Employees often envy entrepreneurs because of what they perceive as the entrepreneur’s flexibility, freedom and financial potential. There are certainly many benefits that come with being your own boss. The thought of not having to answer to someone else is pretty attractive.
Nevertheless, there are numerous new risks that are introduced to your life the moment you become a business owner. For this reason, many first-time entrepreneurs fail. It often comes down to preparation. The following are some of the things you can do to make sure your transition from employee to entrepreneur is as smooth as possible.
1. Hold onto Your Day Job as Long as You Can
When you come up with a business idea that seems viable, you’ll have a strong urge to quit your day job and run your own show as soon as possible. While this approach has worked for some people, it isn’t something most budding entrepreneurs should consider unless you have a sizeable savings account you can fall back on during the hard times.
Jumping ship too soon could see you facing a severe and stressful cash crunch in your personal life that will deny you the frame of mind you require to succeed. A safer approach is to launch your business while holding onto your day job. This won’t be easy especially in certain lines of business but there are workarounds.
If you have a spouse, one of you could go full time while the other waits until the business is strong enough to sustain both your lifestyles. If you are single, consider going into a partnership with someone else who can devote more time per day to the business.
2. Is there a Need?
Many people who go into business get caught up in the form and forget the substance. It’s alright to design a catchy logo, dish out those business cards and get an elaborate website up and running. But is there a considerable and profitable need for the product you are selling? If you don’t determine market demand early, you could get stuck with an unsellable product from the onset.
Chances are that whatever you are selling, there’s probably dozens or hundreds of businesses providing something similar. Ergo, before you commit to a life of an entrepreneur, make sure your business idea demonstrates value, clarity and market confidence. If the market need is easy to see, you are likely to spend less money and energy trying to convince both customers and investors to buy into it.
3. Automation and Multiple Streams
The secret of business success is passive automated process-driven income. Whenever you think about the end-goal of your company, consider how possible it will be for it to continue running as usual when you are not present. The faster and earlier you can do this, the more time you will have to concentrate your thoughts and energies on new money-making ideas.
As much as possible, develop a business model that doesn’t demand your presence to succeed. For example, if you are looking to become a fulltime life coach, you can set up online courses that bring in revenue without your intervention.
Ensure you have multiple streams of income and at least some that don’t need you to be there. Remember, you have a limited number of hours per day. If your entire business model depends on your being physically present, that greatly limits how big it can get.
4. Measuring Success
This is perhaps the most common mistake first-time entrepreneurs make. It’s easy to assume that simply because people are buying your product in droves, you are doing well. You have to take a more careful calculated view. Figure out how much revenue you’ll need per day, week, month, quarter and year to break even or reach your desired profit target.
A good guide is to look at how much your current salary is then work backwards to determine what profit your business must make to sustain your lifestyle. Establish mechanisms to simplify performance tracking. For instance, make the most of invoice templates (e.g. https://www.freshbooks.com/invoice-templates). It makes it harder for anything to fall through the cracks.
Moving from employment to entrepreneurship will be one of the most important decisions you make in your life. By thinking through it carefully, you increase the chances of your business succeeding.