Have you had it with your 9-to-5? Are you ready to stop dreading Monday mornings and start your small business? Before you start drafting your resignation letter, think hard on this.
Are you a good multitasker? Are ready to take on 10 to 14 jobs at once? There is no IT department, so if the printer breaks, you will need to fix it yourself. You’ll be the director of sales and customer service. You’ll write the checks, manage inventory and take the packages to the post office.
Did you know that it takes, on average, 18 to 36 months for a small business to break even, let alone replace your corporate salary? If you have a fantastic lifestyle and a lot of debt, this might not be the right time to launch a new business. Starting a business requires a lot of financial sacrifice up front.
Honestly evaluate your skills, your network, your discipline, your niche, your optimism and your ability to be coachable to determine whether you’re ready to start a new business. Here’s a breakdown of my six-step system to make the transition from employee to entrepreneur.
Start with a Life Plan
You must first figure out what you want out of life, and then build a business that supports your personal goals. Your life plan should outline how you live versus how you want to live. You should examine your financial, personal and learning goals.
For example, you need to know up front how much money you need to make in order to be happy. Your personal goals will play a role in just about every decision you make in your business. Do you want to have one great store or a build a chain? All of these decisions must be measured against your big-picture goals for your life.
Check Your Finances
The money to start your business will come from your personal savings. Your ability to save has everything to do with your ability to become your own boss. Before quitting your job, try to save 20 to 40 percent of every paycheck and start living on a budget. Try to raise your credit score to 750 or higher. Eliminate as much debt as possible. Starting a business while carrying a bunch of credit card debt will put a lot of pressure on you. Take care of your money so that you can go without a paycheck for a year or two.
Be Honest About Your Skills
Look at what skills you have and what skills you need to run your small business. Be honest when making your list of skills. If you are not sure about them, ask three people close to you what they think are your best skills. Upgrade your technical skills while you are still working; particularly start working on your computer skills and your social media marketing skills.
Who’s Your Paying Customer?
You must identify who your target customer is and why they will buy from you. Focus on a niche and become a specialist. As you are starting in business, you will have limited time and limited resources. Develop a marketing plan before the business plan to make sure there is a viable market for your product or service. If everyone can use your product or service, no one will.
Write a Business Plan
You must plan for success; it will not magically happen on its own. Take the time to write a business plan, so that you can think through how you are going to run your business. Think about how many sales you will need to generate each month to meet your revenue goals. Don’t be one of those business owners who spend more time working on your location search than on developing your business plan. Use business plan software to make it easy. In the first few years, update your plan every two to three months to make sure your business is on the right track.
Launch While Working
Don’t cut your paychecks off too soon. Start your business as a side hustle. Take at least 12 months to reconnect with your network, research your target customer, and learn about your industry. About 90 percent of all small businesses get business from referrals, which means the person in the cubicle next to you is likely your first customer or your first referral source.
If you follow these steps, you’ll be more prepared as you step out on faith to start your small business.