Make the Switch
You’ve rehearsed your departure speech in your head 100 times, and dreamed of an amazing new boss—you . But there are some practicalities you could consider before you cut off that magical stream of paychecks and free office coffee to leap into the risk and reward that is your own business.
Over the past nine years, I spent a lot of time sitting in corporate cubicles. There, I gained a deep knowledge of the energy and health-care industries, socked away some money, and met lifelong friends. Still, I dreamed about the freelance writing career I’d left behind 10 years ago. Then I lived in a cheap house in Seattle and the only obligation I had was to my beagly mutt, Lucy.
Now I’m a single mom to Grace, 3. I have a home and a rental property – the days of wine and popcorn for dinner are over. You know how people warn you kids are expensive before you have them? I’ve found this to be painfully true ($900 a month for preschool?! Gulp), which is why you want to mine every dollar you can before you embark on your own business. Here’s what I did when my freelance workload started to outweigh my day job, and what I’d advise anyone making the transition from office worker to entrepreneur—now, a year from now, or sometime down the road:
1. Finish financial transactions while you still look good on paper: Even if you’ll be able to meet obligations from savings, contracts and future income, lenders give you the stink eye when you don’t have that steady paycheck. Refinance (or buy a house), get the car loan (people who have low credit risks get better rates), apply for business loans, and complete any other transactions that might not go as well if you can’t produce proof of your earning power. Plus, that lower payment after a re-fi means more money for your savings, retirement, or business.
2. Get your health together: That tooth that sometimes sends you to the moon when you bite the wrong way on your Ben & Jerry’s? Take advantage of your company’s dental and medical plans while you can , and get it checked out. Once you’re paying for your own insurance, you might not have the luxury of free or inexpensive co-pays for office visits. (Getting a full check-up before you go is also a good move in case you discover you need a procedure or have a condition that requires medication that would be more expensive on a new health plan.)
3. Pay off big bills: In California, December means watching palm trees sway to the swingy holiday sounds of Nat King Cole. But it also means that the first chunk of property taxes is due. The thought of paying the taxes once I didn’t have a regular income scared me so much, I made sure they were paid early so I wouldn’t feel the panic of watching my savings plummet. Another way to do this is to automatically funnel money into an account that’s unlinked to your regular checking and savings so you won’t be tempted to pull from it.
4. Double-check your numbers. Do you have enough of a savings cushion in case plans A, B and C fall through? Are you able to put a third of your projected income away for taxes? Consult acertified financial planner who can help identify elements you may have missed or misunderstood, and who can help you strategize ways to save and spend what you earn.
5. Milk your other benefits: I once worked for a company that paid employees $400 a year to spend on wellness—things like gym memberships and smoking cessation. Before I left, I made sure to buy prepaid yoga classes at my regular studio, so I could enjoy the perk even though I’d left the company. Do you still have tuition reimbursement, or dependent and health-care savings balances available? How about company discounts on movie tickets, amusement parks, cell phone service and car dealerships? Not taking advantage of these benefits is basically like leaving a bag of money on the bus and watching it drive away .
6. Bag your bonus: Do you need to stay through the end of the year, or be currently employed to receive your bonus? A too-early departure could cost you thousands of dollars – is it worth sticking around a while longer ?
7. Line up new prospects: When I made the decision to freelance again, I opened up my LinkedIn LNKD +3.13% account and wrote to 20 people I’d worked with. I told them I was back in business for myself, and asked them to please let me know if they heard of work available. That day, I landed two reliable clients who helped ease my transition. I plan to make reaching out a regular practice. The flip side to this is that if nobody responds, there may not be the market you thought for your services. Perhaps you’ll need to alter your approach before you leave your job so your savings won’t drain away.
8. The most important thing you need to do: Is take this advice from entrepreneur Jay Papasan, who co-wrote the best-selling “The One Thing” with real estate mogul Gary Keller: “Ask yourself, ‘Why is it important to do this? What will it do for you? What will it do for your family? What will it do for the world?’” he said. A person who ventures out on her own will face hard times. Business will go up and down. There will be failures. What helps you ride through them is how you answer the question. Then, as Jay said, “Write it down. Tattoo it on your back. Don’t forget it.”
Our conversation made me think about my own reasons for leaving the warm security blanket of a job, and heading into the sometimes stormy seas of solopreneurship. I’m happiest working at home, and being able to leave in the middle of the day for a yoga class. I know I’ll get the inevitable call from my mom that she needs help, and I’ll be able to get to her in a snap. Someday Grace and I can spend the summers with my family in the tiny speck of the town where we’re from on Hood Canal in Washington State, and she can run crazy with her cousins in the woods, throw rocks into the water, and become an oyster connoisseur by the time school starts.
What else do you need to do before making the leap to your dream job?