Transition from Employee to Entrepreneur

[mustard76]

I'd like to hear from people who have made the transition from employee to entrepreneur/business owner. I'm currently making this transition and I'd like to know what to expect and how to prepare myself.

I'm interested in learning about the attitude adjustments required, how you funded your business, how you managed your personal finances, how the transition affected your personal relationships, how you motivated yourself and any other problems you faced. What would you have done differently?

[openmind]

Hi, I think Steve has been covering a lot of what it takes for an employee to become an entrepreneur. So reading through his website/blog is probably an excellent start. Most of the information Steve has posted on his website is what I have experienced too. At some point I asked myself what I truly wanted out of life. I realized I wanted to have the freedom to decide what to do, when to do and with whom. One of the vehicles to achieving that goal was my own business. But it had to be a different from a traditional company that requires you to be physcially present at an office most of the time. About 15 years ago I started trying out all kinds of business ideas and every time I learned something new.
OK, at this point I'd like to hear what others have to say on this issue and if you like I will share more of my experiences with you.
Regards,
Torsten

[zpivat]

This would be a good read to accompany your new journey I think
http://www.stevepavlina.com/blog/200...self-employed/

[gberardi]

I can't speak as someone who has made the transition, but I can talk about how stuck things have been. Maybe my errors can serve as a lesson.

I decided to start my business over a year ago. In October 2005 I created a simple business plan. I updated it a few times over the next few months. This past March I officially formed an LLC in Illinois.

I kept my day job, since I didn't expect to start making any income from my own business for possibly a year. I was being "realistic".

In the past few months, I've been in crunch mode at the day job, which meant that everything else in my life had been pretty much put on hold. My business was already suffering due to the small amount of time I dedicate to it.

I also realized that I didn't have the skills I thought I did, which meant that it would be even longer before I could create the product I would be selling.

A few weeks ago, I finally updated my business plan after leaving it stagnant for about six months. I had learned a lot in that time, and I knew that the plan needed some data filled in or updated.

I've basically reassessed my situation, and I hope to be on a better path towards independence from a day job. What I think I've learned:

- I need to start making income sooner. I am sure I can be a bit more creative about leveraging existing products (not necessarily my own) to create some income. Meanwhile I can still work on my own product.

- I need to do a better job of making the time for my business. I haven't done an official time log, but I know that there are plenty of opportunities to improve my use of time as a resource. For instance, I can do laundry while getting ready in the morning, which leaves me more time in the evening (and also has the benefit of almost always having the laundry room to myself since it seems that no one else is up as early as I am).

- I need more clarity. I want to be independent of a job, but I still don't have a clear idea of what it means in terms of income and expenses.

It's been six months since I started my first real job, and I know more than ever that independence is more important to me than the "stability" of having a job that dictates what I do for so much of my time. Wish me luck!

[Hugh Hollowell]

As Fred Smith, the founder of Fed-Ex said "Keep the main thing the main thing".

The main thing is not your business plan, the formation of an LLC, or profit projections with 6 different variables on an excel spreadsheet. The main thing is income generation.

It is not comfortable to sell things. It is much more comfortable to redesign the website, to proofread the newsletter, to hang out on forums. All those things are important, but they pale next to bringing in income. Those are all avoidance activities, because you can always justify to yourself that the reason I have not succeeded yet is because the website is not perfect, or I just don't have enough market data, or [insert own excuse here].

The cold hard truth is that to succeed you need to focus on sales. There are very few problems a start up will have that can't be fixed by selling more.

A plan set in motion, even if it is a bad plan, is better than a plan still sitting on the table. It is always easier to correct something in motion than something stagnant.

[openmind]

What if your business doesn't involve any 'selling'?

[gberardi]

Originally Posted by openmind

What if your business doesn't involve any 'selling'?

Everything involves selling. If you aren't selling a product or a service, then what is your business doing?

Hugh: I suppose it sounds like I made some 500 page business plan. The plan was really more of a guide to me, and it is based on Steve's article "To Plan or Not To Plan". I hadn't looked at my plan in many months BECAUSE I wasn't taking any meaningful action to improve my business. My plan became outdated because I hadn't looked at it in many months.

Thanks for the advice and the new quote on my wall. B-)

[Hugh Hollowell]

The fundamental principle of business is a value for value exchange. I give you $5, you give me a widget.

Your widget may be a blog, which I extract value from and thus I donate money to you, or click on ads for related items.

Your widget may be a book or information product.

Your widget may be that you will cut my grass.

Regardless, unless you have something I value more than the $5, you are not getting my $5.

The act of convincing me that widget is worth more than that $5 is called selling. It is the highest paid activity in the world. Nothing happens until somebody does it.

Nothing.

gberardi: De Nada. I like to have an outcome or intent decided in advance, but with the certain knowledge that it will change often as the fluidity of the situation eveolves.

As Dwight Eisenhower said, "I have always found that plans are useless, but planning is indispensable".

[openmind]

Originally Posted by Hugh Hollowell

The act of convincing me that widget is worth more than that $5 is called selling. It is the highest paid activity in the world. Nothing happens until somebody does it.

Nothing.

Let's agree that selling is not the only term to describe the process of creating value and turning ideas into something useful. Why do I have to convince you that my 'widget is worth more than your $5'? This exchange can work both ways, there are situations where you are trying to convince me that your $5 is worth more than my widget.

[Hugh Hollowell]

"Let's agree that selling is not the only term to describe the process of creating value and turning ideas into something useful."

That is not what I said. Selling is the act of facilitating the exchange of value for value. Creating value is called work. Getting paid for it takes selling.

If I am trying to convince you my $5 is worth more than your widget, then I am selling.

There is a name for people who do not have to sell anything.

Employee.

[gberardi]

Originally Posted by Hugh Hollowell

There is a name for people who do not have to sell anything.

Employee.

I was going to say that it makes for another good quote to put on my wall, but technically the employee is selling. In exchange for a certain amount of money, he/she is providing value. And most likely, as you say, he/she is providing more value than the salary received.

Which is why being an employee can be so demotivating to someone starting a business. B-)

[Hugh Hollowell]

Technically, you are correct.

However, the only thing the employee is selling is his time, and usually at a price set by the business owner. Not to mention the finite nature of that time.

There is a world of difference between selling your time to build someone else's dream, and creating money from thin air, which is what the business owner does.

[Hilary]

I think the giant difference - apart from selling stuff (I really like Hugh's summary of that) - is how you get paid.

A friend of mine is a school teacher. She can turn up in the morning and do an outstanding job, inspiring the children and transforming their lives, and her salary gets paid into her bank account. Or she could turn up unprepared and teach the children nothing at all, and the same salary would still be paid in.

If I do a brilliant job (at both creating value and selling it) I make more money. If I do a bad job, I make no money. Feedback is instant and total, with no insulating layer. It'd be an over-simplification to say that the value I create in the world is revealed in my bank statement each month, but not completely untrue, either.

[Bootstrapping Joe]

I was always considered a good employee by my bosses because I'm dedicated and hard working. But I hated being an employee. Since the moment I entered the work force, I wanted to be an entrepreneur. So, for me, the road was a long one.

The transition came when my grandmother became very ill. I knew that a small inheritance was coming my way, so I began preparing. I got a job as an operations manager at a mail-order company. Only the absentee-owner was above me, so I learned a lot. He was a difficult person to work for, and I was fired after about a year, but that was just as my inheritance came in, and I was ready.

I have excellent credit, and the inheritance was just enough for a downpayment for a small business. I searched businesses for sale within a 100 mile radius for about 4 months. I wasn't too picky. I was looking for some sort of manufacturing business that had good financials/profitability.

The transition was not so difficult for me, but I can see how it could be for a lot of people. Basically, I lost all of my friends that are still employees. We had little in common. They thought my stories were boring or bragging, and I wasn't much interested in the employee plight anymore. I've made new, business owner friends.

The first couple of years are difficult for any business, and personal finances are rocky during that period. Try to enter a new business with clean credit cards, so if you can float yourself with a line of credit if need be. You have to be stone cold with your own finances and the businesses. Watch every penny. Learn to do with less.

Fear is a primary motivator during the beginning, and later on running your business will be fun.

With my next business (why stop at just one?), I will probably create it from scratch instead of buying one. The upside is that you have total control, and inefficiencies never gain a foothold. The downside is that cashflow will be a mere trickle for a lot longer than if you bought an existing business.

[Adam Sargant]

Originally Posted by mustard76

I'd like to hear from people who have made the transition from employee to entrepreneur/business owner. I'm currently making this transition and I'd like to know what to expect and how to prepare myself.

I'm interested in learning about the attitude adjustments required, how you funded your business, how you managed your personal finances, how the transition affected your personal relationships, how you motivated yourself and any other problems you faced. What would you have done differently?

Heh heh ... I've made this transition several times now... I spent most of my life as a mental health nurse, before quitting to join some colleagues setting up a recruitment company back in '99... fell apart badly (1st lesson, ensure such moves are initiated and maintaned by self!!! 2nd lesson, there is no failure, only feedback) to the point where I have only just finished suing the buggers for money they owed me After that, my wife and I set up our own recruitment company just to prove that we could do it ethically and with our ideas... went from start up to £300,000 a year turnover in 12 months. We then closed it down (3rd lesson... if your going to dedicate your life 24/7 to something, make damned sure it is something you enjoy and ain't going to wreck your family) and I went back to nursing for a while... our accountant was in tears LOL

I am now nursing (sic) several income streams... hypnotherapy practice, selling my hypnosis sessions online, utilising the programming skills I developed in building my site by doing similar for others... I have two residual income streams paying of my existing debts and am planning more

What can I say? Hold your nose and jump... it is an abundant universe out there... consider the lilies... listen to your fears (they tell you what to pay attention to) but follow the dreams

[Alarin]

Originally Posted by mustard76

I'd like to hear from people who have made the transition from employee to entrepreneur/business owner. I'm currently making this transition and I'd like to know what to expect and how to prepare myself.

I'm interested in learning about the attitude adjustments required, how you funded your business, how you managed your personal finances, how the transition affected your personal relationships, how you motivated yourself and any other problems you faced. What would you have done differently?

I made this transition seriously about 8 months ago, although I'd worked on and off as a sole trader before that but never 100% from home. I went from being a full-time web designer in an office of over 50 people, to a full-time illustrator in an office of 1 - me - unless you count my cats

If you're going to work from home full time expect a transition period, and you'll need to enjoy your own company or you will probably hate working from home. I've always loved time to myself, being a typical introvert time alone is like air to me, but I still found the transition from a people-filled environment to being alone most of the time quite challenging. My advice there would be - don't do it unless you genuinally enjoy spending time alone, and if you do decide to work from home full-time be sure to keep your social calendar busy so you get out of the house at least a few times a week. Also take advantage of the 'perks' of working from home like being able to cook your lunch if you feel like it, go for long walks, work in your slippers and basically have everything the way you like it

Income is probably the main concern when making the move from employee to business owner. I was in business for 6 months before I started making any real money as it took me that long to set up my website, documents, sales pages, build a customer base, etc. If you can it's often a good idea to do all that stuff while you're still working for someone else -then- launch your business, but in my case I decided to go for it full-throttle because I wanted to be completely focussed on what I was building. I also have the advantage of a partner with a full-time income and we're doing this as a partnership - he is working while I build a profitable business which will safeguard our income for the future. We both have a dismal view of the job industry and - having both worked in IT most of our lives - have been made redundant more than once, so we're working to trade in the "security" of a job for the more reliable income of an established business. So my husband's income pays the rent and bills while I grow the business - if I'd had to go it alone I just would have waited a bit longer so I could begin generating income to support myself before taking the plunge.

The other important part of income has been economising and living within our means. We have a budget for both living and business expenses and we stick to it. This is important not only for peace of mind while starting a business, but also for providing the freedom to take on only good clients as there's nothing more disheartening than having to take on a bad client or a bad project because you really need the money.

Being really organised and prioritising is also a must. I think one of the main differences between employee and business owner is that the employee gets paid just for turning up, while the business owner must provide value day after day to get paid. And while most entrepreneur's tend to be motivated it's easy to get caught in the trap of doing a lot and achieving very little, which is why it's doubly important to prioritise - there will be 100 things each day clammering for your attention and you've got limited time so you have to focus on the ones which are actually going to increase your income and genuinally improve your business. My system for doing this is to have a to-do list for every month, combined with a to-do list for each day. I plot this out a week at a time so that by the end of each month I've ticked off everything on the to-do list for that month. It's the only way I can actually keep up with my workload.

Finally it's good to have at least one day a week set aside for marketing as this is an extremely important part of any business but can often fall to the wayside because it's not as fun as other parts of the business. I set aside mondays (Marketing Mondays as I've heard them called) and spend this one day each week writing my next newsletter, updating my website, contacting publishers, and researching new avenues of income. I also set Friday's aside for generating passive income in line with my work as an illustrator. The rest of the week I use for client work.

Oh and one last thing, be sure to get enough rest! I find it's quite easy to work all day, stop for dinner, and keep working if I'm not careful because I really enjoy my work, but this will lead to burnout before long so I am careful to factor time to relax into my day. Generally, unless I'm really busy which I try not to do too often, I work from 8am to 5:30pm and then I stop to cook dinner, hang out with my husband / friends / family, watch movies, read a book, etc. until I go to sleep. Taking this break makes a big difference in my energy, productivity and motivation the next day.

I hope that helps. Good luck with your transition, starting your own business is definately an exciting and liberating thing to do! It has it's difficulties but nothing compares to being in complete control of your own time, your own income, your own environment, "holding the reigns of your destiny" as Steve P says

[munish]

Be Careful.

Business, especially .....is not for the timid.

http://www.stevepavlina.com/blog/200...self-employed/

[Steve MacLellan]

I'd like to hear from people who have made the transition from employee to entrepreneur/business owner. I'm currently making this transition and I'd like to know what to expect and how to prepare myself.

I'm interested in learning about the attitude adjustments required, how you funded your business, how you managed your personal finances, how the transition affected your personal relationships, how you motivated yourself and any other problems you faced. What would you have done differently?

I've been working for myself since 1999 doing web development for clients that are mostly US based. At first it started off as a hobby. For about 3-4 years I just helped people solve their web site problems. Prior to 1999 I started getting sick from the dust at work and laser surgery did not cure the problem as promised, but only made it worse. So I needed to do something else. Plus it was always our dream to move across the country.

So I emailed most of the people I had worked for (free) and told them I would have to start charging for my work. I lost about 85% of them, but the ones I kept started referring others to me. My business was born.

Obviously, I was making money, but didn't know anything about running a business. So I took some business courses in the evenings to bring me up to speed on things like working with accountants, taxes, leasing, lawyers, marketing, registering a business, etc...

Attitude and motivation were not really issues. One is always motivated to work at your hobby. However, my wife never supported my business idea, even if she loved spending the money. We eventually divorced.

As far as the business goes... I wouldn't do anything differently. No sense spending a whole bunch of money and time on something that won't make you any money.

Of course, over time I've learned a little more about running a business. For example, after I moved across the country to a small eastern town, I couldn't find a used car to buy locally.

So I did some market research to see if I could find clients for a website that I would build that sold advertising to used car dealers. I don't care what anyone else says. Market research is all about finding where your prospects are and what they are willing to pay YOU for your product or service.

Anyways, after I visited a few used car lots and spoke with the owners, I realized that if I could help them sell cars they would be happy to be my clients.

So I built the website, and put 3-4 thousand dollars into advertising it, and a second business was born. It was doing great, but I made the mistake of hiring enthusiastic, but unexperienced sales people. After I ran the business for a while, it was taking too much time away from my primary business. My sales people wanted me to travel around with them and close sales for them.

I eventually had to get out of it, as I didn't want to spend my time on the road. I wanted to be at my home office building websites for my clients. And the car business was taking off too fast. It went from $0 to $3000 in 90 days and continued to grow. I had people pulling me over driving through town and giving me their orders. (They saw the car magnets and recognized the name of the business from advertising in newspapers, radio, car publications and many advertising joint ventures I had setup.)

Of course it was a great experience... and it would have been better had I hired only experienced sales people. Still, all wasn't lost, because I wrote an eBook about how you could do the same thing, and it is still making sales.

My advice: take it or leave it -- your time is your most important commodity, and this includes your free time.

I like to goof off a lot. I give myself 3 day weekends every week through the Summer so I can spend my time at my cottage on the beach. I don't have a telephone or the Internet there. I spend my time mountain biking, clam digging, wandering the beach or inviting friends over for a BBQ and a beer or two.

Best Regards,
Steve MacLellan

[Isis Kali]

Originally Posted by Hugh Hollowell

As Fred Smith, the founder of Fed-Ex said "Keep the main thing the main thing".

The main thing is not your business plan, the formation of an LLC, or profit projections with 6 different variables on an excel spreadsheet. The main thing is income generation.

It is not comfortable to sell things. It is much more comfortable to redesign the website, to proofread the newsletter, to hang out on forums. All those things are important, but they pale next to bringing in income. Those are all avoidance activities, because you can always justify to yourself that the reason I have not succeeded yet is because the website is not perfect, or I just don't have enough market data, or [insert own excuse here].

The cold hard truth is that to succeed you need to focus on sales. There are very few problems a start up will have that can't be fixed by selling more.

A plan set in motion, even if it is a bad plan, is better than a plan still sitting on the table. It is always easier to correct something in motion than something stagnant.

I've spent a lot of time building up readers, nosing about for clients, learning things, and making my stuff look professional. I'd rather be a bit broke than put a foot out there with a crappy-looking webpage. That's a wonderful way to NOT sell your product. I'm not saying to kill yourself till things are utter perfection, but they should be presentable, and you should have a solid basis when you go gunning out right away for money. Trust me, your clients will see when your product, site, etc. isn't tight. They'll see, and they'll go somewhere else. Don't promise the moon with lots of sales until it's good to go, and at a point where you can be proud of the entirety of what you're offering.

I'm just getting to monetizing my blogs and setting up my shops and stuff. It's been a month. I could have started to sell, I suppose, but I would have been a mess, and would have been disheartened because I was selling something that I wasn't proud of or ready for.

[Bruce Achterberg]

I would like to commend everyone for the quality of their responses in this thread so far. I'm finding them very interesting, informative, and helpful, and I'm sure I'm not alone.

Bravo, guys. Keep it up!