The time warp that manifested in March 2020 has been described by many names but the one creating the most positive buzz is: “The Great Resignation”.
What is the “great resignation” or “entrepreneur wave (depending on when you are reading this)?
An overdue phenomenon where the workforce has left their jobs in droves and jumped on the entrepreneur bandwagon.
They have decided to say goodbye to the hamster wheel that is their career and seize the opportunity to set their own hours, be their own boss, eliminate the commute, and enjoy a workday in their pajamas.
And why not?
Most of them had already been working from home since midyear 2020, why stop a good thing!
But Then Reality Sets In…
As a member of several entrepreneur groups and professional networks, I have seen the steady drop of new business owners.
I wish I was a historian or surfer because I could probably create a killer surfing analogy but I won’t embarrass myself.
Instead, I will stay in my lane and simply say many didn’t take into consideration that starting their own business isn’t as easy as it looks.
As the age old saying goes “You gotta crawl before you walk”. For many, they decided to run a marathon without taking a second to train.
In the corporate world, you simply showed up and did your job (yes…for the sake of length I am oversimplifying).
You didn’t need to worry about every aspect of the business including (but limited to): cost, revenues, profits, shareholders, legal ramifications, tax filings, compliance issues, permits, licenses, etc.
For many, they failed to realize that as an entrepreneur, you are responsible for every angle of your business.
In the beginning – you don’t work, you don’t get paid.
Unlike clocking in for a 9 to 5 and receiving your paycheck according to payroll’s schedule, there is a lot of front loading of time, energy, and funds with no guarantee of return.
So, for those who are contemplating joining the “great resignation” and riding the entrepreneur wave, here are some things to consider before starting you own business.
1. Understand the Basics of Starting a Business in Your Area (Even if it is All Virtual)
First and foremost, determine the type of business you want to create (your niche focus).
Next (and probably the most important on your to do list): Learn the laws in your state.
Do not assume just because you are working out of your home that you do not need to worry about a business license, sales and usage tax (some states require this for digital services as well as physical services), or other regulations that may be required by your city or county.
Also ensure you can LEGALLY perform the services you are wanting to provide!
Two Lessons I Learned the Hard Way:
1) Any one can property manage in the state of Massachusetts but only those with a Real Estate license can do any type of property management in North Carolina.
2) If you are doing business as a wholesaler or drop shipper with a business in California, the State of California requires a Sales and Usage Tax Certificate within their state (yes – EVEN if you are not a resident). If you are selling products to anyone who is a California resident, this is a requirement. The business may work with you with the stipulation that you cannot sale/ship to a California residence.
Once you know what business you want to do (and that you can legally do it), do some research:
1. How is your service recognized on an industry level (if people are going to find you, what would they put into Google to locate you)? This will help you choose a brand name and domain to minimize creator’s remorse if/when your business takes off.
2. What type of company do you want to have: Sole proprietorship, LLC, S-Corp, are you working with a Partner? Solo?
If you are not sure – seek the advice of a legal professional (not a bookkeeper, an accountant, or tax professional) to determine what is best for your business.
Nothing against anyone wanting to give advice but choosing your company structure isn’t just closing you eyes and picking a name out of hat.
Work with someone who know what papers to file, when annual reports are due, if a foreign LLC is needed, if you need to do a trademark, if you need a resident agent, etc.
3. What specific products or services will your company offer? Are you only going to have digital products? Physical products, mixture of both? Are you creating them? Is a third party creating them? Where will you sell them? Is shipping involved? How will payment be processed? Do you need a sales and usage tax id (see how that just went full circle?!)
There are many more questions to ask yourself but these will get those neurons firing and may even guide you to do a little more research on your own.
Once you begin generating revenue and have a little profit to play with you, decide if soliciting the help of a business coach/mentor is the right move for you.
2. Do You Have What It Takes to Run a Successful Business?
Settle down Rocky Balboa.
BUT…even in those cases, bringing a great idea into fruition took time, planning, patience, and tough skin.
Take a moment and ask yourself the following:
- “What are my motivations?”
- “Realistically, how much money do I need to make versus how much I want to make”?
- “Financially, do I need to keep working full-time to get this off the ground, can I downsize to a part-time job and split my time, or do I have enough saved to go all in for one, three, six months, a year?”
- “How long am I waiting to stick this out before throwing in the towel?”
- “What is my competitive advantage?”
- “What do I love most about this niche? Will I tire of it eventually or can I do this for decades”?
- “What is my end game – to build a self-sustaining company I maintain until retirement (or pass onto future generations – i.e. Chick-fil-a that passed from founder S. Truett Cathy to his son Dan Cathy) or to built a profitable company to eventually sell (i.e. Maurice and Richard McDonald who sold their company to Ray Kroc for $2.7 million)?”
Creating a successful business takes looking at the “Here/Now”, “If/Then”, and “In the past”. You may feel like you are going in circles but this 360 view will give you the advantage to succeed over the competition (and in the long run).
3. Will This Be Your Only Source of Income? How Much Money Can You Afford to Lose?
The biggest question an entrepreneur will ask themselves is if they are ready to go “All in”.
Some prefer to wait until they have a sizeable nest egg before saying “Sayonara” to their day job.
Others; however, get caught up in the exhilarating feeling of freedom and with little to no planning, make their new business their sole source of income right out the gate.
The risk aversion types (what I did as well) – play the balancing game, slowing growing their side hustle into a business.
For me: once my side hustle was able to replace my day job in terms of income, I made a comfortable transition to the entrepreneur world – full time.
Truth: The latter is gruesome, time consuming, and isn’t for the weak hearted. To work (essentially) a full-time and a part time job, you are sacrificing nights and weekends to grow your business BUT the peace of mind when you sever that cord is worth it.
The route you choose to go is your own but so are the consequences. While your friends and family may have faith in your business idea and intentions, your rent and bills won’t accept that as payment.
Take a moment to let the adrenaline pass and think, really think about the best case and worst case scenario. My mother used to always say “It is better to have and not need, then need and not have.”
Ok…so we said three but I think this last one is important:
4. What is your fallback/exit strategy?
There are two aspects to this question. Firstly, what is your fallback plan? Secondly, what is your exit strategy?
Fallback plan: Sometimes the best planned intentions don’t pan out. It doesn’t mean your idea was bad, your strategy was weak, or you did anything wrong – it just means the market wasn’t ready for your brilliance at this time.
So what do you do now?
Actually scratch that because if you are asking that question in that form, it is already too late.
The question should be “What would you do then”?
Add to your business brainstorming session – your “worst case scenario” strategy.
While you are hoping for the best, make sure you are planning for the worst. It doesn’t mean it will become reality but you don’t want to be at the end of your rope looking for a safety net.
- Did you express your intent with your former employer? Will they allow you to come back if it doesn’t work out?
- Did you leave on good terms so you can use them as a reference if you needed to find a new job?
- Do you have a skillset that needs to be kept up to date if you need to return to the workforce?
- How much time will you allow to pass (or what is the lowest amount allowed in your savings account) before you close down shop?
- Are the investments you’re making short term or long term? If you need to pull the plug suddenly, can you?
Exit strategy: If you do eventually implement an exit strategy., that means you arrived at a conclusion of your business on your own terms.
This initial question is the simplest (the implementation of the answer will normally involve an attorney).
What do you want to do?
- Do you want to keep the business in the family (depending on how long you have been in business, do you want to pass it to a child or sibling)?
- Would you prefer to sell it?
- If you decide to sell it, would you want to remain onboard in some form (keeping a role in the company – depending on the size)?
Obviously this one will change over time and be heavily impacted by the growth/overall size of your business (and business type). Jeff Bezos had no idea Amazon would turn into the powerhouse it is today, neither did Steve Jobs (Apple) or Bill Gates (Microsoft).
Hey – Sara Blakely (founder of Spanx) had NO idea what she was getting herself into and never imagined where she would be today!
Simply put: just hold onto a flexible idea of what your exit strategy will be as part of your “best case scenario” with the knowledge that nothing is written in stone.
But what there’s more!
Just not here. There is a lot that goes into being an entrepreneur but you don’t know unless you try.
Hopefully these three (make that four) steps give you a better sense of direction so you become one of the success stories versus another statistic.
We are rooting for you and hopefully (if we are lucky) will be tapped for services to help your business continue to grow.
Until then – best of luck on your business adventure!!
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