Are you tired of the insecurity that comes from constant corporate restructures and the politics of a large work place? Way back in episode 11, I explored the Security Illusion. This looked at the idea that most of us are brainwashed into believing that financial security comes from working for a large corporate, or perhaps even a government body. In reality, these organisations are constantly the subject of restructures and redundancies. They are pyramids, with fewer and fewer roles the closer you get to the top, so people need to be constantly shed to make room for those below to progress.
So this post is for those who have reached the point of thinking about life beyond the corporate world, and what they see in their future is some form of self-employment.
I’m particularly excited to explore this topic, because this is a path that I’ve walked, and I know it’s been the experience of many in the Financial Autonomy community too.
So as I mentioned, transitioning from the corporate world to self-employment has been part of my life experience. I worked for one of Australia’s largest banks for 16 years. I’ve got plenty to be thankful for during that time. I learnt a heck of a lot, worked in several different areas to gain a diversity of skills, and got a start in financial planning. In hindsight I perhaps wish I’d tried to accelerate my path a bit, but that was really about my own lack of maturity rather than a fault of my employer.
As a foundation stone for my working life, I have no regrets about my time spent in the corporate world.
But I did reach a point back in 2006 where I’d found the thing I was passionate about – Financial Planning – I had another 20+ years of working life ahead of me, and I just couldn’t see my life plan aligning with that of my employer – I knew at some point I’d get shifted, or downsized, or worse, made a team leader, the ultimate kiss of death.
My story is far from unique, with perhaps the only wrinkle being that my banking career had lead me to a budding profession that I could continue with in the outside world.
So how could you successfully transition from the corporate world to self-employment? I’d suggest the first step is to develop a plan. Start with a 1 page business plan, of which there are plenty of templates available for free on the web. Whatever you will do next, if you’ve chosen the self-employment route it’s highly unlikely you’ll be managing a team of 100’s. So if you can’t explain your business plan on a single page, you’ve gone wrong somewhere.
Another step, which I didn’t do when I planned my transition, but I really wish I had, is to draw a diagram of your business model. Just on a piece of paper or a white board, show the various sources where your customers will come from, and how they will go through your funnel to become revenue generating.
Here’s an example for my financial planning business:
Just as with the 1 page business plan, your business model should also be 1 page and answer the core question, how will your business make money?
The next port of call is to think through how you will manage cash flow. Cash flow in your post corporate world life will be very different. No more approving the invoice and sending it to accounts for payment. Cash flow is king.
From personal experience I advocate developing a Survival Strategy and a Capital Strategy. The Survival Strategy addresses how you will survive financially whilst you get this business off the ground. The Capital Strategy then considers your new enterprise – how will you fund the start-up costs, marketing etc.
For a deeper dive on this, take a look at How to be financially ready to start a business.
It will also be helpful to you in making this transition a success, if you’re in a good financial position – that is you live within your means and you have minimal debt.
Also, whatever your business plan, assume things will go wrong. If you forecast initial cash flow coming in at month 3, have a plan for if first cash flow doesn’t arrive until month 6. Most business plans don’t survive their initial interaction with the real world, so always adopt the mantra – Hope for the best but plan for the worst.
Can you test?
Assuming you’re not leaving corporate unexpectedly as a result of a redundancy, as part of your planning for this transition think about whether there are ways that you can test your idea with minimum risk. Let’s say for example that your plan for the next phase in your life is to start up a florist in your local area. Could you run a stall at a local market to learn what types of flowers people like to buy, who are the most reliable suppliers, and even just if you like dealing with flowers.
The main thing you want to try and test is whether people will part with real money to purchase your product or service. You’ll have no shortage of friends and family giving encouraging words, but it’s not until total strangers put their hand in their pocket that you know you have something that’s viable.
The book Lean Start-Up explores this quite a bit. It focuses mainly on tech start-ups, so you might be best just reading a few summaries on-line rather than investing the time in the entire book. Like most business books, the key useful information could have been written in a 3-5 page essay, but as that’s not commercially viable they find a way to pad it out into a book.
It’s worth remembering here to ensure what you are testing isn’t in conflict with what you do for your current employer.
Buying a business
Another way you could consider making this transition is to buy an existing business. Like sports people, most business owners don’t get out at the top. Nearly every business that you look at will have had its best years a few years back. So look for a business where you have some expertise, and where you could apply some fresh ideas.
The great thing about buying a business is that you have cash flow and customers from day 1. Sure it won’t be exactly as you would have built it, but that can be changed in time. Just don’t rush the changes though. Sit in the business for a few months and get an understanding of why things are the way they are. Talk to your newly acquired customers and check that what they value from your business is what you thought.
As an example you might have bought a printing business, and thought that the most important thing to customers was fast turnaround. But once you get into the business and talk to your customers, you might learn that actually what they like is dealing with someone local so they can discuss their needs and fine tune their designs.
Had you jumped straight into implementation phase on your assumption that turnaround time was the key, you might have invested in a flash new web site so customers could just jump online and order with you. But by slowing down a bit and speaking to your customers, you learn that actually there’s plenty of printers already doing that, and many cheaper than you would be. You’d be better off investing the money in customer service functions instead to provide help and support.
In making your transition to self-employment, think about what skills you’ll need to give you the greatest chance of success. Often in the corporate world there is opportunities for training. What courses could you do to help in the next phase of your life? Even if these courses need to be done outside of your current working life, if you can at least gain these skills while still bringing in a regular wage, you’re improving your chances of ultimate success.
The other way to build up skills while still being a productive employee is to put your hand up for special projects, or even promotions into areas of interest.
Nurture your network
Never before you will have so much need for the support of others than when you make the leap to self-employment. You’ll be moving from having lots of colleagues around to bounce ideas off, to possibly flying solo, or at best having only a few staff members.
No-one knows everything and starting a business can be lonely. You likely have an extensive business network, but perhaps you don’t give it a lot of thought. Reach out to people who you respect and cement those relationships. Connect on LinkedIn so you have a way to stay in touch after you leave, and if appropriate, grab a coffee or lunch with them sometime to dig a bit deeper into what drives them.
Knowing someone that you can call or email when you’re stuck on something is incredibly valuable. Of course relationships work in two directions, so make sure you support the people in your network too. Generous people get rewarded.
Paul Higgins, founder of the BLG community, a resource for people escaping the corporate world to start their own business observed “Escaping corporate is one of the most exhilarating experiences. You learn by doing, and having the right support group is essential”.
And a final tip for planning your successful transition from the corporate world to self-employment is to leave on a good note. The financial services industry is huge in Australia, yet I still bump into people from when I worked at the bank. Burning bridges is definitely unwise, even if you’re moving to a completely different industry – who knows, some of your former colleagues could become your first customers.
Resources & Links
- Podcast Version
- The security illusion – Episode 11
- How to be financially ready to start a business – Episode 1