For many young employees today, self-employment is the goal to reach for. They crave the potential flexibility and control it can give over their time, finances and creativity. For them, their stint working for a big corporation can be a stepping stone to building their own business.
If you are among these young people who think of corporate life as an opportunity to generate connections, experience, and funds for a future business, it is crucial to learn a few lessons on how to make the shift a smooth one. Provided here are some tips to help you with this objective:
1. Use your free time for further your education
It is imperative to acknowledge that being good or skillful at producing something does not automatically mean you can create a profitable business. It requires business chops to succeed as an entrepreneur.
So, take some classes over the weekend, employ the services of a business coach, and even go to your bank to study the different SME banking solutions available to you as an up and coming entrepreneur.
Learn as much as you can about becoming an entrepreneur and setting up a business while you are still working as an employee. This will not only increase your knowledge but also the confidence in the change you are targeting to make.
2. Decide when you will leave your current job
Do not resign when you want to start the business, say business startup consultants. Instead, stay until the business is up and running and you can already afford to leave.
This is important advice if you want a steady stream of income to support what you are creating and the practical aspects of your life. Basically, it can create that much-needed breathing room for your finances, which can encourage you to be bolder in securing the future of the business.
That being said, do not be hasty in quitting the job you currently have. Earn a bit more from there. Don’t forget everything else when you decide to follow your dream. It is always better to set up shop on your own while still gainfully employed to be free from worries about the potential for initial financial losses — something quite common in startups.
3. Identify the way your career change will impact your personal finances
Take the time to study how the shift from employee to entrepreneur can alter your financial rhythm.
A lot of new entrepreneurs discover that they are not prepared at all for the irregularity of income during the early stages of their business. It is quite a culture shock for them to not have enough business income to pay themselves because they are fresh out of a system where they were given a monthly salary.
It is good to have foresight of the financial difficulties typical to a new business. It will allow you to prepare effectively for them.
4. Identify the sacrifices you can make to safeguard the “foundational” period of your enterprise
The period of none to low and slow income is a constant variable in the business startup equation. Therefore, it is important to be prepared for that with a list of personal sacrifices you can make.
Downsizing various aspects of your life is always a good way to go. Moving to a cheaper home or moving back in with your parents is worth considering. This way, you can reduce your rent and utility expenses.
A side job (aside from the business you are working on) is also worth thinking about. You will sleep less and have zero social life for a while. However, you can earn and save more money that you can direct toward your enterprise.
5. Creating a separate bank account for your business is a must.
You need to create a business bank account right away and start funneling a portion of your salary into it. This will help you stay on budget with business expenses.
Additionally, it can ensure that expenses for business do not mix with personal ones and vice versa as not doing so can compromise your overall financial situation.
It is worth noting, too, that setting up a business bank account can also provide you the advantage of tapping into special banking services, such as a new and better credit card that you can use to better manage your business expenses.
These tips cover the base level requirements of a business startup that a lot of wannabe entrepreneurs end up struggling with. They are strategies that work.
So, if you want to make the shift from an employee to business owner, use the tips shared here. They will help you create a smooth transition and ensure you have the financial cushion to ensure the success and longevity of your dream enterprise.