Friday, October 14, 2016

Becoming Your Own Boss: A Bplans Guide

You’ve spent years working, day after day, at jobs that left you feeling uninspired, unfulfilled, and tired.

You’re ready for a change. You want to be in charge of your own future. You want to have control over your days, and work on something you are passionate about and truly enjoy.

You want to become your own boss.

But how do you make this dream a reality? Maybe you have an idea for a great business that you’re dying to start, or maybe you think you have a skill set that you could turn into a viable career. Whatever your goals and current situation are, this guide will help you along the way to becoming your own boss.

I’ve also written a checklist on the steps you need to take to become your own boss—it’s essentially the same information, just boiled down into a checklist format. This guide goes over the steps in more depth and offers additional resources; once you’ve finished reading this one, make sure to take a look at the checklist as well.

1. Determine what you want to do

So, you want to work for yourself.

But what do you want to do? What kind of business do you want to start, or what service do you want to offer?

Maybe you already have an idea—perhaps there is a business you’ve dreamed of starting for years, or you have a skill set that lends itself well to a new career path. If so, skip ahead to the next step. If not, keep reading.

If you want to be your own boss but don’t know what you want to do, don’t despair—we’ve got tons of resources to help you. Have fun with the brainstorming process; don’t let anything be completely off the table at this stage.

Resources to help you determine what kind of business you should start:

2. Evaluate your idea and the market

So, you have a business idea. Excellent—this is often the hardest part.

But, how do you determine if your idea is a good one, one that will make you money, speak to your ideal target audience, and make your transition successful?

These might seem like impossible questions (how can you predict if your business idea will be successful?!) but the reality is, you can answer them to an extent.

Validating your business idea

The process of determining if you’ll be successful is called validating your business idea. It involves determining whether or not your idea is actually viable and taking a look at the market you hope to enter.

Resources to help you validate your business idea:

Conducting market research

After you’ve validated your business idea, the next step is conducting market research. You’ve already started this process by validating your idea, but here is where you’ll get a more in-depth look at your market in general.

Resources to help you perform market research:

3. Make the switch

Do you plan to quit your current job and make the switch to being your own boss cold turkey, or would you feel more comfortable starting out part time, and transitioning to working completely for yourself, gradually?

Making the shift gradually

If you are worried about having enough of a safety net, it might be a good idea to work on the initial stages of becoming your own boss while you are still employed at your “day job.”

This will enable you to have some income continuing to flow in while you set up some of the preliminary basics, like planning your business, getting your funds in order, setting up your website, and so on.

A gradual switch is best for those who know they need the security of their day job and prefer to chip away at a transition more slowly. However, the downside is that you may feel stretched a bit thin (think long days and working on weekends to set everything up), and there is less impetus to go “all in” if you still have the security of your day job to rely on.

Quitting your day job to become your own boss

On the opposite end of the spectrum, you may decide it’s time to quit your day job, never look back, and devote all of your energy to becoming your own boss.

There are pros and cons here, too. You’ll have plenty of time to focus on your new venture, and you’ll have a bit of fire underneath you prompting you to work extra hard. However, the obvious downside is that you may be without an influx of income for a short (or maybe long) period of time.

The good news is, there really is no right or wrong way to go about making the switch from employee to boss. Your decision will depend on your current financial state, the type of business you plan to start, and your own self-awareness when it comes to your working habits.

Resources to help you make the switch from employee to your own boss:

4. Set aside enough money

Before you take the plunge and make a plan toward becoming your own boss, it’s important to make sure this road is financially viable for you.

This doesn’t even mean getting funding squared away for your new business; I’m talking earlier even than that. Do you have enough money to sustain yourself while your business gets off the ground?

Putting enough money away for personal expenses

General wisdom (and Intuit’s Quickbooks blog) recommends that would-be entrepreneurs have six months of personal living expenses in savings before starting their own business; some more cautious folk opt to have enough income saved away for an entire year’s worth of expenses.

Before you commit to the process of becoming your own boss, spend some time evaluating your personal expenses. How much do you spend per month, and on what (rent or mortgage, groceries, transportation and car payment, and so on)? Do you have any big, upcoming expenses (new technology you plan on purchasing, necessary additions to your home)? What about yearly recurring expenses (flying home to see your family, holiday gifts, and so on)? Do you have enough saved for emergencies?

Get very familiar with your monthly budget before you make the shift to becoming your own boss. A personal finance tracker such as Mint can be very helpful here.

Making sure you have enough money to start your business

In addition to determining how much you need saved to cover your own personal expenses, how much money you need to start your business will depend on what kind of business you’re starting. We’ll look at a couple of different cases next.

Selling or producing a service

If you plan on becoming your own boss by selling or producing the intangible (such as providing consulting services, freelancing, and so on), your startup costs will be pretty minimal.

You may need startup capital to hire someone to create a website, a logo, and other branding material, but as you don’t have any physical product, your starting expenses are negligible.

If this is the situation you find yourself in, you’re in luck—you can completely skip the next section. Focus on making sure you have enough saved to cover your personal expenses for six months to a year, and perhaps estimate what expenses you’ll incur on the business end (such as website design, business cards, hiring an accountant, and so on—we’ll get into these topics in more detail later on).

Selling or producing a physical product

Now, if you plan on producing or selling a physical “thing” (manufacturing widgets, opening your own storefront, and so on), your costs will be significantly higher.

Not only will you want to focus on making sure you have enough in savings to cover your personal expenses until your business is profitable, but you’ll also want to ensure that you have the starting capital in place to purchase inventory, rent retail or office space, and potentially hire for any key roles you may need to fill.

There is no set amount that I can say will be “enough” to start your business; this will depend on your industry. However, in the resources section I’ve included some useful tools to help you estimate realistic startup costs and calculate how much you’ll actually need.

Resources to help you determine how much money you need set aside:

5. Consider your own strengths and weaknesses

Everyone needs to be able to support themselves—but what do you have riding on your ability to be successful as your own boss?

Evaluating your emotional and relational state

Do you have a family to support? Are you in a desperate position, or do you have more of a cushion? Do you have a support system in place? Do you have a lot of distractions in your life (new baby, children who need a great deal of care and personal time, family members in need of much attention)?

Evaluating your skill set and abilities

How would you describe your level of self-discipline? What about your time management skills? Do you get easily distracted? Are you able to work long hours, late nights, as hard as needed to make things happen?

Really think about your answers here. The presence of distractions or difficult circumstances in your life shouldn’t necessarily detract you from becoming your own boss; they just mean you need to be realistic.

It can be helpful to conduct a SWOT analysis on yourself at the outset before you even take the first big steps to becoming your own boss. Where are you strong, and where do you need to focus your energy on improving your habits, or balancing the forces in your life that pull you in different directions?

Resources to help you evaluate your strengths and weaknesses:

6. Create a plan for your business

You have your idea, you’ve validated it and done your market research, and you’ve established that you feel confident in your ability to be your own boss.

Now, you’re ready to plan your business.

However, note that I said “plan your business,” rather than “write a lengthy, formal business plan.” Depending on your new career path, you may never need a formal business plan—a Lean Plan may be just fine. It’s the planning process that is important here.

Determining what kind of business plan you need

Before you create a business plan, figure out exactly why you need one.

For a business plan event

Are you seeking funding, either from a bank, investors, or a combination of sources? This is what we refer to as a “business plan event.” It’s a formal setting in which you’ll need to prove to outsiders that your business is viable. If you don’t foresee having a business plan event in the near future, you can skip to “for internal use.”

If you do have a business planning event in your near future, you’ll need a formal business plan. Luckily, business planning is our bread and butter—we’ve got plenty of resources for you on business planning right here on Bplans.

Resources to help you create a formal business plan:

For internal use

So, you don’t have an upcoming business event. Maybe you have enough money saved to become your own boss right away, or your business doesn’t need a whole lot of money to start.

This makes the process of planning simpler; you don’t need to prove to outsiders that your business idea is viable.

However, this doesn’t mean that you don’t need a plan at all. The planning process is hugely important; by creating a business plan (even if no one else ever sees it) you will be able to get your ideas down on paper, clarify where you see your business going, and reevaluate as time goes on.

It doesn’t need to be a lengthy, formal business plan—in fact, we’d recommend against it. A Lean Plan is much more flexible, easy to complete, and useful internally. Check out our resources below on Lean Planning and internal business plans to get started.

Resources to help you create a lean, internal business plan:

7. Pick your business name

If you haven’t already, now is the time to start thinking about your business name.

The key here is making sure your business name is one you can live with long term. Once you begin the process of registering your business and establishing a brand, changing it will be highly inconvenient (and potentially expensive). Don’t forget to check that your business name is available on social media sites as well.

Resources to help you name your business and register your business name:

8. Make it legal

Now that you have your business name, you may have already started the process of legalizing your new venture. However, in the process of becoming your own boss, there are other legal matters to attend to, such as setting up your business structure, acquiring any necessary licenses and permits, and getting your EIN.

Setting up your business structure

What business structure best suits your new venture? If it’s just you, congratulations—you’re already a sole proprietor. However, you may wish to start an LLC, a partnership, or even a corporation. I’ve written a guide to choosing your business structure, which is linked below.

Resources to help you determine the right business structure:

Getting any necessary licenses and permits

Depending on the type of business you’re starting, you may not need anything in the way of permits and licensing. However, it’s good to look into your industry and see what’s required.

You may not need a Federal Tax ID number (or EIN) either; the IRS website has this handy guide to determining whether or not you need one.

Resources to help you apply for the necessary licenses and permits:

9. Get your finances in order

Now is the time to straighten out your financial situation, if need be.

This could be speaking with an accountant or bookkeeper, setting up bookkeeping software and familiarizing yourself with it, setting up a business bank account, and so on.

Hiring an accountant or bookkeeper

If you feel it is financially viable for your business, hiring an accountant (or at least meeting with one periodically) is a good idea.

Resources to help you find the right accountant or bookkeeper:

Taking on your bookkeeping yourself

If you choose to go the DIY route, never fear—there are plenty of resources for those entrepreneurs who wish to do their own accounting.

Resources to help you complete your own bookkeeping successfully:

Setting up a business bank account

Another important step to becoming your own boss is setting up a separate account for business expenses, in addition to your personal accounts. This way, it will be easier to separate the two and prevent confusion.

Resources to help you set up a business bank account:

10. Set up your workspace or pick a business location

Do you plan to do all your business out of your own home, or will you need to find a location to set up shop?

Setting up a workspace in your home

If you are establishing a freelance business or another type of service business, you may be best suited to work out of your own home.

In this case, there are a few considerations. First, you’ll want to ensure that your home office is set up in such a way as to maximize productivity, and serves as a functional workspace.

Secondly, if you plan to write off certain expenses, you’ll want to make sure that your home office meets requirements—for example, did you know that if you want to write it off, your home office cannot double as a guest bedroom?

Resources to help you set up a home office:

Choosing a retail or office location

If you need more space to take clients, see customers, or house merchandise, you’ll be looking into choosing a business location.

Fortunately, we’ve covered the topic extensively here on Bplans, so check out our resources below.

Resources to help you choose your business location:

11. Establish a website, social media presence, and brand

At this point, you have all the physical details in place. You should be well on the way to becoming your own boss, and making your new business and career path a reality.

So, now it’s time to make sure you establish a strong presence online and build a recognizable brand.

Setting up a website

One of the biggest mistakes you can make when becoming your own boss is avoiding setting up a website.

Depending on your industry, having a website may be seen as standard. If you are becoming your own boss by opening, say, a restaurant or a clothing store, you probably already have plans to set up a website.

However, if you aren’t part of an industry where setting up a website is pretty much a given (i.e., you’re becoming your own boss by offering a service, such as graphic design work, writing, and so on), you may not think you really need a website.

However, setting up a website from the beginning will help legitimize your business, and you can direct new clients to it so that they can see your rates, past work, and contact information.

Resources on how to set up a website:

Establishing a social media presence

Some social media platforms will be more useful to you than others, depending on your field.

For example, while Pinterest is great for visual vocations like wedding planning, it might not be ideal for someone starting a new construction business. Take the time to figure out where your target audience spends their time online.

That being said, you’ll want to make sure you have at least a few social media sites with a unique handle associated with your business (preferably your full name or the name of your business, or as close to it as you can get).

Resources on building your social media presence:

Building your brand

Depending on your industry, you might be inclined to dismiss the idea of developing a brand image.

After all, a brand is something that big companies like Nike have, right? If you’re a freelance writer, for example, surely you don’t need a brand?

The truth is, you’ll be putting yourself at a disadvantage if you don’t brand your business, even if your “business” really is just you offering a service.

A brand can be fairly simple; it can be the colors, fonts, and imagery you choose to use on your website and business cards, the type of projects you take on or niche you fill, and how your tone of voice fits with that particular niche.

We have a lot of information on branding here on Bplans, including our partnership with the Brand Genie, a tool to help you create your brand.

Resources to help you build your brand:

12. Get the word out and market your business

Now, it’s time to set yourself up for success by building awareness around your new business or service.

Becoming your own boss means a great deal of added flexibility, but it also means you need to make a conscious and consistent effort to bring in new customers and gain exposure.

To do this, it’s important to develop a marketing plan and build a strong network, both online and in your community in person.

Marketing your business

When it comes to marketing your business, your opportunities are, if not endless, pretty darn close to it.

Marketing tactics are really only as limited as your imagination; that being said, a solid marketing strategy generally consists of a combination of online and offline marketing, and online marketing is split even further into the spheres of paid advertising, and the realm of social media, low-cost, or “guerrilla” marketing efforts.

Resources to help you market yourself and your business:

Networking online and in your community

In addition to marketing your business, as you embark on the journey to becoming your own boss, it’s important to build a network for yourself.

This will likely be a combination of in-person networking efforts (such as getting involved with local meetup groups or industry associations in your area), and contributing to your field online, and making connections this way (such as regular participation in industry-related forums and establishing yourself in your sphere on Twitter).

Networking can be intimidating, but avoiding it can be detrimental to your success. Not only does avoiding networking mean you will be less likely to establish yourself as a thought leader in your field, but you may be missing out on potential clients or customers.

Resources to help you become a networking pro:

Additional resources

If you’re serious about becoming your own boss, it’s a good idea to seek out as much information as you can about the process. There are several thought leaders in the field who have put out great resources on becoming your own boss; here are a few that are well worth checking out.



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