6 Steps to Take Before You Become Your Own Boss
Have you had it with your paycheck job? If you think you are ready to become your own boss, January is a perfect time to start moving toward what you really want to do with the rest of your life.
I remember when I knew my next career would be as a small-business owner. I had my dream job, working as a television news producer in Philadelphia, the nation's fourth-largest media market. People work their whole careers to get to top-market TV, yet I was getting headaches on the way to work in the morning.
I had thoughts of starting my own business since my undergrad days, inspired by Oprah Winfrey and her Harpo Studios. Despite my entrepreneurial goals, I knew the value of getting business experience. After working for three television stations, I felt comfortable that I knew storytelling and production. Next, I had to learn how to run a production company.
I worked weekends at the TV station, so I had two business days a week to do freelance work for another production company. I enjoyed that work and I learned important lessons, such as how to price a job and how to budget my time between doing work and finding the next client.
My next move was to make a plan to leave my job. My biggest concern was making sure I was financially stable enough to quit my job. I took out a home equality loan and paid off all my bills, including my car. I took my lunch to work and stopped eating out to save money. I invested in some business plan software to map out my enterprise, but creating a business plan the first time was really hard. I eventually signed up for a business plan course. The class was great, and I was able to finish my plan. The class also made me realize that I needed much more business training. I quickly became a student of entrepreneurship.
In 1998, I launched Quintessence Multimedia, a video production company. People soon started asking me for business advice. After I gained five years of experience running my company, I began speaking on panels and doing workshops about marketing and how to start a business. In 2007, I branched out to do consulting work about small-business best practices.
After 12 years as an entrepreneur, having made many, many expensive mistakes, I believe that if you want to become a small-business owner, you need a 12-month transition plan to give yourself the best odds of succeeding.
The biggest difference between starting a business in 2011 and launching one a decade ago is that the current economy is brutal, and so is competition. If you fumble around and make costly mistakes, you'll fail. According to the Small Business Administration, only half of new businesses survive five years.
The time you spend planning your business is just as important as how you run your business. If you lay the groundwork now, you could be ready to open a business in 2012. Here are six steps to take before you become your own boss.
1. Develop a Life Plan. Regardless of your business idea, you must first figure out what you want out of life. By developing a life plan, you can build a business that aligns with your long-term goals. Too many people start businesses that are not good for them and their families. Your life plan should outline your financial, personal, learning and retirement goals. For example, you need to figure out upfront how much money you need to earn in order to be happy. Then settle on the best fit for a new business venture. Is day-to-day variety important to you? Do you want to open one great pizza shop or a chain of franchises? Will you take on a partner? All of these decisions must be measured against the big-picture goals for your life. You need a life plan before you ever write a business plan.
2. Develop a Financial Plan. Can you go without a paycheck for a year or two? Your ability to save has everything to do with your ability to start a business. The money you use to start your business will come from you. Start developing a financial plan by calculating your net worth. Over the next 12 months, try saving 20 to 40 percent of every paycheck. Start using a household budget to watch every penny you spend. Launching a business while carrying credit card debt will put a lot of pressure on you. You'll need your credit capacity to support your business, too.
3. Examine Your Skills. Look at the skills you have and the skills you need to run your business. Be honest when making your list. If you are not sure about your strengths, ask three close friends to name your best skills. Be sure to evaluate your tech skills, too. You may need to learn computer programs such as accounting software or Customer Relationship Management (CRM ) software and basic graphics and website programs such as WordPress and Adobe Photoshop. And don't forget about the latest social networking sites such as Facebook, LinkedIn and Twitter.
4. Develop Your Marketing Plan. The most important questions about your business idea are: Who is buying? Why will they buy from you? The new economy is all about niche marketing. I suggest you develop a marketing plan before the business plan to make sure there is a viable market for your product or service. If you can't answer these questions, then you need to go back to the drawing board and come up with another business idea.
5. Every Small Business Needs A Plan. You must plan for success; it will not just happen. You need to write a business plan to run your enterprise. It is very helpful to think through how you are going to get sales, what happens when a sale is made and how many sales you will generate each quarter and year. Don't be one of those new business owners who spends more time working on a logo and stationery than you spend working on your business plan. I suggest starting out with business plan software such as Business Plan Pro. Then, you should enroll in a business plan class at a Small Business Development Center, a SCORE chapter or your local community college to finish the business plan.
6. Start Your Business While You Are Still Working. It's best to be a moonlighter at first. Join the 5-9 team. Use your evenings and weekends to launch your business. You can find more time in the day if you start working flex hours, stop watching TV, scale back on volunteer work and sleep less. For more tips, read my previous column, 7 Steps to Successful Moonlighting.
Twelve months is an ideal time frame in which to launch a business. The longer you plan, the more research you do and the more money you save, the more likely you are to succeed as an entrepreneur.
Here's one last idea to help you stay motivated: Find a song that you can use as your personal theme song. Make it your favorite on YouTube, and get it on your iPod and on a CD in the car. On those days when you feel discouraged, play the song to keep you fired up and pushing forward. If you lay the groundwork this year, you should be ready to take on the world with a plan of action in 2012.
Read more: Boomers Lead the Way With Business Startups