years.
- The activities you need to take to achieve these goals: Use the results of your SWOT analysis and market research to create an action plan that shows what you will do to get your business up and running within the first year.
- Your marketing strategies and plan: Come up with 1-3 strategies that are not time and money consuming.
- First year income and expense projections.
- A break-even analysis.
Check out the One Day Business Plan by Patsula Media. The site also has all the information you need to create a comprehensive business plan. Remember that this is your startup plan so don’t get too fancy about it.
Finally, get the help of an accountant if you need a business plan for seeking funding.
5. Create your transition plan
A transition plan is a strategy for between now and the time you leave your job.
It will help you to and plan carefully how and when you will move from employment to business.
It’s not wise to just quit your job and jump into business no matter how much you hate your job. Plan wisely and don’t leave anything to chance.
Include the following in your Transition Plan
Personal financial reserves
It is advisable to have reserves that can run your family expenses for 6-12 months before you quit your job. This is because it can take time for your business to be able to pay you a good salary.
Calculate how much you spend per month and add a contingency of 25%. Also include medical, insurance and any other benefits you get from your employer as you will lose these once you leave your job.
How you will manage your family as you transition
Quitting your job will affect your family if you’re married and/or have children. Be upfront and prepare them in advance.
How will you do this, especially if your partner is normally a negative voice in your plans?
If you cannot prepare your family openly, how can you change your activities and the way you run your home for 6-12 months before you quit your job?
Worst case scenario for the business
Your business income and expense projections are just projections. Many people come up with very lofty income projections that they have a hard time actualizing in the first year.
Your first year in business is more of a learning year. It’s also possible to miss your income projections and overshoot your expenses in Year 1.
Having a worst case scenario projection will help you identify where to cut corners without messing up the quality of your product or service.
How you will build your business
You need to think critically about your availability as you prepare for and start your business.
Will you work on your business in the early morning, at lunch time, in the evenings, on weekends, or a combination of some or all of these?
Will you opt to work part-time after the business has achieved a certain level of income?
How will you manage all the activities needed to grow your business and offer outstanding products, services and customer care?
Who can help you in the business so that it runs optimally before you quit your job?
When to quit your job
You’ll need income to sustain you as you grow your business so I don’t recommend that you quit your job now. Remember the caution to be strategic about when to give notice at your place of work.
Your support team
This team, which could be just one person, is already discussed in Section 3 above.
If possible, plan to give your notice at a time when your value to the employer is higher that letting you go.
This way, you can propose an exit plan where you come in as a consultant at a price that is higher than your hourly or monthly rate as an employee.
You can also propose to work part-time for 6 months so that you ease into your business while still being cushioned by your salary as an employee.
Of course this will only work if you’ve increased your value to your employer over time. The strategy won’t work if you’ve suddenly become an extraordinary employee when you want to quit.
The question you need to ask yourself before handing in your resignation is, “How can I stay relevant to my employer while I work on my business?”
Aim to leave your job on a positive note. You never know what will happen in the future and your employer could be a customer or source of referrals.
Quit your job when your business is able to meet its obligations and pay you a salary. The best time to transition from employment into business is when your business is able to pay you at least 75% of what you’re earning in your job.
Finally, be aware that handing in your notice will not necessarily be received positively by your boss or employer. Be prepared for unexpected results when you quit your job.
6. Set a launch date
Set a launch date for your business and make plans for the launch.
- Decide on date when your business goes live.
- Write the date on a 3×5 index card and put it on a wall or mirror, a place where you can see it all the time.
- Make the date public.
The more public you are about the launch, the more likely it is that you will launch your business in time. Here are some ideas:
- Call your friends and family and tell them about your business and the launch date.
- Post the launch information on your Facebook profile.
- Set up a single web page (not a complete website) and/or Facebook page with the launch date and basic info about your product or service.
When you go public, you will find creative ways to make the launch successful make it work. In this case, necessity truly is the mother of all invention!
Setting a launch date and making it public will also give you the focus you need to put all your plans in place and then roll out the business.
7. Prepare for success once you move from employment to business
Just like a wedding is the start of a marriage, having a successful startup or launch is just the beginning of the business and not the end. After that comes the work of making the business successful.
Many people work hard on their goals and forget to think about the period after they achieve their goal. What will happen after you start the business?
In the book The Big Leap: Conquer your Hidden Fear and Take Life to the Next Level, bestselling author Gay Hendricks talks about the Upper Limit Problem, which holds people back from success.
He notes that all of us have this problem and it’s the one barrier we have to conquer if we want to reach our maximum potential. Having the Upper Limit Problem means that you can only stand so much happiness before you get uncomfortable and start sabotaging your efforts.
To conquer this problem you will need to:
- Change your mindset from being an employee to being a business owner.
- Change your habits to the habits of successful people.
- Be willing to raise the bar on yourself and let go of negative thoughts, beliefs, habits, actions and people.
- Be ready to succeed in your business (some people fear success as much as, or even more than, failure).
- Be ready to be wealthy.
Are you ready to make these changes?
At some point, you will have to quit your job. If you work on your business diligently, then you may be able to quit within 6-12 months of starting the business. So your transition plan is a very important part of the business startup process.
You now have enough information to help you move from employment to business within a year or two. What will you do with this information?
Start by scheduling the time to research and plan your business in your diary. Be realistic about the time it will take to get the business up and running. Your results will mirror your preparations.
Finally, don’t be in a hurry to quit your job. You may end up finding that working on your business provides you with added motivation at work.
I’ve had a number of clients who ended up realizing that they didn’t need to quit their jobs (while keeping the business part-time) and some actually got promoted at the same time – more money, freedom and fulfilment for them.
Starting a business while still employed need not be a hassle. Sign up for this Teleclass with Business Coach Caroline Gikonyo, and find out how you can start your dream business without giving up your job.