Our little family is a family of people who run their own shops. That might sound like a family of business titans but I can assure you that it is not! When we think of people who runs small businesses we tend to think of the wealthy examples of people who run more lucrative businesses that are the stand out money makers of entrepreneurs. In reality the vast majority of small businesses only provide average incomes to one or two people.
If you’re after money more than anything else your best option is to work a regular job, live modestly and invest early to achieve financial security. More often than not people who work for themselves found that they didn’t really make that choice. In one way or another circumstances dictated that they had to.
People tend to look at those that work for themselves and glamorize that experience. I’ll often hear misinformed comments like:
- Working 5 days a week is just too much
- I hate dealing with having a boss
- I wish I had a flexible schedule
- I want to work to build my own thing just for me
- I want to decide where, when and how I work
- I’m over the politics of it all
- I would love unlimited time off
- I can just start a successful business and then sell it and retire
These aren’t things that are realistic or likely when you start a business at all!
Talk to people that run their own businesses honestly and listen
There are a lot of cliches out there about being your own boss, in fact the idea that you are actually your own boss is one of them. People honestly believe that it is easier, you can work when you want and for who you want. Really none of that is true. We tend to look at the outcomes of these businesses once they are established and glaze over the reality and the work it took to get there.
If you think working for yourself is something you might want to do really talk to as many people that you know that already do. Avoid those shallow platitudes, get deeply into it and actually listen to what the person has to say.
While the businesses people have are all very different the experience of actually running one are a bit more universal. No matter who you hire, and there will be no one at first, all the hats are ultimately on your head at the end of the day. At a regular job all you have to worry about is your projects and your personal career. As a business owner you are always worrying about this year’s cashflow, growth, the brand and upcoming investments and the worst headaches of HR. How will you grow, treat your employees and manage your time effectively? You will at some point be the accountant, the lawyer, the HR department and the expert on site. Talk to people who have dealt with that, ask follow up questions and believe the bad stuff too.
Scale back your lifestyle and save
It would be nice to walk away from your day to day and focus all your energy without distractions on launching your business, but that isn’t a reality available to most. You still have to pay the mortgage, insurance, utilities and eat three times a day when you work for yourself. Plus you’ll have to fund your own healthcare, your retirement and plan for the worst case disasters like accidents and big company losses as much as possible.
For a while you won’t be making the same money, maybe for a very long time. The best thing you can do is to cutback on your lifestyle and start saving. This pays off two-fold. First you have the safety net virtually everyone needs to leave. Spending less going forward will take a lot of the pressure off too, though it will still very much be there.
Divest yourself of expensive cars, habits and debt. Get used to eating in, buying affordable items and take care of the expensive things that need to be done now. Get yourself to a lifestyle you can easily afford where you will confidently have a significant amount of money leftover each month.
Also get anything you need to finance done now. Get into a mortgage situation you like, pay off all your bad debts and replace any cars that need it now. Here’s a banker’s dirty little secret once they give you the loan they don’t really care how you pay it. If you’ve paid on your loans with no problems they just continue to renew them. But… it’s notoriously hard to get financing as a business owner, especially a new one.
Decide what you are going to do and what makes you different
Before you start actually working for yourself take some time to think about what will set you apart. Not every industry needs you to innovate to run a successful business. There isn’t really a reason to re-invent the wheel if you are going to do construction or house cleaning. Even still, take some time to think about how you’ll run things.
I try to get my customers to either text or email as much as possible just because that works well for me. I’ve found the fancier the house the poorer the cell service so sometimes for hours I am unreachable. You might want to decide if customers should take their concerns to employees or always to you. Are you going to focus on one segment of the market over another and will you undercut the market starting out or demand a premium?
If you are able to find a way to stand out or be different it’s good if you can lead with that. You might be starting your business in a field you already work in. If that’s the case you’ll probably have a better idea of how the business you start will run compared to the competition. As you are planning and thinking these big thoughts write them down somewhere so a picture will develop as you go.
Start working at it in your free time
Since we all have those pesky bills the best option is to start your business in your free time while still working your regular job. Yes that sucks but evenings, weekends, holidays and vacation days are your best bet to stay financially secure. I think the vast majority of people will be making more per hour in their new business than their regular job so as you get busier and stressed let that monetary gain keep you going.
As you get more clients in a perfect world you might scale back at your regular job. It’s always worth the ask to cut your hours, drop off a day a week or even go to part time. This would be the perfect scenario if you can get it.
Get to the point something has got to give
This part by definition isn’t going to be fun but ideally you’ll get to a point where you are literally run off your feet. You’ll be super busy, tired and have all of the balls in the air. This might even cause you some tension at home, feeling like you are falling behind at work and like you can’t keep this up forever. At this point you are getting really close to getting ready to make the jump and quit your regular job because you can’t in fact do this forever.
Start planning to jump
This is your last moments to prepare for what is probably a big income drop, The good news is that between your regular job and the side work you’ve been doing there’s lots of money in the pot. If in doubt save your extra cash maybe even over aggressively paying off debt. Take this moment to deal with any expenses you’ve been putting off or that are coming up like:
- Car repairs
- Home repairs
- Health or dental work
- Equipment you need to purchase for work
- Really anything else
Take a look at what you are making now on the side because that’s about all it will be for the next little while. If you are at capacity for side work see if you can start delaying the starts of new project enquiries instead of turning them down once you get an idea of how long you will still be doing your day job.
It’s also a good idea to start putting things in place at the job you are leaving as much as possible. So if there is someone you can teach some of your tasks to or mentor do so. You still want to keep your plan fairly private but if there is a person who would do well in your old role start talking them up to your boss.
You might even start working on things like social media and your website. You can still wait to launch them but now is the time to grab those handles and prepare content. Then you’ll have some cheap marketing built in right away.
Jump!
Devote yourself entirely, say yes
Trust me it’s normal to live your life in a constant state of panic at this point. It does suck but it’s totally normal. You might find yourself working way less than full time hours for the first time in your adult life which at this stage might just feel like a lot of time to think.
During this phase as long as there isn’t a really good reason do your very best to say yes to everyone. Don’t take on jobs you don’t have the skill for or work for customers with lots of red flags but this isn’t the time to consider a job too small for you. Often times people will come up with more for you to do if they like your work.
I get lots of jobs from recommendations, the neighbors seeing me at one house and even the odd supplier. So working one job often leads to another. Now is also the time to run a lean and mean business so avoid investing in expensive equipment if you can avoid it. Side note: my first year I let new customers know that this year was going to be an introductory rate so that they knew this good deal wasn’t going to last forever. Feel free to steal that if you like.
Decide whether you want to bail or grow
After a while of doing your own thing you’ll have to decide whether to keep working for yourself or bail and go back to a traditional job. There is no shame in that! Depending on your industry this could be a pretty long time. At the end of the first year I jumped I made just above the poverty line with enough time to train for my first marathon. At that level I would eventually have to jump back. The second year I made 75% of the average household income where I live with three months off. But.. let me tell you those 19 months were a long, stressful and bumpy financial ride.
The more you have saved in your lead up the longer you can try to make your new venture work. You should have an idea of how long you are going to try this for going into it but after a time you will have to evaluate how it’s going. If your time point is coming up and you’re still a little short of your old job evaluate whether there is a likely potential for growth going forward. If there is not you would be financially better off going back. If your business is going well and still very much growing it’s probably a good idea to kick this decision down the line a bit.
At this point you should also evaluate the reality of running your own show. There are lots of good things about it but it’s a different level of stress. Honestly, running your own business does become a big part of your personality. I can’t think of a person I know that owns a business where that’s not true. This may or may not jive with you but thinking about your work constantly may or may not be something you are interested in. Take some time to really think if the expectation is living up to the reality for you!
Set a goal and meet it
If you decide to stick around pick a benchmark for success and then make an active plan to meet it. That could be to onboard an employee, hit a certain level of income, work full time hours or invest in a big piece of machinery you want. Really anything that applies to you. It feels good and after you meet and set a few goals you’ll start gaining some confidence.
Build a big slush fund
For a long time when you start out you need every customer, to make them happy no matter what and you really need them to pay their bills. That means you don’t really have all that freedom you were after in the first place. Personally, I recommend living frugally for a while after you have to. This allows you to build a big slush fund and this fund should grow as you do.
Things can go off the rails quickly and business insurance can cover that but. it can be a better idea to absorb those costs yourself. Don’t believe me just look up blue collar fails on the internet or social media. Trucks can break catastrophically, big clients can back out and really it’s the things you never think about that get you.
Once you start making real money put a significant amount aside in case you ever need it. This also allows you to take time off, deal with a health problem, turn down work or to break up with a client. This is the first thing that really starts to give you back that quality of life you were after in the first place.
I know a lot of people fantasize about becoming their own boss. I also think that the conversation about being an entrepreneur is both glorified and there is plenty of gatekeeping too. I get it that people are frustrated with their traditional work but make no mistake running your own business is still very much a job. I hope this helps someone out there and it’s basically what I think I would have wanted to read those years ago. Are you considering going out on your own? If you have what’s your number one piece of advice? Leave it in the comments below!
Sweat Sweetly 
Leave a Reply