Many people dream of the day they get to be their own boss, set their own schedule and choose which clients to work with. In fact, our state of small business survey found that 47% of Americans have had multiple new business ideas that would put them in the driver's seat. But, the reality of getting there is a little more complicated. Leaving a full-time job to become an entrepreneur is a financial risk with an uncertain outcome.
To get the insider tips, we asked some experienced entrepreneurs for their recommendations to help you get started on your journey from full-time employee to entrepreneur.
Look for Market Demand
According to Debra Boulanger, CEO of The Great Do-Over, there’s a vital step that most entrepreneurial dreamers miss: checking that the market wants your product or service. She says, “the most important step to take when you first get started is to have conversations with potential buyers of your services. The key is to uncover the unmet need and the gap in the market that needs filling. Without a gap, you don't have a business.”
She suggests asking pointed questions of potential customers, such as:
What challenges them in this area?
What have they already tried?
What does success look like to them?
What value do they see in that solution?
Asking questions like this of potential customers gets you so much useful information. You get to understand customers’ pain points, how you can solve the problem, what other solutions are already available in the space, potential competitors and get a better understanding of who your customer is. This valuable information will help guide you in building your business and researching the market.
A note: your friends may be potential customers, but they aren’t the right people to interview about your business. You need unbiased opinions from people who aren’t afraid to tell you the truth, even if it might hurt your feelings.
Start with a Side Hustle
When you’re considering the jump to being an entrepreneur, always remember, it doesn’t have to be all-or-nothing. “To avoid the jolt, test your business model via a side hustle before making the leap,” says Tim Toterhi, founder of Plotline Leadership. “You may not be able to replace 100 percent of your income working part time, but you will gain insight as to the path to breaking even. Once you have at least 50 percent of your current income, including healthcare costs stemming from your business, it’s time to consider cutting the corporate cord. Sure, an all-in approach may get you to the goal faster, but sometimes the prudent approach provides the ideal outcome.”
Starting with a side hustle gives you time to figure out the nitty-gritty of running a business while maintaining some security from your full-time job. Successful side hustles can bring in $1,000 or more a month in supplementary income, giving you time to grow your entrepreneurial business before leaving your full-time job.
To avoid being a side hustle entrepreneur forever, it’s important to set yourself a deadline for officially launching your full-time entrepreneurship. This is a promise to yourself that you’ll make the leap on a specific day or month.
Sophie Biggerstaff, founder of the BYRCOLLECTIVE, recommends that you “put a timeline on when you want to start your business/quit your job and identify exactly what you would need financially and practically to be able to quit by this date. Start to build a critical path working backward from this date and identify all the steps you need to take to be able to leave by the date you have set yourself.”
The next step in this process is to hold yourself accountable to that date. “A mistake many new entrepreneurs make is hiding behind the busy work of getting their legal house in order, building a website and hiring a branding consultant to help with their company name and website design,” says Boulanger. “This is what I call, 'sharpening your pencils.' It feels like something useful (and it is), but it doesn’t answer the bigger question of, ‘How will I make money?’”
Don’t get stuck sharpening your pencils. Instead, set yourself a goal date to leave your job and become a full-time entrepreneur.
Kelan Kline, co-owner of The Savvy Couple, shares his experience making the financial transition from a salaried job to being an entrepreneur. “The two biggest advantages I had going into full-time entrepreneurship was we were stable financially, we had minimal debt and we practiced living off my wife Brittany's teaching salary. It made the transition easy and I never had the stress of having to make money to survive, which was a huge advantage in making the right decisions at the right time.”
Not everyone has a partner to rely on, but that’s not the only way to make it as an entrepreneur. You can apply for relevant grants, including our entrepreneur grant. You can also build up savings before making the leap. “It’s realistic to expect that you will need to supplement your income with your own savings or by taking on a side gig at first,” says Boulanger. “This will cover your expenses until you have a proof of concept and assurance that you have hit the mark with your service offering and that you have proof of demand before you start building supply.”
If you’re going the route of building up your savings, it’s important to really get to know your personal finances first. Figure out the smallest amount you can live on each month. Then, build your war chest and fill it with at least six months of living expenses. You can use this savings to live off of while you build your business, or you can use it to invest in your business as startup capital.
Once you do make the leap into being an entrepreneur, it can often feel like you’re spinning your wheels. You’re creating, doing and networking, and nothing is happening. Have patience. Building momentum and business takes time.
“The truth is, it takes time to find your niche and craft your unique value proposition,” says Boulanger. “It’s a crowded market, and you need to be able to get your messages right and your marketing in place to attract your ideal clients.”
If you feel like you’re Sisyphus rolling the rock up the mountain again and again, keep going. Keep building, keep refining, keep networking. That hustle is part of being an entrepreneur and it’s valuable, even if it doesn’t always feel like it.
Get Mentally Prepared
“Taking this leap to entrepreneurship is likely to kick up all of your ‘stuff,’” says Boulanger. “Succumbing to self-doubt or fear will result in you procrastinating what’s important for what’s easy. Or chasing another credential you don’t need just because you would feel you were worth more if you have more initials after your name.”
Starting your own business and becoming an entrepreneur is an exercise in almost constant vulnerability. You have to believe that you know your stuff and that you can do this. And, if there is something you don’t know, ask for help.
Boulanger says it’s important to “realize that nothing is perfect. Effort spent in the right direction is worth more money than effort spent in a distraction. It’s important that you learn to 'master your mindset' as you embark on this journey. It’s the first thing I train my clients to do so that it doesn’t sneak up behind you and bite you in the ass before you even get started.”
Go in with Strong Boundaries
Part of mentally preparing yourself to be an entrepreneur is defining and setting up your boundaries. Biggerstaff says, “My best advice would be to set boundaries from day one. Starting a business is easy to become all-consuming and that can be really unhealthy, so setting boundaries from the offset will help you manage this.”
While your business could take up every moment of every day, it shouldn’t. Growth takes time, no matter how hard you work or how many hours a day you work. Have patience with the process and set boundaries around your time so that you take care of yourself and spend time with friends — not just work on your business.
Don’t Be Afraid to Pivot
No matter how well you craft your business plan and how much savings you build up, sometimes the idea just won’t work. Boulanger recommends, “when you are first starting, hold lightly to your idea, and realize that there’s a 90 percent chance that it will change given new information. It might be a small pivot or a whole new direction depending on what you learn in your testing phase.”
Put your belief and trust in yourself, not your business. Then, if the business isn’t successful, you can focus your energy on pivoting to a new idea. You are not your business. It’s ok to let go of your original idea and pivot to try something different.
Making the switch from a full-time job to being an entrepreneur is a complicated process. Your success as an entrepreneur depends on your financial stability, your hard work and your mental state. Getting yourself mentally, emotionally and financially ready will help you work hard, build a successful business and even find a new path to success if it's not working.
Let Incfile come alongside you in your path to entrepreneurship. Our Start a Business Checklist will give you all of the steps you need to get going right away.
Page is a freelance content marketing writer with experience writing about small business, the future of the workplace and health. She also operates a weekly email newsletter where she shares advice on living an authentic, intentional life. When not writing, you can find Page traveling, fostering older cats and working as a sexual assault advocate.