Small Business Advice

What to Consider Before Migrating from Employee to Self-Employed

Migrating from a w-2 mindset to a 1099 mindset is more than a transition, it sparks a transformation in perspective.  Of one’s self, and the world around them.  Here are a few key things to consider in preparation for making even a negative transition into a remarkable transformation.

Some recent surveys were just released indicating nearly half of workers in the U.S. are actively searching for another job.  It is apparent that, in far too many circumstances, employers have placed an undue weight upon the shoulders of their employees to weather the recession.

Americans are a resilient and remarkable bunch when they’re faced with a common enemy…work harder, or work for less, take on additional responsibilities, or face the common enemy of unemployment.  A recent study by the Pew Research Center(1) confirms 55% of Americans faced at least one of these, or similar negative work issues, during the Great Recession, yet they rallied to do more for less to keep the firm healthy.

As the recession rescinded, profits soared in lockstep with executive compensation, but not much else has changed, leaving a workforce that is exhausted, disengaged, and disgruntled.

With such numbers scouring the country-side for fresh horizons other concerns are emerging.  Am I about to jump out of the frying pan and into the fire?  Is moving from one corporation to another actually going to improve my lot, or will I end up in a similar culture, or one that is even worse?  Would I be better off to go out on my own?  The following slides may shed some light on the state of affairs in corporate leadership and what we may expect going forward.

If you are thinking about making the transition from corporate employee to entrepreneur or the ranks of the self-employed, there are some simple things you can do now, while you’re still contemplating the move, that can greatly enhance your chances for success.

First, know that’s there’s no magic bullet, hidden recipe, recently discovered formula, mind-trick, tapping technique, or social networking secret that will guarantee success.  There is, however, lots of research on what contributes to failure, and familiarising yourself with these evidence-based pitfalls can dramatically improve your opportunities for success.

The Small Business Administration identified the top nine reasons startup businesses fail. The first eight can all be traced back to the lack of a mindful strategic planning process; the ninth reason is lack of good business planning.  The SBA also reports that less than half of nascent entrepreneurs start a business plan.  It doesn’t report on how many of them complete one nor do they offer any information on the quality of the plans new entrepreneurs complete.

Other research indicates more than two-thirds of early-stage business failures are do to poor performance by management.  They either don’t know what they’re doing, don’t know why they’re doing it, or simply doing the wrong things at the wrong time.  What delivers clarity in such instances?  A contemplative strategic planning process.

From my experience of working with investor-driven startups and entrepreneurs for the past ten years I must concur with the findings of the research.  You’d be amazed at how many promising technologies I’ve seen, whose management team was seeking funding, that didn’t have a sound, well-validated strategic plan for taking the technology to market!  This is the key failure point for the vast majority of early-stage businesses.

We live in an age of remarkable specialization. Technology, the growing sophistication of global markets, and our traditional approach to higher education all support the creation of technical specialists.  Most first-time entrepreneurs are just that, technical specialists.  I think you’ll find most successful entrepreneurs have grown into generalists.  But this takes a transformation in order for it to occur.  And that transformation begins with engaging in a well structured strategic planning process.

Why is this?  The first steps involve a self-assessment process that demands you challenge your assumptions as to your strengths, weaknesses, and core competencies.  It is a sobering look into the mirror when done with authenticity and self-honesty.  It informs you as to where you are today at the outset of your journey.  As important as the old saying “Physician, heal thyself” may be, an even more poignant one might be, “Entrepreneur, know thyself”.  This is one of the cornerstones of the building that will be your business.

Once you’ve looked inward, it is time to look outward, into the marketplace.  This is the single greatest stumbling block I’ve seen over the years.  First time entrepreneurs struggle to conduct insightful market assessments that are well validated.  There’s just so much information to sort through it can seem daunting at first.  This is the dropout point in the planning process for most first timers, which may be an early indicator of a lack of patience and perseverance they will inevitably need to succeed.

Stepping out on your own will change everything, one way or another.  You will learn more about yourself than you could ever imagine…it is truly an opportunity for self growth and fulfilment on an entirely new plane.  But plan for it now, while your still in the incubation stage of thoughtfulness.  And the emphasis must be on the planning process itself.  The questions you ask are often more important than the answers you discover.

This is why templates are poor substitutes for working with an experienced team.  Find a mentor, someone you can trust, to push you beyond your current mindset and perspectives; and set your plan down on paper, so you have a road map to your future.  Not one etched in stone, but a working document that can help you engage, measure, and calibrate your efforts along the way.

Beginning in this manner will place you a leg up on more than half of the nascent entrepreneurs dreaming of success!

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