Consider this before leaving employment for business

Close up of a 'Letter of Resignation' [Courtesy]

Most employed people dream of becoming their own bosses one day. The ideal fantasy is to toil away as an entrepreneur and birth a long-held business idea. 

Self-employment allows one to be flexible, choose the working hours and dictate their own targets without someone breathing down their necks. 

It sure sounds rosy. However, it’s no walk in the park and not everything will work out as you had envisioned. It can take time before you establish yourself in your entrepreneurship journey.

It is also a very terrifying decision. You risk losing a steady paycheck and also the reality of failure and embarrassment. 

Not to forget that you can lose all the capital that you had invested to start the business and get burnt. 

It takes more than a courageous spirit as you also have to get the business fundamentals right as success isn’t guaranteed. 

To some, self-employment may save them from the agony of being trapped in a job they don’t like and have to drag themselves to work every morning.

Experts reckon that leaving the comfort of employment should be done in a well-thought-out manner.

Doing it wisely helps build a business that replaces the security of pay from your previous job.  

Phylis Kahiga, a personal finance expert who runs Z-Star Consultancy, a firm based in Nairobi, advises one not to leave the comfort of employment before they figure out what the market that they are venturing into looks like.

“If you are going to work in a similar field or industry like your present employment, make as many connections as possible out there,” she says.

Ms Kahiga also underscores the importance of conducting thorough market research. A key reason why budding businesses fail is not understanding what their market wants.

The paramount reason for opening any new business should be to offer a solution for a certain problem in the market. 

“Ask yourself if your service or product is going to address a market need as you are looking to fill a gap,” points out Ms Kahiga. 

It is important to also identify who your customers are and how you are going to reach them, she adds. 

“Pay attention that there are competitors too and ask yourself how your business is going to be different from them.”

According to Ms Kahiga, it pays to network intensively while still employed as the networks created can turn to be your customers or that crucial connection to the market.

However, she adds, if the reason for quitting is job dissatisfaction, it would make sense to look for another job than quit for business in case you have not done your research well.

Usually, those who quit their day jobs for self-employment begin on a wrong footing and consequently rue their decisions.

She adds that it is advisable to begin investing while one is still employed and quit when the business is sustainable. During the first few months, businesses require significant cash injections and she calls this a critical stage.

To this end, Ms Kahiga urges those contemplating leaving employment to pursue entrepreneurship to have savings that can last them at least six months.

This is because it would be difficult to source loans from financial institutions. This is besides the capital one will need for business.

“How would it be like to quit employment for business and you find it struggling and needs external cash injections but you have limited or no access to credit facilities? That’s why it is essential to save and quit employment when the business can sustain itself.”

Mrs Kahiga cautions that going to self-employment is not a guarantee one’s income will be better than what the regular eight-hour job was paying.

“Depending on nature of the investment, and other factors like market forces, it can even take a longer time for a business to break even.” 

And in case of a company going insolvent resulting in job redundancies, you can research ways to invest that severance package.

Some more tips to consider before quitting your job to start a business. 

Never burn bridges

Giving up well is an art of emotional maturity. You may no longer view your work with respect, but the way you leave should show respect for it. There are people who not only sink their ship but set it on fire.

Quitting is not an act of revenge against the company or your boss.

Give a notice 30 days before, do not throw things away. Avoid venting frustrations about the company, colleagues or bosses. Take a diplomatic approach that may leave the door open for future recommendations or better yet, even doing business with the company.

Set and stick to deadlines

Stopping working for someone else doesn’t automatically make you able to work for yourself, but it does qualify you to try.

A dream without a deadline is a wish. Sitting for months contemplating your idea is one of the worst passive tactics to avoid compromise. Set a date to quit your job and dedicate yourself full time to your business. Just as it is important to set a start date, it is just as important to designate an end date.

Avoid debt

A business must be started without debt. Living on your credit cards and loans is a pattern that should be avoided since statistics say that it is a sure path to failure, not because of the idea, but because of the lack of liquidity to last in the market that requires a business to be profitable. [With additional information from entrepreneur.com]