Making the transition from employee to entrepreneur is one of the most exciting but also very difficult decisions you can make. Becoming an entrepreneur is not as easy as quitting your job today and starting a company tomorrow. While some have done it successfully, it’s a lot more complicated than it seems.
To help you prepare for your big day of starting life as a full time entrepreneur, here are 5 things you should make sure you do;
Leave your job on a good note
As obvious as this sounds, you should avoid burning bridges as much as you can when you leave your job to start a business. No matter how much you hate your boss or believe that your business venture will be an ultimate success and you can’t wait to leave, there is a wrong and right way to leave your job to venture. Make sure you do it the right way. Here are a few pointers on how to do it right;
- Don’t steal your employer’s time – During the last months leading to your resigning, you will be busy setting up your business while also having to fulfill your work duties. Instead of using work hours to handle personal business, sacrifice your late nights and weekends to sort out your business or get someone to run errands for you during work hours.
- Give at least a month’s notice before resigning – You’re almost going to be an employer, so put yourself in your employer’s shoes. They need enough time to hire someone new and adjust them to your position. Also ensure your resignation letter is brief and respectful.
- Do not poach employer’s clients – For the sake of your good reputation and if you plan in running your business for the long term, start your business on a clean slate and find your own clients.
- Do not poach your former workmates – It’s okay to inform your workmates of your new venture but by no means should you coarse them to come join you. Remember you do not want to burn bridges with your employer.
- Do not bad mouth your employer – This is pretty self explanatory.
- Make your last project the best – Ensure you complete all your work assignments and give them your best.
Research, Research, Research
Starting a business is like buying a new car or a new phone. Before you buy one, you do your research and are specific about what you want. Here are some questions you should have answered before you get into full time entrepreneurship.
- Who is your target audience? How can you effectively reach them?
- Who is your competition? How can you do things differently?
- Is there adequate demand for your business?
- What start up costs and expenses will you incur?
- Where will your business be located?
Build a Safety Net
Being a full time entrepreneur is one of the best decisions you’ll ever make. However, the bitter truth according to statistics is that only a few of startups launched will be operational after the first 5 years.
We aren’t trying to be negative but as a new entrepreneur, you should accept that not everything may work out as planned. Either way it’s always better to be safe. Before resigning, ensure you have saved up at least 6 months’ worth of expenses. This should be separate from your capital and should only be used for your personal expenses and in case of an emergency.
Remember, your new business may not bring in profit for the first 6 months and you are likely to experience a number of financial setbacks. Having that emergency fund will definitely come in handy.
Capital – Loan, Savings or Angel Investor?
So many people have great business ideas but one challenge that stands out for most entrepreneurs is lack of capital. To take the leap into entrepreneurship means pushing yourself to make your ideas your ideas a reality.
There are quite a number of capital sources for startups but these 3 stand out: Business Loans, Personal savings and angel investors.
- Business loans – Before you apply for a business loan and actually get it approved, there is a long process you have to go through and a number of things to consider. With a well prepared business plan with a clear value proposition and outlined return on investment, most banks will be willing to give you a business loan. Most bank loans however are secured loans meaning that is you fail to repay them, your assets might be taken away by the bank. If you are taking a loan from a SACCO however, you will need a guarantor.
- Angel Investors – The secret of getting an angel investor is being able to make a good pitch that will convince them that your idea is profitable and will give them a huge return on investment. However, you should note that involving an angel investor will mean that they have a share of your business and will be involved in decision making.
- Personal Savings – Whether you decide to get capital from loans or an investor, it is more likely that you’ll have to put at least some of the money yourself. The easiest way to do this is to use your personal savings. This gives you a huge advantage because you know exactly how much money you intend to put it and can save in advance. You also have more control and full ownership. This sacrifice also helps you value your business more and avoid excess spending.
This is probably the most boring and stressful seasons of starting a business. You may have capital, a location ready and you are ready to hit the ground running but did you know that failing to acquire one license can lead you back to square one and get you in some serious legal drama?
Here are some legal red lights to look out for;
- Have you picked out a business name? Are you sure you are legally permitted to use it or has it already been trademarked by someone else? You can easily prevent this by doing a business name search on ecitizen.
- Do you have all the necessary licences and permits? Depending on your type of business and the county location of your business, you will require permits and licences some from the state and some from the county. Some of these licences include, certificate of incorporation, city council business permit, fire safety certificate and food and health related permits.
- Are you familiar with KRA taxes? KRA has a list of penalties that you should avoid at all costs as a new entrepreneur.
Do you have any more tips or comments for employed people looking to get into entrepreneurship? We would love to interact with you in the comment box below.