Discover the three steps to confidently go from employee to entrepreneur.
“The great resignation is coming,” says Anthony Klotz, an associate professor of management at Texas A&M University who’s studied the exits of hundreds of workers. “When there’s uncertainty, people tend to stay put, so there are pent-up resignations that didn’t happen over the past year.”
Ok, but, what if you’re uncertain about what you’ll do after you resign? Although starting a consulting or professional service business may seem like the best option for you, lack of clarity can make the risk too high. And, as a result you may stay in that same job as you see top talent leave to pursue their own interests.
Clarity is the precursor to confidence. So, if leaving and starting your own consulting business is something you’ve thought about — but you don’t want to take that risk without a defined path to success — I’m going to provide that clarity so you can confidently decide your next steps.
Determining your finances
Getting laid off in 2009 launched my career, but I don’t know when or if I would have by choice. If you’re leaving a job to start your own business, it’s recommended that you have 6-8 months living expenses saved up. I had roughly 6-8 days.
You may be in a completely different situation but keep this in mind as it may impact when you’re able to quit. I’m not a financial advisor — as evident by my 6-8 days left of living expenses — so consider chatting with one to explore your options. If you’re not in a good spot to quit relatively soon, you can still commit to a savings and professional development plan aligned with leaving eventually. This may seem like a drag, but it allows you to support yourself while still taking advantage of the “one percent rule”. This strategy of small margin gains states that if you can make one percent progress every single day — in this case, as it applies to saving and professional development — it can result in a significant impact over time. And, it’s motivating to know that with each day you’re getting closer and closer to living in your vision.
All that being said, saving up 6-8 months of expenses could take years but there is a way to accelerate the process of leaving, which we’ll discuss that shortly.
Developing your business before quitting
If you have the opportunity, I would strongly recommend starting a business while you’re still employed. You’ll be less stressed about finances and will have more time to build demand for your services before quitting. If you’re working from home, the time saved commuting and chatting at the office could very well be enough to get your side gig off the ground. To get started, I suggest reading my article How to Start a Consulting Business: Your One Page Business Plan. It will provide you with the framework and roadmap to build a sustainable business.
Of course, you’ll want to determine what guidelines your company has around employees starting a business. If they’re cool with it, you’ll be able to do so without hiding the fact you’re starting your own venture. This includes posting on social channels and even setting up a website when the time feels right. If there are rules against starting a business, the next step is up to you and again based on your tolerance for risk. You could either continue developing resources to start your own business, or say “whatever” and do it anyway. Ethically, I can’t advise you to take the “whatever” route. I don’t have to deal with the consequences so it wouldn’t be right for me to encourage you to do something that could result in you getting laid off.
That said, for some of you, this company policy and your current situation has left you with no choice but to start your business under the radar. If so, you’ll need to grow your business by getting clients and referrals from your personal and professional network. I cover this process in the article How to Start a Consulting Business: 3 Steps to Getting Your First Client.
When and how to quit your job
So, when should you actually quit? Among your unique personal considerations, you should reach a point where at least two — hopefully all three — of the following apply:
- The revenue from your business is consistently enough to cover your living expenses
- You’ve developed a repeatable process for attracting and converting cold leads (not just referrals)
- You’ve finally saved that elusive 6-8 months of living expenses
There’s also another — more riskier — scenario for you to consider; you reach a point where you can’t take on any more business and still handle all the tasks associated with your 9-5. This can easily lead to frustration because you’re literally turning down prospects and can’t leverage other business development opportunities due to lack of time or that pesky policy around running your own business. As a result, establishing even two of the parameters I listed above continue to elude you. Again, this is another sign it may be time to move on and completely enter the world of entrepreneurship.
How you quit is almost as important as when you quit. Although it may be tempting to walk out with your middle finger in the air — or however you’d do that remotely — nothing good would come from it. Beyond that, your current employer could very well be your first big client. That’s exactly what Sarah Casterline, a Brand Designer who focuses on the creative and measurable business outcomes of her work, did when she left her job as Director of Marketing at HUNGRY.
“I positioned it not as leaving but as a transition of scope and a win-win: they were still getting the high value creative items from me, but at a lower cost, and I was getting a big recurring client and a more secure financial starting point for my business. The conversation went better than I could’ve imagined. My supervisor said, ‘I knew this day was coming. You’re very good at what you do, and we’re going to support you. Oh and by the way, you need to charge more.'”
If you’re sure you want to do your own thing, it can’t hurt to negotiate with your current employer. You’re already leaving, so the worst they can do is tell you to leave quicker. And, once you officially leave, I highly recommend taking the time to create a vision for your personal and professional life. This is different from a goal, your goal could be to make $300k per year. Your vision provides more details such as what it feels like to own your business, what you’re known for and the associated experiences.
You’re going to experience challenges but if you want to achieve that vision, more than you want to avoid those challenges, you’ll have all the motivation needed to continue growing and moving forward.
Ready to start your consulting business? Check out our Consulting Business Accelerator and get going today! You’ll gain access to training videos, hands-on activities and join live weekly Q&A calls.