If you missed Part One in the series, you can read it here.
At the time that my business started booming, I hadn't really planned on quitting my full time job. I loved my boss, I was good at it, and I also loved the people that I had built so many relationships with at work. Then, on a Tuesday morning in September 2013, everything changed. My beloved boss, who I had worked with for nine years, decided he was going to retire. It was a shock to all of us who had worked with him so long, but it was with mixed emotions that he wanted to spend more time with his family. On a day where I was so sad and overwhelmed, this is the day that made me decide that I needed to make a change. His retirement announcement ended up being the inspiration and motivation for me to do something with my life, to build something that was solely mine.
I needed a strategic plan that would actually make working for myself a reality. I had to create more revenue, decrease my expenses, balance myself financially, and plan for the future. Below is the initial list I created:
- Streamline the ordering process to gain more revenue.
- Understand my profits, as well as tax obligations.
- Create a financial backup plan.
- Get out of debt.
- Decide what benefits I was going to need to obtain out of pocket.
- Create a retirement strategy.
Growing the Business
I started to evaluate my current structure, and decided that if I wanted to grow, I needed to streamline the ordering process. I needed to be able to handle more orders than what I was doing currently, and to simplify the ordering process to make it easy for clients. I decided to build a website with a landing page that I could place in all of my Etsy listings (for my wedding shop) so potential clients can easily find out the process, timing, pricing, and customization options available to them. One page that gives all the information they would need to place an order, and a shop that would be linked to it so they could purchase their deposit and give me their details all at the same time. This is where the new website would be my single greatest tool - a place to organize all the information a bride would need, and where they could order their wedding invitations at ten o'clock at night in their pajamas.
Over the next few months, I worked on the new website and launched it in late December 2013. In January 2014, my business grew over 100% from the previous January, and I was getting more orders than ever. I was generating more revenue, almost doubling from the previous year's sales month over month. The website became my number one selling tool, and still is today.
Think about your particular business and how you can make it easier for your clients to order from or book you. Look for ways to streamline gathering information, such as the use of forms (I use a lot of forms). Keep them minimal, but try to look for shortcuts in a process and look outside the box for new ways to generate business. Don't necessarily do what everyone else in your field is doing. Give your clients more information up front, so they don’t need to ask later. Think of the most common questions you get, and find a way to utilize your website to make it easier to generate business. If you are looking to find out more about websites, I have a post on Why I Chose Squarespace Over Wordpress that may be beneficial.
Money + taxes
Ah, everyone's biggest fear when it comes to running a business - money. Managing expenses, taxes, personal bills, etc. can be a bit overwhelming. For years, I have been utilizing a monthly budgeting spreadsheet, so I was already well aware of what I needed financially to succeed every month. While I have always been financially responsible, I needed to learn more about taxes and how this would affect me once I quit my day job. I was so scared of taxes, and the best way to beat that was with knowledge, so I hired an accountant. My accountant was able to take me through my business finances and explain how I could save money. I paid her for a two-hour session to figure out what I needed to do for the year, and she also handles my year end taxes. The cost was low, and it armed me with the data that I needed to move forward. I handle my own monthly bookkeeping through Outright (Go Daddy Accounting) and I love it. All my expenses and income are automatically put into it from various sources, and it is very minimal work on my end. There are many accounting software programs out there, so I suggest researching them to find the best fit for you.
My best tips about money and taxes - hire an accountant, obtain online bookkeeping software, and have your own business checking account. Don’t mix your business and personal bank accounts, as this will save you so much time later when you are forced to separate the two.
Save, Save, Save ... and then Save Some More
If you have a full time job, keep it as long as you can. There is no such thing as having too much money.
Everyone's situation is different, but having a solid savings account that you do not touch is a must for everyone. When you are planning to quit your day job, my recommendation is to have a minimum of one year's bills in your savings account, and then add 20% as an emergency fund. Build a spreadsheet, and make sure you include student loans, car payments, etc. in your calculations. Then, build a second spreadsheet that has your bills once you quit your full time job. Include health insurance, retirement, dental, etc. that you will be paying on your own once you no longer have benefits. This spreadsheet will be your lifeline into preparing you financially to be an entrepreneur.
Debt is a very tough subject, since there are various ways to be in debt. Focus on the items that you can pay off before you quit your day job. Those that have higher balances (student loans, etc.) may not be able to do this in a reasonable timeframe, but decide what is best for you. Remember, the more debt you have, that is more you will need to add to your savings goal anyway so if you can pay it off, do it!
Benefits + Retirement
Another item that becomes very difficult if you do not have a full time regular job is benefits. It is often one of the more overlooked items before going full time, but it is just as important as saving. Research your options on all the items you will need, and ensure you include it in your savings calculations. Here are a few items to consider, depending on your age and marital status:
- Health Insurance (dental, vision)
- Life Insurance
- Short/Long Term Disability
I recommend sitting down with a financial planner as well to work out your specific details, as they can be very helpful in providing a plan, particularly for retirement.
Let the Hard Work Begin
After creating the plan above, I started working hard last January to achieve my goal. I started with building revenue, focused on saving money, hired an accountant, removed debt, and put a benefits plan in place. I knew exactly what I needed to do in order to make my dream of becoming an entrepreneur happen. In 2014, I was working my full time corporate job and trying to grow my business, putting in 70-80 hours a week total with rarely a day off. It was the sacrifice that I was willing to make in order to be successful on my own. Thankfully, I also worked from home for my corporate job, so I would get up at 6:30 a.m., work until 8:30 a.m. when my "other day" began, checked emails on lunch, and at 5 p.m. I would sign off and work for 2-3 more hours on my business. It was not an ideal schedule, but I was so motivated to do this for myself that failure was not an option.
Making the decision to become a full time entrepreneur
First, I will say that I am very lucky - I have an amazing husband that has supported me through all of this, put up with working nights and weekends, and even helped me put orders together when I needed him to. Having a solid support system I believe is crucial, because becoming an entrepreneur is emotionally and financially difficult. Whether it is your family, spouse, boyfriend/girlfriend, or your friends cheering you on, lean on those you can trust for guidance and support. It can go a long way in holding you up during the emotional ups and downs of starting your own business. In October when I had told my husband that I was ready, he was very supportive, and it was helpful to hear his words of encouragement. To this day, he is always the voice of reason when I start to panic.
Finally, in October of last year, the day came - I had hit my savings goal early, was making more each month than my corporate job, and finally I was feeling the exhaustion of working so hard. I needed to make a choice - stay at the corporate job and cut back on the business, or take the plunge. I chose to take the plunge. My last day at my corporate job was December 12, 2014, and I cried a lot that day. I couldn't believe that it was over, I couldn't believe that I made this life-altering decision and nothing was ever going to be the same. What was I doing? What if I fail miserably? What if no one decides to buy another thing from me again? What if I had to go back and find another job because I couldn't make ends meet? The emotions and doubts where overwhelming.
Continue to Part Three...