When do you know it is time to take a leap of faith when it comes to your career?
Every would-be entrepreneur has asked that question in a moment of soul-searching. When is the right time to move on, to try something different, and to take a calculated risk?
The answer to that question is deeply personal and guided by many factors. Still, no matter how long you’ve been working in corporate America, how old you are, what your business idea is, or where you are, you deserve to try and find the answer.
This nine-step guide to quitting your job to become an entrepreneur aims to help you answer that question. It will help you understand the importance of planning, how to depart gracefully, and what steps you need to take to secure the startup funding you will need to launch your own business.
Step One: Do Your Homework
It is critical to do lots of research about the industry, type of company, products and services you are considering to offer, locations, competitors, and available talent. You can do this research while employed in your current job by conducting lots of background research.
You can use online databases, information from business organizations (such as local chambers of commerce, the U.S. Small Business Administration, or trade groups), and discussions with trusted advisors. The key is to do the homework. You may find you need to explore several ideas or variations before you find the one that has customers that want what you are offering.
Here are a few things to nail down:
- The nuances and details about the product or service you are considering
- The prospective audience (What’s the buyer persona? This tool provides the basic characteristics and common traits shared by your potential customers.)
- What competitors are offering similar products, the price points, and locations
- What talent you will need and whether it is available at the prices you can pay for salaries, wages, or consulting fees
- How you will market and sell the items (website, direct mail, sales reps, in-store)
Step Two: Develop a Business Plan
Whether you are appealing to venture capitalists, angel investors, or a neighborhood bank, you will want to develop a detailed business plan. There are many online resources available to help in the creation of these plans, and often business organizations offer mentoring programs to pair you with experienced executives to help flesh out these plans.
The contents of the plan often can use some of the research you did in step one. Among the key elements of the standard business plan are:
- An overview of the business, its purpose, and its products or services
- An executive summary
- Company description
- Objectives and a mission statement
- Market and industry analysis
- Strategies you will use to enter into the industry and market
- Your team, with executive bios, background, and relevant experience
- A marketing strategy and plan
- An operational plan
- A financial plan
Step Three: Review Personal Finances
You need to take an honest assessment of your personal financial situation during the decision-making process. What will you live on during the months or years before your business turns a profit that allows you to draw a salary? How will you cover insurance premiums and savings strategies for you and your family?
You should run your credit report and fix any errors, and if your score is low, take steps to begin to improve it. Consider securing a business credit card to handle any startup expenses associated with the business.
Talking to a financial planner or accountant can help you determine what resources you have available to you and how you will pay the bills (both personal and professional) in the start-up phase of the business.
Having a clear sense as to your financial means and budget will give you peace of mind when you do make the leap.
Step Four: Complete the Business Basics
You are going to need a name, a tax ID number, and an incorporation filing. You will also need to determine how you will organize your business, as a limited liability company, a limited liability partnership, a sole proprietor, general partnership, or similar type.
Each business type has different ramifications from legal and tax perspectives. The structure decision also has implications for how much control you will have over the company, the permits and licenses you will need, and regulations you may need to follow.
Securing these details, and the patents, copyrights, trademarks, and other business protections are important considerations. You will also need to secure a website, web hosting, and vendors for key business functions, along with a location for your business.
Step Five: Build Your Team
No business is successful on the shoulders on one person. As the owner, you will need to assemble several teams. The first are your advisors. These may include those with specific professional roles, such as an attorney or an accountant. They may also include a formal or informal group of advisors who can guide you on business decisions, especially as you are considering whether to start a business. You can rely on these advisors for feedback on plans and markets, and use them to poke holes in your logic and conclusions.
Who should constitute your advisors? Business mentors, former colleagues, trusted friends and associates, or community leaders. Should your family be included? Perhaps, though it may be wiser to use them separately as a sounding board so as to not blend the personal and professional any more than necessary.
The second team to assemble are your employees. If you are unable to hire extensively from the outset, develop short- and long-term staffing plans that will guide your approach to bringing on talent. If there are critical needs from the outset, be sure to understand prevailing salaries or wages so as to provide a competitive compensation package to your earliest hires.
Step Six: Create a Company Budget
Depending on the business you select, you will face capital and operating expenditures. Capital expenses include the costs of land and buildings, franchise fees, signage, permitting, and professional fees for architects, builders, and brokers.
Ongoing operating expenses include the costs of utilities, supplies, mortgage or other loan payments, and, most critically, wages and salaries for your employees. Also factor in the costs of employee benefits, website development and management, travel and client relations. Working with an accountant to determine a realistic budget is important and gives you a better sense of the revenue you will need to meet the overhead and ongoing expenses.
Step Seven: Set Realistic Expectations
Revenue is not likely to roll in the door the first day you open for business. You need to set clear, realistic expectations about your business. These expectations need to be made in several areas:
- Initial and ongoing revenue flows
- Outside conditions that may affect your business (from weather impacts to hacked websites)
- Amount of time you will spend at work
- The type of work you will need to do, especially if your team is small in the beginning
- What work you need to outsource
You also need to recognize that you are likely to make mistakes along the way. You should look at mistakes you might make as an opportunity to learn how to do something differently, better, or never again.
In the first few months, you may wear many hats, from chief salesman to tech support to inventory manager. Embrace these experiences as a way to learn the work and what you like, and understand multiple aspects of the business that will serve you well down the road.
Step Eight: Leave on a High Note
When it comes time to leave the organization where you are currently employed, the last thing you want to do is burn bridges, especially if your new business is one that is in a similar field. You want to continue to leverage the relationships and potential partnerships afforded by your current employer as a way to keep connections, network, and remain professional.
While you may feel like you want to run screaming from the hills, the better approach is to be upfront about why you are venturing forth, discussing the work you have put into the planning and research, and then sharing your excitement for this new chapter in your professional and personal life.
Step Nine: Get the Right Help
When it comes to starting your own business, you have a lot of needs. Perhaps the most critical is securing financing.
At Benetrends, we help small businesses and entrepreneurs secure the funding they need to start and expand their businesses. Our proven funding model eliminates the need to apply for commercial bank loans or max out credit cards.
With Benetrends’ model, entrepreneurs leverage existing 401(k) or IRA funds to establish a retirement plan at the new business. The entrepreneur can access the existing funds to use for up-front capital expenses, operating needs, payroll, or other expenses, without the debt, loan repayment, or equity sharing required by other investment vehicles.
Benetrends supports entrepreneurs with a range of business services, including retirement fund management, credit card processing, payroll management, and insurance products. To learn more about how Benetrends can help realize your entrepreneurial aspirations, download Innovative Funding Strategies For Entrepreneurs.