For most women, entrepreneurship offers an opportunity to create an alternative work life of creativity and financial independence that remains elusive in corporate America. However, after the initial excitement wanes you’ll quickly realize that starting a business requires more than a great idea and heartfelt passion.
In addition to writing your business plan, deciding on the colors for your web site and designing your logo, you must also determine how you will live without the comfort of a steady paycheck and employee health benefits. The keys to making a successful transition from employee to entrepreneur are preparation, careful planning and more importantly, checking your corporate mindset at the door. Before you commit to your business endeavor full-time, follow these three tips to create your own financial safety net.
Get over yourself
“No one cares what your title was, and it can be a culture shock when you realize there’s no one to delegate to,” says Susan Slovic, author of The Girl’s Guide to Building a Million Dollar Business. As an entrepreneur, you must have a willingness to be flexible and do things differently. You may be tempted to handle everything yourself in an effort to avoid paying lofty overhead expenses, but in order to ensure longevity in your business you must learn to relinquish control. Make certain your business is systematized, so it can be easily taught and duplicated, adds Slovic, and start small. While your ideas may be grandiose, resist the urge to expand beyond what your financial resources will allow. For example, instead of opening your own boutique right away, start out selling jewelry at your local flea market or launching an Etsy store online.
Ditch the corporate mindset
One of the biggest mistakes women make when starting a business is failing to develop a sustainable business model beyond trading dollars for hours, says Slovic. If your business can’t run without you, you’ve only created another job for yourself. When determining your business model, consider how you will transform your business idea into multiple sources of income. If you’re an event planner, in addition to hosting events you might also decide to write a book giving tips on how to select the appropriate décor and offer workshops. The idea is to channel your passions into various incomes, so you don’t have to rely on one source if your primary revenue stream suddenly comes to a halt or becomes obsolete.
Build a stable financial foundation
No matter how passionate or talented you are it won’t matter if you’re under financial strain. Before you make the leap, it’s essential to organize your finances: reduce any debt, save more than you earn and build a 10-month emergency cash reserve. Your business may take from six months to a year before you start breaking even or recouping your start-up costs. In addition, research low-cost insurance options and keep your overhead costs as low as possible. Then you can expand as your business grows.
While starting a business is indeed its own reward, it’s not without challenges. It requires diligence and an anticipation of the unexpected. However, once you’ve casted your ego aside, dug deep and plumped up your financial cushion, the transition from employee to entrepreneur will be well worth the financial and emotional investment.