Plenty of people have hobbies they love so dearly they’d do them nonstop if it weren’t for their time-draining day jobs. Not surprisingly, many fantasize about taking their rewarding side hustles full-time.
How many folks fit into this category? GoDaddy research estimates about half of Millennials and nearly a quarter of Boomers dabble in side gigs. If you often find yourself entranced by the thrill of your hobby, you’ve probably considered ditching office life. But before making your part-time obsession your main source of income, you need to take some steps to avoid a rocky transition on a path that will merge your personal brand with the brand of your startup.
Set up a Strong Foundation before Setting up Shop
Daydreaming about being your own boss someday is one thing. Rushing headlong into the experience is another. A study published in the Academy of Management Journal found that one-third of entrepreneurs held onto their “safe” positions until they felt ready to quit.
What are the signs it may a good time to sever those ties to a steady paycheck? One indicator could be an increase in product or service requests from your part-time work. Say, for example, that you have an Etsy shop. You’re getting tons of orders year-round, developing a unique brand that delivers noticeable value. That’s a nice position to be in and it could indicate you’re ready to fly solo.
Another hint could be a growing interest in your idea. Perhaps you’ve been talking about a business concept for a while. Not only are you getting positive feedback, but others are talking about your budding brand. You might even have a few people who want to invest in your hustle or join forces. Again, that’s a good situation to be in as someone who hasn’t officially taken the entrepreneurial plunge.
Of course, these signals aren’t foolproof. You could be on the wrong track. Still, you can’t wait until everything’s perfect to make your escape from the corporate grind. But what you can do is strategize in advance to make sure your tank is full prior to going full throttle with your new venture.
1. Define success.
Until you know where you’re going and how you’re getting there, you don’t have a company. You just have a dream. Clearly state your end goal and set up metrics for yourself to ensure you stay on a focused path to success. For example, establish realistic metrics for your income and expenses. According to a U.S. Bank study, 82% of small companies fail because their owners can’t wrap their heads around cash flow or forecasting. How will you live without a regular salary, and how much do you need to bring in during your first year to stay afloat? Do you have at least six to nine months of a financial buffer in your personal savings to cover the initial flux?
And be sure to include healthy living as part of your yardstick. Just as you want to fuel and nurture your business, you need to do likewise with your mind and body through stress relief, exercise, good sleep, and good food. When you define success, tracking your happiness and your physical health should be part of the equation. After all, your personal and professional development will directly impact your business’s growth. One way to accomplish this professional development is to surround yourself with an entrepreneur network that will push you. For instance, you could join a mastermind group or even just a Facebook group for entrepreneurs and business leaders.
Your definition of success should also include brand recognition. What do you want to be known for? And who is the audience you want to serve? Taking care of your fiscal, physical, and mental health will help ensure that the word “successful” (as opposed to “struggling”) is itself one of your authentic brand traits.
2. Plan for future financial peace of mind.
A huge downside to not working for someone else is the loss of 401(k) and other benefits. Take upfront time to seriously think about ways to restore the perks you’re going to lose. While your business is getting off the ground, you may be unable to provide a 401(k) plan for yourself through your new company. Fortunately, there are myriad retirement accounts made for self-employed workers and small business owners. For instance, a Simplified Employee Pension plan is popular among sole proprietors because it has low to nonexistent annual account fees, and guidelines for making contributions are simple. Naturally, you’ll also want to investigate health insurance before handing in your resignation at your current job. Make sure your anticipated healthcare costs are accounted for in the money you have saved before jumping into business ownership.
To sort all of this out, you’ll want to speak with a financial planner at the outset to ensure you’re on track. When choosing this individual, research his or her credentials and experience, and ask questions about the advisor’s approach to long-term planning. The more aware you are of your options for protecting your future retirement interests, the less stress you’ll feel as you take the risk of entrepreneurship. And if you plan to use this advisor for the long haul, make sure the person you’re working with is from a pool of fiduciary financial advisors, meaning they are legally required to put your interests ahead of their own.
3. Take advantage of entrepreneurial programs.
Learning is growing. Seek out educational opportunities such as accelerator programs that can provide mentorship, advice, and funding all in a short time frame. Incubators, which provide benefits similar to those of accelerators but last a few years instead of a few months, may also help you gain the technical assistance and fundraising know-how you need to truly launch your business. Prize competitions can likewise give you access to vital resources. In addition to these programs, post-secondary degree programs can provide a wealth of mentorship, ideas, and perhaps even seed funding.
You could even take classes at an entrepreneurial-focused college to advance your knowledge of your industry or business management. Need evidence of the value you’ll see? While earning her degree at University of Missouri–St. Louis (UMSL), Bailee Warsing not only worked as an intern for the Ameren Accelerator, a public-private partnership between the university and Ameren Corp., but also co-founded her own robotics company with the school’s mentorship and funding. So if you’re a college student (or the parent of an entrepreneurial student), valuable contacts and some financial backing through a university experience might be available.
It can be hard to get out of your comfort zone, particularly if you’ve relied on receiving a regular paycheck for years. But with so much support for startups and founders, now is an excellent time to embark on new adventures—as long as you do your homework and keep your eye on your branding, delivering unique value from YOU, Inc.