With the recent pandemic and poor global economic outlook affecting people’s feelings of job security, it’s no wonder many employees have started side hustles. But should you take it a step further and strike out on your own?
The short answer is yes, now may be a perfect time to start your own business. But before you quit your current company, you have to consider a few things. Not only will you need to do some market research, but you’ll also likely want to consult an accountant or tax professional to help decide on the legal structure of your new company.
Here are six essential questions you need to answer before beginning your entrepreneurial journey.
- Are you sure you’re up for this?
Let’s be brutally honest for a moment.
You need a high risk tolerance, creativity, resilience, and a strong work ethic. Freedom can be a double-edged sword. While it’s wonderful to set your schedule, it can also feel like you are working 24/7. You need discipline to set work-life boundaries.
When you’re the boss, the buck stops with you. Take some time to evaluate if you really feel ready for the responsibilities, pressure, and financial risk of running a business. You can’t just clock out and go home if things aren’t working out.
- How Should I Structure My Business?
Once you feel certain that you’re up for the challenge, you need to consider the type of business structure you want. The answer depends on how much capital you’ll need, your risk of litigation, and your long-term growth plans.
Choose a business structure that maximizes your benefits. For example, a freelance designer may thrive as a sole proprietor and not need the hassle and cost of filing separate business taxes. An online store selling physical products may opt for an LLC to protect any personal assets from legal liability. It’s best to speak with a professional to understand your options fully.
- How Big Will My Company Be?
Maybe right now it’s just you and a dream, but will that always be the case? If your long-term success will need multiple employees or will require scaling your operation, it’s important to run a cost analysis now. How much revenue would you need in a year to pay employee salaries, benefits, and other related costs? Do you have the start-up capital to pay employees in the meantime before your business is profitable? Consult with an accountant to make sure you are not dooming your business from Day One.
- What Will I Name the Business?
“What’s in a name?” you may ask. Quite a bit, it turns out. A business name is part of the identity of your business, helping to define it and stand out from the competition. So it’s important to come up with the right one.
Now is the time to purchase domain names and register your business name. Make sure your name is available and will not be easily confused with competitors in your industry.
- What Is Your Mission Statement?
When starting your own business, you also want to develop its mission, vision, and values. Your company’s mission is what it wants to achieve, and its vision is where you see the business in the future. Lastly, your organizational values are what the business stands for. Values help drive your company’s culture and how it carries out its operations.
This exercise will be valuable to you in the future as you grow and add employees, but it’s also important to establish for yourself why you’re doing this. If you do not have a clear mission statement that you can believe in, you will be less likely to feel motivated in the rough patches.
- How Will I Create a Strong Customer Experience?
Finally, it is also important to think about the kind of customer experience you want. Why will customers love your business compared to a competitor’s? Guiding principles for your customer experience can affect your website design, marketing campaigns, and social media presence.
It’s never too early to start thinking about the customer purchasing process. For example, if you will conduct business online, start thinking about payment portals. Explore some different options for payment processing for small businesses. It may surprise you to learn that different point-of-sale systems or payment gateways can vary drastically in their costs and features. Choose the one that best fits your business model and provides an easy experience for customers.
Remember, a positive customer experience results in improved customer loyalty, word-of-mouth advertising, and increased revenue growth.
How to Leave Your Company
Okay, so now that you feel ready to start your own business, how—and when—do you leave your current job?
Save Money and Build Capital
Before you spread your wings to take off on your new business venture, you need to have a few pennies in the bank. On average, it takes businesses two to three years to become profitable. That doesn’t necessarily mean that you need three years’ salary in your bank account before you start, but make sure you can afford to work for at least six months without making a dime.
Consider small business loans or equity lines of credit that can help fund your business. In addition, you need to consider the cost of raw materials, operating costs, marketing, staff, and more. A financial plan, like a budget, will help you take these costs into account.
Start Small
You don’t need to jump ship right away when starting your own business. First, try out your business as a side hustle to see if you can pick up on any hiccups along the way. This will also test out the feasibility of your business idea without incurring much risk because you’ll have the safety net of your income from your job.
If your current job offers part-time employment, you may consider simply lowering your hours as your new business scales up before you quit completely. Have a friendly conversation with your HR department to know your options before you make the final decision.
Leave on Good Terms
It’s advisable to give the required notice (i.e. usually two weeks) before leaving a job. Ensure you complete and submit your deliverables on time and leave things organized. If your company has already found someone to replace you, speak to your manager and offer to train them. Not only will this leave management with a good impression of you, but it will help lessen the load on your coworkers when you leave your company.
Generally, your former coworkers well and with respect will help you out in the long run. In fact, some of them may become customers of your new business.
Final Thoughts on Leaving Your Company and Starting Your Own Business
Starting your own business can be an exciting yet daunting task. But if you’re not afraid to take risks and work hard, it can be worth it. There are a lot of things you need to do before starting your own business, such as thoroughly researching your idea, investing in the right tools, and having a solid plan.
Before you make the leap, it’s important to know what you’re getting into.
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