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Escape from Cubicle Nation: Is starting a business impossible when you are the sole income earner in your family?
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Escape from Cubicle Nation How to go from corporate warrior to thriving entrepreneur - by Pamela Slim About Free Stuff! Great Books to Help You Escape ...



Escape from Cubicle Nation How to go from corporate warrior to thriving entrepreneur - by Pamela Slim About Free Stuff! Great Books to Help You Escape Cubicle Nation Martha Beck: Finding Your Own North Star Rhonda Abrams: Six Week Start Up Romanus Wolter: Kick Start Your Dream Business Seth Godin: The Bootstrapper's Bible Michael Gerber: The E-Myth Revisited Yvon Chouinard: Let My People Go Surfing Robert Kiyosaki: Before You Quit Your Job Jeff Sloan and Rich Sloan: StartupNation Extraordinary Marketing Sites for Free Agents Build a Better Blog The Ezine Queen Get Known Now Action Plan Marketing Money Worries Stressing You Out? Small Business Start-Up Sites Webmomz Small Business Blog Directory Romanus Wolter - The Kick Start Guy Small Business Administration StartupNation Who has visited this blog? Blog Directories Powered by TypePad « Nice link wink from David Batstone in Worthwhile and Gain | Main | Tony Awards presenter chokes his lines and teaches important presentation skills lessons » Friday, 09 June 2006 Is starting a business impossible when you are the sole income earner in your family? I have been a little surprised at the large volume of emails I have gotten from people concerned about starting a business when they are the only income earner in their family. These are working dads with stay-at-home wives, working moms with stay-at-home husbands, or working singles with financial responsibility for their parents or younger siblings. It is definitely more difficult to start a business if you are the only one working, since there is no backup income if business plans do not turn out as anticipated. But with some careful planning and risk management, I still think it is possible to make the shift from employee to entrepreneur. Here are some things to consider if you fall into this category: Get your financial house in order. Get a crystal clear picture of where you stand financially so that you know exactly what you are working with. Evaluate things like: Monthly budget - How much do you spend each month? Are there any areas of expense that you could trim to give you more working capital? Total debt - What is your total outstanding debt? What interest rate are you paying on your credit cards? Is there a way to negotiate a lower rate? Long-term financial needs - How much do you need for your kid's college fund or parent's medical or housing costs? What kind of retirement plan do you have in place to make sure you have a happy and healthy life after work? Are these costs currently part of your monthly expenses? Savings - How much do you currently have in savings? How many months of living expenses do you need to have to feel safe? I know that many people recommend having 12-18 months of living expenses saved before starting a business, but in my experience that is extremely challenging for most people to accomplish. If you can do it, more power to you. But if not, know where your comfort zone is and work diligently to stash money in the bank. You must shave your expenses down to the minimum and have a crystal clear picture of what your "burn rate" is every month so that you can factor that into the assumptions for your business plan. Create a business plan. I believe the greatest way to mitigate risk about your new venture is to be very concrete and realistic in your business planning. You want to have a very clear picture of how you will make and spend your money. You want to make sure there is indeed a market for your services or products and that you have a unique competitive advantage in that market. You do not need to prepare an overly complex document, but I do recommend going through the exercise of planning. Startup Nation provides some guidance on this, as does Guy Kawasaki in chapter four of his book Art of the Start. I love what he says under the heading Write for the Right Reason on page 67: "Unfortunately, naive entrepreneurs believe that a business plan alone can produce an awestruck reaction, followed by one follow-up question Can you send me the wiring instructions for the money?" Do the plan for yourself and the health of your business. If done well, it will also help recruit good partners, employees and investors. Start work on the side. The best way to see if you have what it takes to make it as an entrepreneur is to try it. Start with a small project and you will learn a ton. I know it is challenging to work full-time and do work on the side, but if you are truly committed to being an entrepreneur, you better make sure that it is what you want to do and you have the skills to do it. One of my clients took vacation time to do an independent project and he said it was well-worth the sacrifice since it absolutely validated all his assumptions about his nascent consulting business. There will be a point where your business grows so much that you will need to quit your day job. This is a good thing! Decide if you could move somewhere with a better cost of living. My good friend John has been contemplating entrepreneurship for a long time, but has been somewhat backed into a corner since he and his family live in Silicon Valley, one of the most expensive areas in the entire U.S. It has been important for him to live there during his tenure as an employee since he has worked for high-tech firms. But if he were to get serious about taking the leap, he could sell his house and move somewhere with a housing market that is not on crack. My smart reader Matthew did just that, moving his family from California to Oregon so that he could comfortably start his new business The Life's Work Group. Learn as much as you can about your new venture. You need to get out of the conceptual land of dreaming about your business and start to talk to people who are actually doing it. Identify a group of mentors that can give you feedback and guidance as you make your plans. Observe experts in action and pay close attention to what they do that makes them successful. Take advantage of any and all employer-sponsored training programs that will further your cause. Have a plan B and C. If you decide to quit your job, you are not forever leaping into a dark abyss. You control what happens with your career. If you you try to make it on your own and it does not work out the first time, you can always choose to go back and do another stint as an employee! This is not an admission of failure, it is a good strategy for taking the time that you need to be successful. I often call a stint at employment "being your own venture capitalist." You are clear in your reason for taking a job and you are deliberate in your use of the income you receive from it. So don't cut ties with recruiters or work colleagues. Which leads me to my next point: Absolutely, positively do not burn bridges with your old employer. I don't care how fed up you are with your current boss or managers, it will not serve you well to leave under tense or uncomfortable circumstances. Be as upfront and honest as you can with your plans for leaving. Make sure that you clarify that your reasons for leaving have to do with your desire to do something challenging and rewarding for yourself, not because you think they are all a bunch of political, backstabbing, spineless and soulless schmucks. You may indeed feel that, but there is absolutely no benefit to share this with them when you are leaving. If things do not go as planned, you may need their reference for another job, or they may personally know one of your new clients. You will show your good character by not stooping to petty behavior when you leave. There will come a moment when you just have to close your eyes and leap. There is no amount of planning, networking, saving or wishing that will guarantee that all your risk is mitigated if you start a business. Don't forget that you are currently assuming lots of risk as an employee! Your job is not guaranteed and if you are like most people, you have felt the knife of layoffs close to your neck many times in your career. Building a business is really about building a better life. Great love involves great risk. If you make the leap, I do guarantee that you will grow in ways that you never anticipated. I would love to hear from those single-income readers who have successfully made the leap from employee to entrepreneur. What different/additional advice would you share? Posted by Pam at 12:14 PM | Permalink TrackBack TrackBack URL for this entry:http://www.typepad.com/t/trackback/5057540 Listed below are links to weblogs that reference Is starting a business impossible when you are the sole income earner in your family?: » Going from paycheck to startup from MyMicroISV By Bob Walsh There???s a school of thought out there that only people unencumbered with families and mortgages and the like should start micro-ISVs. Paul Graham is best known for this, but there???s no denying how hard it is to put down a steady payche... [Read More] Tracked on Jun 12, 2006 2:49:46 PM » The Carnival of Entrepreneurship is Here! from Seeds of Growth There may be no ferris wheels, hot dogs, or rigged games, but the Carnival of Entrepreneurship is exciting for a set of entirely different reasons. Every week bloggers submit their best entrepreneurship related posts and the best of that bunch then become [Read More] Tracked on Jun 15, 2006 8:01:11 AM Comments I think the big mistake people make is quitting their day-job too early. Also, pick a business that doesn't require a lot (or any) start up money. Finally, dig in for the long term. I see a lot of people giving up too easily and too quickly. Good Post! - Bryan http://www.BryanCFleming.com Posted by: Bryan Fleming | Friday, 09 June 2006 at 12:35 PM One thing to also consider for the readers is the forced scenerio. Layoffs can sometimes be better off than you think. It's the throw-you-out-in-the-water approach to learning to swim, but sometimes it's just the kick you needed to really get out there and do it. I once heard it said- if you are so busy holding on to everything you have, you wont have a free hand to catch a better deal. -Jyn Posted by: Jyn Meyer | Friday, 09 June 2006 at 01:00 PM Don't be fickle. At some point, you have to make up your mind that you're going to take the leap and just go for it. So many people try to ease into starting their own company, and the reality is that it takes time. Entrepreneurship isn't a part time gig, no matter how you slice it. Save your money, garner up as much patience as you can, and hang on for the ride of your life. It's well worth it! Posted by: Carolyn | Friday, 09 June 2006 at 02:10 PM Can't say I've ever lived in the Bay area, but I do live in Portland, Oregon. If anyone is looking to escape the prices down there, Oregon is a great place to live (and maybe starting to have a bit of a tech boom, too). Come on up! Posted by: Topher Cyll | Friday, 09 June 2006 at 02:13 PM As Pamela mentioned in her post I moved from San Diego to Portland to start my company The Life's Work Group. Like Pam has mentioned many times in her guidance-I too completed a life-plan before I completed my business plan. During this time period of discernment, reflection, imagination, etc.. I was convinced that the "where" of my business was as important as the "what." My wife and I traveled around the country with the pledge to each other that we would find the version and location of "home" as indicated in my life plan. From east coast-mid-west-to west coast we searched and discovered Portland. Besides the cost-of-living differences from San Diego to Portland-the unforeseen variable has been quality of life and how Portland has become a part of the branding image of my company. So my guidance is find the "where?" as part of your life/work plan. Posted by: Matthew Scott | Saturday, 10 June 2006 at 10:34 AM I totally agree with Pam's post and I would like to expand on Matthew's point of view. I did start 2 businesses in my 20's and although I did not turn up as a millionaire, the experience has been priceless. Now that I'm in my late 30's with 2 kids and a wife that works part-time, my financial reality is completely different and starting a business now is a completely different ball-game. For me, the "what" is somehow more important than the "where", although sometimes I find myself to disagree with this statement. Once you know what you want to do with your professional life and this direction is compatible with the choices you've made on a personal level, then the "where" might be not relevant. My advice to anyone who knows the "what" is to plan, to plan, to plan and to plan. Starting a business may the ultimate experience to discover your true self. Posted by: Steve Silverman | Monday, 12 June 2006 at 08:45 AM Pam - great post! Most of this advice is applicable to other scenarios, but mush of it is specific to us single-income families. I think your best advice is to, as much as possible, ease into it. I realize that may go against much of the "just make the leap" approach, but I would guess that the success rate for startups is much better when they were started with some part-time experience, or some ready-to-go clients/customers. Pam - your blog continues to be a source of inspiration and solid advice. Keep it up! Posted by: Mark Wooten | Tuesday, 13 June 2006 at 07:14 PM Excellent post! We have been hearing from a lot of women business owners, in particular, about their fears around diving in and starting a business. Many of them may not be the sole income provider for the family, but their current income keeps the family afloat. That's why I love your suggestion about getting the financial house in order. We see a lot of folks who really have no idea how they are doing financially (at a personal level). Then, they start a business without doing initial planning on when cash may start coming into the business. This vicious cycle leads to a lot of business closings because the owner didn't really know how much money the family needs to survive (and/or where to trim) and didn't plan for when cash would really start coming into the business. Posted by: Kira Wampler | Friday, 16 June 2006 at 09:04 AM Post a comment If you have a TypeKey or TypePad account, please Sign In You are currently signed in as (nobody). Sign Out Name: Email Address: URL: Remember personal info? 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