5 Steps You Must Take Before Becoming an Entrepreneur
Are you bored in your job, unchallenged by your work and have an idea for a great new business you just can’t get past your boss’s door? Maybe it’s time to walk out the door and go it alone.
Starting your own business can reap deep personal and professional rewards, but if you take the leap, your days of punching the clock on a regular schedule will end. If it’s work you love and you crave the freedom of operating under your own steam, starting your own small business will energize your career and make the long hours that await you melt away.
But don’t go off half-cocked. Before you quit your day job, here are five steps you should take to ensure you’re ready to go out on your own.
1. Establish goals.
Ask yourself: Do you want to start a lifestyle business or a growth business? What does success mean to you?
In a lifestyle business, your goal is to have your own, steady stream of income. You may plan to have a few employees eventually to help out, but you don't envision building multiple locations, offering an ever-expanding line of products or growing your business into a national powerhouse.
A growth business is different. Your ambition is to build a venture that grows quickly, is constantly evolving and in which you regularly invest more and more money to expand locations, product offerings, customer segments and the like. You’ll be hiring people, traveling and probably working all or parts of seven days a week.
Knowing your goals is key to setting expectations and establishing revenue targets. In a lifestyle business, the goals are more modest, such as equaling or bettering your income from your current job. A growth business requires constant reinvestment and prioritizing its expansion, often at the expense of your personal income -- at least at first.
2. Think through your business.
What is your product or service, and who are the potential customers? How will you attract these customers? Who will be your competitors? If you can’t answer these questions, your risk of failing to launch will be high.
This will be your life from now on: constant market analysis and pivoting when necessary. For example, NerdWallet started in 2009 by creating unique, unbiased comparison tools for such items as credit cards. The reaction upon release? Crickets chirping on the website. Just because we built it didn’t mean people would come. We hadn’t thought out the challenges of distribution and discoverability. So we invested heavily in producing high-quality personal finance content to draw customers toward our tools. Six years later, we now have 2.5 million unique visitors each month.
3. Have an early client base.
Earlier this year, in a conversation with young entrepreneurs at Texas A&M University's Startup Aggieland business accelerator, one of the biggest pieces of advice we shared for aspiring entrepreneurs was to make sure you have paying customers for a new business before you decide to turn down a full-time job.
If you're starting a business full-time, your salary equals your client's willingness to pay.
Knowing whom your potential clients are is good; already having customers is even better. Whether it’s profitable moonlighting work that is now ready to supplant your day job or a growth business that has secured an initial client, starting out with a ready revenue stream will greatly increase your chances of success. You’ll already demonstrate a product-market fit, and you’ll have users who are willing to vouch for you to potential clients.
4. Talk to your loved ones.
Here’s the thing about starting a business: You can’t do it by yourself.
Before you take the plunge, you need to communicate your ambitions and goals to your family, friends and loved ones. Part of your success -- probably a big part -- will depend on their support. You’ll be working long hours, dealing with stress and uncertainty and tackling difficult challenges. You’re going to need the backing of those around you.
5. Adopt an all-or-nothing mentality.
If you’re going to succeed starting your own business, you’ll have to break out of your corporate-employee mindset. I came to NerdWallet because I was looking for the opportunity to do more than my job at an investment bank allowed. Some people saw my move to a young startup as a risky one, but for me the risk was more than offset by the opportunities I got -- in market research, product creation and business development -- that allowed me to contribute on so many fronts to our ongoing success.
If you’re starting your own business, chances are you already have the attitude to see the venture through. As Andrew Chen writes in his piece “Career Suicide Versus Startup Suicide”: “When you commit career suicide, it’s mostly because you do something that defies the norms” in a corporate environment. Conversely, starting a successful business depends on breaking free of those norms.
“In one case, failure happens when you do something abnormal. In (startup suicide), failure happens when you do everything just average,” Chen writes.
An all-or-nothing mentality will help ensure that an entrepreneurial leap will lead to extraordinary results -- for yourself, for your company and for your career.