Starting your own business is risky and scary, but hanging on to an office job you hate poses other problems. All the more so in today's tough job market when it may be difficult to find any job – let alone one that suits you. The more eclectic your interests or skills, the more difficult your quest.
Although self-employment is a tempting alternative, proceed with caution. It can be a bit of an emotional roller coaster, with higher highs and lower lows than you're probably used to. I went that route after getting eight years of on-staff experience first. (See my post, "How To Make Money Without A Job.") Merritt Baer, a 2010 graduate of Harvard Law School, made the transition much sooner. In today's guest post she describes her recent decision to open shop as a cyber strategy consultant. Her month-by-month guide to preparing for the big step will interest other millennials who are just starting out, as well as their baby boomer parents, who may be trying to reinvent themselves after a career on an organization's payroll.
Some friends with day jobs envy my decision to start my own company. Part of me can't believe it. "Don't you want your steady paychecks, your workplace perks, your safe answer when an acquaintance asks what you're up to these days?" I ask. Then I think of the satisfaction I've had, even in just a few months of being my own boss.
For the first two years after graduating from law school I worked in Washington, D.C. – first as a judicial clerk and most recently as a legislative fellow. As I concluded a year in that position, I interviewed at traditional jobs, but was looking for a position that leveraged more than one side of me: my cyber law and policy knowledge, my love of emerging technologies and my entrepreneurial streak. I saw a need for interdisciplinary work in cybertech. So several months ago I started a cyber strategy consulting firm.
Anyone pondering self employment should first answer the question, "Why are you considering this?"
Don't start a company because. . .
You hate your boss. Instead, change the dynamics, or find another job with a different boss.
You want to work less. You will end up working more, probably with more stress.
You want to feel special. You may end up being swallowed by another venture anyway, and you should be open to that when it's the right move.
Do start a company because. . .
You have something to offer a client or customer, have a stable of them already, or can round up enough of them within three months of launching.
You have skills or product ideas that aren't being leveraged.
You have enough savings to get by for at least nine months.
You work harder when challenged, and aren't afraid of risk.
I planned my transition for about a month, though I spent many months pondering various options. For those who want to launch a business, here's a timeline to follow.
Solidify references associated with current or recent employers. Buy them lunch, ask if there are other projects you can work on together, confide in them and make sure you have an ally when you need one.
Attend networking events -- in moderation. The ROI of these events varies wildly, and the value is likely strongest as a source of community, rather than of future clients.
When networking, use what you've got. If you attended a university with a strong alum network, tap into it. If you are in a profession with professional associations that are strong, attend the next networking event.
Enjoy your corporate benefits. Schedule a doctor's checkup and dental cleaning. Soak up other perks, whether they include free Friday lunches, gym discounts, corporate rates from your cell phone provider or the nice window from your desk.
Two months before you quit. Research your student loan options if you have them. Ask your school's loan officers for help. You may want to switch to income-based repayment. Compare costs of borrowing if you need to do so. Talk to a tax professional if you have questions.
Explore health insurance options. It may not be as bad as you expect, and now that Obamacare has gone into effect, there has to be an insurance plan that covers you. My plan has a significant deductible for hospital stays, but routine care is free, and it costs less than $100 per month. Meanwhile, if you work at a big enough company that there is an human resources department, you may want to ask for a confidential appointment to discuss their policy for former employees. Bear in mind that COBRA plans are often more expensive than buying insurance outright.
Decide whether to operate as a sole proprietorship or create a business entity and file the necessary paperwork. If you don't want to file your own, there are sites that file your paperwork for you like Legalzoom and Incforfree. Even if you do that, save a few bucks by easily filing your own application for an Employee Identification Number with the Internal Revenue Service.
For lawyers, doctors and others with codes of professional responsibility, do extra research on how you need to structure your company and what the reporting requirements are. If you have questions, there are ethics hotlines available for free. Google it.
Start saving receipts and keeping track of business expenses. It's useful for tracking what you need to keep your business running, and you'll use them for taxes later.
Network to get in touch with others who have started ventures. Ask them for coffee to talk about the experience. (Take everything with a grain of salt.) If you take notes by hand, transcribe the information later into Evernote. Read books by entrepreneurs. Observe what other people in your space are doing, and note their tips as well as what you think they're doing wrong or missing.
Look around. Anything that you will wish you had done before leaving, do now. Take your secretary to lunch, or your boss's secretary to lunch. Ask your brilliant-but-crazy colleague for her thoughts on anything. Get everything you want from your current situation, interpersonally and professionally.
Two weeks before you quit. Give notice. Don't worry too much if your mother says you're crazy, or if she doesn't really understand what your new company is going to do.
Discuss post-severance benefits with your current employer.
Put the finishing touches on your website. Deploy it, and share on social media. Order business cards.
Perfect your elevator pitch. "What is it that you are working on?" people will ask. Write down a brief answer--you'll draw upon it often. You may have a few different versions depending on what kind of client or customer you're talking to, how much time you have (15 seconds at a cocktail reception, 5 minutes in a coffee meeting), and what you're hoping to get from the conversation. Everyone is a potential client or customer.
Email your growing list of contacts. These are all the kind folks with whom you've been having conversations. Make it personal and inform them that you've decided to venture out on your own. Ask them to keep you in mind for future projects. Think about how you can serve them.
Get your company records in order. This is crucial if you have paid contracts coming in. Open a bank account, get a business credit card for your company if you want to, or if ethics regulations prescribe it. Focus on the work but maintain good, simple records. If in the past you filed your own taxes, consider paying a tax pro at least the first time to to be sure they are done right, especially now that you may be considering new deductions, like for a home office.
Continue networking. Keep requesting conversations with professionals in your field--now even more often since you have the freedom to conduct them during the day. These are meetings with prospective clients or customers. Don't be shy about mentioning ways you could add value to their business.
Carry business cards. Bring them everywhere but don't force them on anyone.
Keep in touch. Maintain contact with your former coworkers, including your boss. Presumably it has some relevance to what you're doing now, and yes, they too are prospective clients or customers.
Set your rates. They should be in line with your industry, so poke around a little. Another way to figure: calculate your rent + basic credit card bill for the month (including health care premium and groceries, not including expensive wine on Saturday night), and divide by billable hours. Remember that a 7-hour billable day is at least a 10-hour workday.
Investment spend. Accept that you will likely do some work for free if it provides good exposure or experience, if you support the cause, or if it might lead to paid work.
When you do unpaid work, communicate to the client that you are choosing to donate services. Write up an invoice that lists your hourly rate and shows that it was comped. This reminds the pro bono client that your time is monetized, and shows consistency if they become a paying client down the road.
Finally, be kind. Reputation lasts and your personal brand is your most valuable asset.