If you’re anything like me, I always knew I wanted to own my own business. I’m extremely driven, and while working for someone else I constantly felt like my employer was holding me back from something bigger. I’m self-motivated, and I never needed a boss to give me a pep-talk in order to perform.
Still, I was afraid of all the unknowns around starting a business. Statistics show that over 90% of new businesses fail. When I finally decided to make the transition from employee to entrepreneur, I was making a comfortable six-figure salary, had my expenses paid for, and quite frankly was treated like a king. But I wasn’t happy with where I was, so I started my own business (Weik Fitness, LLC).
I had spent lots of time writing articles on the side to help people understand health and fitness. It was actually my writing that got me into the industry initially. When I was traveling on business, I would work my normal 9-5 job first — then at night I would sit in my hotel room and write articles. For me, it was a natural progression to doing what I loved: writing and helping people.
But leaving a job where I made great money without a lot of responsibility was truly scary. Would I succeed, or would I fail miserably and put my family through some rough times due to lack of income? If this is the decision you’re struggling with right now, please know: there is no “best time” to start a business; you simply just need to start. Start I did, and here I am. Below are six steps for you to follow that will help ensure you have a plan before leaving your steady-paying job to start your own business.
1. Decide on the Type of Business You Want to Start
First things first: what type of business do you want to own? What are you truly passionate about that you can wake up excited to do every single morning? Try to envision a business where you are willing to work 80 hours every week, just for the privilege of not having to sit behind a desk doing something you hate for 40 hours. Ideally, you’ll be taking your passion and turning it into a profitable business.
Once you’ve decided on a rough business model, you need to decide if you want to structure your business as an LLC, sole proprietorship, partnership, or corporation. If you don’t know the difference, Incfile can help you make the right decision based on your goals.
2. Figure out What the Market Looks Like
The worst thing you can do is walk into a situation you know nothing about. Think of it this way: If you see a hole in the ground in front of you, are you going to do some research and investigate before jumping in, or are you going to walk up and jump right in without even looking to see if that leap is actually a 100-foot fall?
If you’re selling a product, are you selling online or drop-shipping? Who are the major distributors of your type of product? Who are your competitors? What do they sell at what price point, and how much does it cost them to produce? Who do your competitors sell to? What is the market willing to pay? Can you differentiate by selling to a different group of individuals?
Do your homework and research on your target market so you have an idea of the landscape. Better yet, think about whether someone has already created the product or service you’re looking into. What share of the market do they currently have? You might get answers from your market research that says the current business you’re envisioning is already oversaturated…and you may want to rethink your strategy.
3. Figure out Your Niche and Who You Will Sell to
Once you research the market thoroughly, figure out the niche you want to be in — preferably one that isn’t saturated already. Otherwise, you’re only going to be able to steal a small share of the market…and it might not be enough to keep your business afloat.
Another piece you need to figure out is your audience. Within the niche you’ve chosen, who are you trying to sell to? Is it the masses, or is it a specialty group? If you can differentiate yourself from your competitors in a niche while providing something that solves a problem, you may strike oil with your new business idea.
4. Write a Business Plan
If you happen to be getting into the fitness industry, you’re in luck here: I’ve already created a guide to creating a fitness business plan. You can read through this feature and follow the steps to put your plan together. For those who aren’t getting into the fitness industry, the layout is still the same, but you would obviously write it for your specific industry and type of business. Here’s a quick general layout of a business plan:
Executive Summary – This section is a summary of your entire business. Explain what your business does, who it caters to, the products/service you sell, and how you plan on marketing the business. Basically, pull pieces from all sections of your business plan to give a quick summary.
Products and Services – How will you make money? Will you be selling products or services? What exactly are the products and services you will provide? What will they cost? Break everything down.
Market and Competitor Analysis – In this section you will write everything you found from #2 and #3 above. Who are your competitors? Who makes up the market? Which companies control the biggest shares of the market? How many competitors are in your area? Of those, how many are five miles away? What about ten and twenty miles away? This will give you a wide radius of competitors around your location.
Marketing Strategy and Implementation – What methods do you plan on implementing to market and advertise your business? How will you engage your customers and prospects? Will you be utilizing things such as Facebook ads or print advertising? Maybe some radio ad spots for the demographic you’re trying to reach? Explain what strategies you plan on using and how you plan on executing.
Operations and Logistics – If you are selling services, you can skip this section of the business plan. Otherwise, if you are selling products, you will need to explain how people will be purchasing the products and how you plan on getting the products to the customer. Will you use a distribution company? A drop-shipper? Will you ship them out yourself? What carrier will you use? UPS? FedEx? USPS? Also, you need to discuss how you plan on overseeing your inventory and how you’ll source the materials for your products.
Cost and Pricing Strategy – Here you are going to want to list the products you’re planning on selling, the costs involved (such as raw materials and supplies), operating costs to produce your product and how you went about pricing the product. Is your product in line with the competition, or is it more/less expensive? What margins are you working with? Does your pricing match the demographic you are trying to sell to?
Financial Forecasts – This section is going to be the hardest to complete. Here, you are going to want to forecast your projections for the first few years of business. How much money do you predict you will make in year one and year two? Look at competitors in the market and understand what growth they show year over year to give you an average for the market you’re in. Use that to predict your growth in subsequent years.
5. Start Your Business While Still Employed
If I could give you one piece of advice as a business owner, it’s to buckle down and start your company while you’re still employed. I recommend this for several reasons. First, it allows you to maintain a steady income while you try to get your business off the ground. Things will not be easy while you’re working your normal 9-5 job plus your “side gig” on evenings and weekends. The good news is you’ll have two revenue streams coming in that can help fund your new business.
Another reason to maintain your job while starting your business is to ensure this new venture is viable. You might find out after a few months that there is no way you’ll ever make enough money to provide for your family. This is a good test — if you did it after quitting your job, you’d have to abandon your business without having a steady job to fall back on. And heading back to your old employer and begging for forgiveness might not work.
If you quit your job before you figure out if your business will work, you risk putting yourself and your family in a terrible position financially. This could decimate your current lifestyle, deplete your savings and could even result in losing your home.
6. Quit Your Job
If you’ve prepared adequately, congratulations — the time has come! You’ve made it through all the steps mentioned above, your start-up is off to the races and you’re making money. Once you’re making enough money to provide for your family while also investing in the business, it’s time to quit your job.
You don’t necessarily need to be making what you were making at your 9-5 just yet. However, if you can make that much or more before quitting, it will greatly reduce the likelihood that your family will face financial hardships.
Now, you can welcome yourself into the small club of businesses and entrepreneurs who have made it. By no means should you let your foot off the gas pedal and slow down. Quite the opposite — now is the time to put all your efforts into growing the business. All the time you’d normally spend at your 9-5 (and then some) will now be spent further building your business.
Remember to part ways with your employer in a professional manner. The last thing you want is people saying you left on bad terms to start your own business. Negative press like this surrounding your departure could end up hurting your business in the long run. Instead, show appreciation for the job you held and leave on a good note (no matter the circumstances).
Ready to make the leap? Incfile is here to help from the start. They’re ready to assist with managing your business by getting you incorporated, staying in compliance, figuring out licenses and regulations and paying your business taxes. Plus, there are tons of great resources on the blog to help you learn more about running a successful business.
Latest posts by Matt Weik (see all)
- How to Write a Business Plan for Your Food Truck Business - December 11, 2018
- #BOTM: Learn Business Owner Insights From This App Entrepreneur & Founder of Playfully - November 27, 2018
- 5 of the Best Business Checking Accounts for an LLC - November 15, 2018