Over the past few years, millions of people worldwide have started to reevaluate their career choices. The pandemic has ushered in the age of freelancers and online work, and has reignited a sense of entrepreneurship around the world.
In fact, last year over 5 million Americans started their own businesses, a major uptick compared to recent years. If you, like so many others, are thinking of starting your own business but are worried about the transition, you’ll be glad to hear that, with a little hard work and preparation, you can make the process a whole lot easier.
Let’s jump into how you can make the transition from an employee to a solopreneur.
First, think about why
The most important question every business owner will subsequently need to ask themselves is, why do I want to start my own business? Knowing exactly why you want to start and run your own business will help guide you through both the initial transition as well as your future growth as an entrepreneur.
Some of the top reasons people start their own business are: for the flexibility, to pursue a passion, and to be able to call the shots. Whatever your reason may be, you need to find what is driving you towards becoming a solopreneur. What is it about owning your own business that will make you want to get up every morning, put in long hours, and face the stressors of becoming a sole business owner?
As you pin down why you want to become an entrepreneur, it’d be a good idea to also figure out why your business is necessary. Far too often prospective entrepreneurs get caught up in this step. They think that their business idea has to be groundbreaking or invent something completely new. Remember, you don’t need to reinvent the wheel when coming up with a product or service; just take a current problem or opportunity in the marketplace and run with it. Sometimes the best ideas are the simplest.
Knowing both why you want to start a business and why your business is needed will keep you motivated towards becoming a successful entrepreneur.
Leave your job with a plan in place
Now that you’ve committed to the idea of starting your own business, you must take the first steps. The first thing you need to do is truly transition from being an employee to an entrepreneur. If you’re currently at a job, think about when the best time to do this will be. You’ll need savings to live off of as you start the business, so creating an effective budgeting plan while you are employed should be a priority. There likely will be a gap in your income, so having as much saved as you can, will help.
Besides having a personal financial plan in place, it’s important to have some sort of business plan laid out before you start your entrepreneurial journey. While it may be tiresome, you should use any weekends or free time you have after or before your job to conduct thorough research and lay out the key components of your business plan.
Even though you’ll be running your business alone, it doesn’t mean that you need to go through the entire process on your own. There are plenty of online and local business resources available. A good first step would be to have a business advisor look over your first business plan after it’s done. They should be able to help fill any gaps or weak spots in your plan.
Figure out your financial situation
As mentioned, one of the biggest hurdles that new business owners often face when deciding to start a business is issues with their finances. Before, any financial issues you faced only impacted your personal life. Now, as a business owner, you must think more carefully about your finances as you’ll need to maintain both your personal and business financial situations.
There are a few ways you can prepare yourself to mitigate any risk of financial hardship for you and your business. First and foremost, as discussed above, it would be best to create a budgeting plan for your personal life. Over the early stages of your business, most of your time and money should go towards building the business. Any money left over should be budgeted and saved accordingly.
On top of creating a personal budgeting plan, you should also be working towards maintaining other areas of your financial health. Some things you should be working on are:
- Save for emergencies– Having a rainy day fund is always a good idea, but for business owners, it’s a must. As a business owner, saving money will look a bit different than in your personal life.
- Work on your credit – If your business is ever in the need of outside funding, maintaining a good credit score will open the door to better funding opportunities. Being aware of what your credit score is, and what credit score is needed for a loan, will help you visualize exactly how financially healthy you are. You can build your credit score by opening new accounts, maintaining on-time payments, and keeping your credit utilization rate below 30%.
- Separate personal and business finances – In the early stages of your business’s life cycle, it’s important to make a clear split between your personal and business finances. Signing up for a business bank account and credit card is a great first step. Do remember when you sign up for these accounts, to only use them for business purposes. It can be easy to throw something on the corporate card, but that can quickly become a slippery slope.
Starting a business is a risk at the end of the day. Taking the time to shore up your overall financial health should help keep you on the right track.
Build business relationships
Even though you’re going into this business venture solo, that doesn’t mean you are completely alone. Leaning on the help of others is going to be necessary if you want to succeed. At the end of the day, no business owner can truly tackle everythingon their own.
Building relationships, no matter how big or small, can help propel your business forward. You never know who may know someone important who could help you out. Getting out to local business events and attending local meetings at either your chamber of commerce or small business development center is a great way to network with like-minded people.
Besides building relationships with local business owners, it’d be wise to start establishing a connection with vendors within your industry, as they can dictate a lot of things for your business.
Oftentimes vendors can offer better prices to customers that have lifelong connections with them. These relationships need to start somewhere, so establishing a good foundation with key vendors to your business will make the future smoother for you and your business. To find vendors within your field you can use a vendor lookup tool.
Fully commit to the business
When you start your business, it’ll be a whirlwind. At first, it may feel like you made a mistake. You must remain positive and quell any negative thoughts you may start feeling. Remember the reason why you started your business, and commit to it.
Fully immerse yourself in the business. Any of your remaining free time should be spent thinking about how you can advance your business. The hardest part of running a business is starting it. Putting in the work now will allow you to rest more, later on in the business’s life cycle.
You’ll feel more connected and confident about your business if you dedicate yourself to making it a success. Even though you’ll be a solopreneur, there will always be people holding you accountable for your work. Loved ones, supporters, and other businesses will be making sure that you put in the work necessary to grow each and every day.
Do keep your mental and physical health in mind. In these early months, you’ll likely be working every day for long stretches of time. Make sure to give yourself a break every once in a while. Taking mental health breaks, no matter how big or small, will help you come back to your business recharged for years to come.
Have you joined the FREE resource library for solopreneurs? It’s packed full of downloads, workbooks and guides to help you run your online business. You can get access here.