Create a Bridge
Almost 18 million Americans identify themselves as independent workers, earning regular income without working as a regular employee, according to a study by MBO Partners. Countless others own small businesses. In fact, some experts say that becoming self-employed is an important step toward building significant wealth.
But let’s be real. While the idea of being your own boss is alluring, it’s probably a little intimidating too. (How would you get started? What product or service can you sell? Will you be able to earn enough money to make it worth the leap?) That’s why many entrepreneurs take some time to test the waters while they continue to collect a regular paycheck: It lowers the risk and increases the chances of success.
For instance, Meredith Butler, owner of Diamonds Are Evil, started selling her wood-cut jewelry at local vendor tent markets every weekend to sell directly to customers and get feedback on her products. Eventually, she started selling her jewelry online, and she is now transitioning to work on it full-time. Here are six steps you can take to build a successful business, before you quit your day job.
Make Sure There’s a Market
Before building a business, make sure that there is a market for your product. Before launching Home Remedies, her contractor referral business, Debra Cohen talked to local real estate agents to find out whether they thought local homeowners would use her service. After launching, those agents became a great referral source for the business.
Cohen recommends making a list of trade organizations, industry associations, websites, newsletters and trade publications to gain as much information as possible about the industry you’d be entering. “Identify who the major players are,” says Cohen, who has since helped more than 300 entrepreneurs launch local contractor referral businesses like hers. “Make a chart of the products and services they offer and identify what will differentiate your product or service from theirs.”
Entrepreneurship coach Carol Sankar recommends convening a focus group centered around the target market your business will serve. “Use their feedback to make adjustments that will enable your business to have a tested market, similar to a clinical trial,” Sankar says. “The next factor is to start a test concept.” If you are considering a retail concept, for example, creating a pop-up store can enable you to create some early demand to support a more permanent location. But it will also give you valuable feedback from your market.
Make a Plan and a Timeline
When you establish that there is a market for your product or service, develop a written business plan. “The plan must include an exit date from your current job,” Sankar says. “Then, begin making the marketing plan to push the concept that starts with a focus group. Make sure you are investing in multiple tiers of marketing from print to mobile marketing with your launch date.”
For entrepreneurs who are continuing to work full-time, the plan might include investing in an assistant to keep things going while the owner is at work, Sankar says.
Figure Out if You Prefer Franchising
While most business owners or franchise owners work full-time in their businesses, some types of franchise businesses allow owners to keep their own jobs while earning income from their manager-run businesses, says Lauren Cantor, a franchise business coach with The Entrepreneur’s Source in Charlotte, N.C. “Buying into a franchise allows both the freedom to run and own a business while aligning yourself with a company that is already offering market-tested products—a proven business model,” Cantor says.
The franchises that work best for a “semi-absentee owner” are those with small retail spaces such as hair salons (Great Clips, Supercuts), fitness centers (Snap Fitness, Title Boxing), package and mail (Postal Annex), and specialty food such as frozen yogurt (Menchie’s, Let’s Yo).
Hiring someone else to run your business while you still work full-time can be rewarding, but these “semi-absentee models still require the owner to devote up to 10-15 hours per week on the business,” Cantor says. While the manager runs the day-to-day business and operations, she says, the owner is responsible for watching the metrics of the business, doing community outreach, managing the marketing and advertising and most importantly the financials. “A good owner will have regular contact with the manager and be visible to the manager and staff so that they know that the owner is engaged and involved.”
Determine When You’ll Tell Your Boss
Since you are continuing to work at your regular job while building a business, you must “make sure you do not have any contractual obligation to your employer that prohibits a side business,” says Erin Austin, a small business lawyer writing a book about the legal issues involved in side gigs. If you are an executive or a manager, you probably signed an employment agreement. Many include a clause that requires that you “shall not be actively engaged in any business activity (with the exception of charitable activities) other than those required in connection with Executive’s duties described herein.” If you have a similar restriction, you’ll need to have a conversation with your boss and, perhaps, your human resources department.
Some entrepreneurs report that they have successfully enlisted support from their bosses to build their businesses on the side, but every situation is different. As long as your contract doesn’t prevent you from pursuing a side business, you’ll have to determine whether it’s worth discussing your new business with your boss or if a conversation could put your job on the line. Itai Sadan, who launched DudaMobile, a mobile website design company with five million customers, while working full-time, recommends “consulting with a good lawyer” before having that conversation.
“It typically is easier in case your venture is in a completely different space and not seen as competitive to your employer's businesses,” Sadan says. “When I talked to my boss about it, he was very supportive.”
If you have a good relationship with your boss and do it in a respectful way, you might even win his blessing. “Who knows,” says Sadan, “he might want to leave his options open too. Maybe down the line he could come work for you.”
Take Advantage of Technology
A successful business owner must be responsive and professional. Luckily, technology tools are available at your fingertips to help you keep up with business requests and customer contacts while working at your day job.
A simple autoresponder will allow you to automatically respond to emails sent to your business email during your workday. Other free technologies can “optimize your new work flow while at work,” says Syama Meagher, CEO of Scaling Retail, a consultancy for small retail and fashion businesses. Meagher recommends Boomerang for scheduling emails, Yesware to see if people are opening your emails, Hootsuite to set up social media, Wunderlist to keep track of daily to-do’s and Expertcircle to source other apps.
Don’t Lose Focus at Work
While you may be excited and distracted by your business plans and potential, as long as you are still working at another job, you have to keep the primary focus on that job. “Never forget that your priority, first and foremost, is to your job and your paycheck,” says Roy Cohen, a New York-based career counselor and executive coach. “It is easy to get distracted and devote more time than you have, or can afford, to what feels exciting and new. New ventures energize and re-focus us. But if you check out at work, your boss will catch on.”
And that could set you up for a conversation you’re not ready to have, or affect your position at work. Also, because you’re working full-time, be sure you don’t “bite off more than you can chew,” Cohen adds — another common mistake. “When you make a commitment to deliver your product or service and you don't, your reputation will be tarnished.” Build your business slowly and carefully and you’ll have a much better chance of creating one that will last a long time.
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