Choosing to quit your job and launch your own business is a risk, but one made easier if you start up in an industry where you already have knowledge, connections and credibility. In that sense, the company you're leaving can become a key asset in your new venture -- or an obstacle to your success.
In late 2009, Ian McAfee left a mid-level executive job at a well-known forex brokerage firm to start a company in the same industry. With less than $15,000, Ian and two partners started Shift Forex, a firm that provides consulting services to forex firms. In its first full year of business, Shift Forex brought in $200,000 in revenue.
Ian says he owes a portion of his first-year success to having a strong relationship with his former employer. And he's not the only one.
Here's a look at how you can turn your former employer into an asset that will help your new business succeed.
1. Show respect.
You want your company to know that while you worked for them, you did your best to serve the company’s interests. In practical terms, this means not talking to the company’s clients, suppliers, and fellow employees (other than your co-founders) about your new venture until you have officially left. If management hears about your new venture from an existing customer, there is a high probability that your relationship will end on terrible terms. Before you leave, you should limit your activities to researching, strategizing, planning and securing funding.
To avoid the temptation of speaking to potential clients before they left, Ian and his partners set a specific start date for their new venture. Knowing that they would be dedicating themselves to the new venture in just a few weeks enabled them to finish strong.
2. Share your plan when you leave.
When the owners and managers of your current employer hear that you are leaving to start a company in the same industry, they may be worried that you plan to steal their customers or provide an identical service. While there may be some overlap, your current employer will likely have a different value proposition or customer focus. Explaining your plan to your boss and possibly a senior executive or owner, gives you an opportunity to make them feel less threatened by your new venture. They still may feel that you are doing something competitive, but your actions will demonstrate a high degree of integrity. Also, if they have a strong objection to your plan and believe that they have the legal right to prevent your new business, it gives you an opportunity to work out a friendly compromise.
When Ian provided his notice, he had a conversation with his boss, who ran the education division of the brokerage firm. His boss had no objection to him working in the forex industry, as long as he stayed away from developing and marketing educational courses for a certain period of time. With this reassurance, his boss was supportive of his new venture.
3. Offer to help with the transition.
You’re probably playing an important role for your existing employer and your departure may leave a hole that will take time to fill. When you leave, you can offer to complete certain tasks or handle limited responsibilities for a certain period time, as a paid consultant. While they might not choose to take you up on the offer, it sends the message that you care about the firm and want to continue to have a good relationship going forward.
Ian and his boss discussed the projects Ian was working on. There were a couple of projects near completion that would provide big benefits to the firm, and so Ian agreed to finish them as a consultant. As the new business took several months to bring in revenue, the consulting checks were very helpful.
4. Let them know how they can help.
One major benefit of leaving on good terms is that you can ask your old employer to help you. They may be in a position to provide your company with references, refer you clients, or provide you with favorable vendor terms. Ian’s original business idea was to help resellers for his old employer, as well as its competitors, with marketing and sales advice. He asked his former colleagues to introduce him to resellers that were looking to enhance their marketing and sales efforts. Because of the way he handled his departure, the company was comfortable trusting him with relationships, even though his new company worked with their competitors as well. He also encouraged referrals by keeping in touch with his former colleagues, buying them a round of drinks now and then.