Get Ready: Your Next Boss Could Be You!
Turn the threat of downsizing into a victory. Prepare now to create your own company.
By: Francie Ward, Idea Cafe CEO
If you're still an employee, you've probably seen your share of pink slips handed out each time your corporation merged or "reorganized." (That's probably why you've come here to Idea Cafe, to check out options to control your own destiny as your own boss.) How many times have you wondered when the next employee to be erased from the organization chart will be you?
Are these company "hatchet swings", starting to affect your digestion and your good night's sleep? Wonder if it's really worth going through what you have to to hang onto your corporate position in this ever-changing global economy?
If the handwriting on the wall is starting to read that your next promotion is to "out the door," despite your seniority and all those awards you've won, it's time to get your ducks in a row -- just in case the next pink slip handed out is yours.
Not everyone who gets laid off will find a new equally good or better position in the corporate world. So if you've always had the latent dream of being your own boss, now might be the ideal (or inevitable) time to prepare to make that dream a reality, or at least do what's needed to keep the option open.
You've heard "the best time to look for money is when you don't need it." Unfortunately, this happens to be true. Once you are "self-employed" you are virtually cut-off from financing through banks and your credit card opportunities shrink.
You'll need to arrange for sources of financing now, since your own business, should you decide to start one, will eat up cash -- your cash. No matter how small your new business starts, you'll need start-up cash and a nest egg to live off of until the new business starts generating income for you.
Even if you envision starting the type of explosive high-growth business that can be funded by venture capital or personal "angel" investors, you will still have an indeterminate period when you'll foot the bill for everything personally until the funds land in your new company's bank account. Consider the cost of flights to meet with venture capitalists, development of your prototype, compiling presentation copies of your business plan, not to mention your family's living expenses during the process.
Although there are many potential sources of capital for new businesses, the fact is that most start-ups are funded from personal savings. Don't wait to stockpile your future financing options. Once you don't hold a job, many doors slam, particularly those to lines of funding. Take preparatory steps now, while you're still employed.
Idea Cafe's Pre-Pink Slip Action Plan
1. Cinch in your spending appetite. Stockpile as much in savings as you can before the next merger eliminates your division (or before you decide you've had enough of corporate red tape). Check with your company's HR department to find out whether you'll be able to borrow from your 401k or other retirement accounts, for what circumstances, and how much penalty (if any) you'll have to pay. If you don't like the answer, ask if they offer another type of program you could switch to that would give more flexibility in these areas.
2. Check into home refinancing. Tonight in your local newspaper, take a look at all those ads for home equity loans and low rate refinancing. Phone a couple of them and find out what the cost would actually be, and how much you qualify for. They will gladly do the math for you, and even start an application. If one lender requires a fee to apply, just call another who doesn't. Go ahead and get estimates -- you aren't obligated to complete the process -- but now you'll know how much your home could contribute to your start-up business.
3. Maximize your credit card portfolio. First, list all the credit cards you and your spouse have and note their annual rate on the types of services you'll use; purchases, special "checks," and balance transfers.
Then phone each card company. Talk with a real person to confirm that your understanding is correct. Your objective is to find out what it will cost if you have to carry large credit card balances for a long time (a common way new businesses are funded, due to the lack of other options). Although some cards may offer very attractive introductory rates (like from 0% to 6.9% to the first 3 to 12 months), those intros will only help you for a short period and will require your diligent attention.
If you don't already have at least one card with a lifetime rate of 10% or less, get one now, and request the highest credit limit they'll give you. If you have cards that don't allow you to carry balances, or that charge annual rates near 20%, or that are specific to one store or vendor, relinquish them in favor of cards that give you the breadth of spending and financing options you'll need. If you terminate a card, ask the card company to mail a letter acknowledging it is closed to you and the credit reporting agencies (or it may still appear open on your credit record and reduce your capacity for getting new credit).
4. Review/correct your credit record. Your personal credit record is something future lenders will request, so get familiar with what everyone will find out about you. The credit information companies will send you a copy of the report they have on you for a small fee, or sometimes for free (such as after you've been denied a credit request). Don't wait to be turned down, request your reports now so you can correct misinformation if you find any, since this takes a little time. Get addresses at "Clean Up Your Credit.".
5. Complete your financing homework. Figure out what it will cost you to start up a business, and to live while you're doing it. In seconds you can look at as many "what if" scenarios as you can imagine online using Idea Cafe's Instant Budget Calculator.
6. Test drive the entrepreneurial life. If you work in a large corporation, it's impossible to imagine what it is really like to start and run your own small company. Before you take the leap, do what you can to simulate the experience.
For example, maybe you believe you could turn your great vocabulary, dry sense of humor, and special expertise into a successful speaking career. Get some practice now. That way if you find no one else thinks you're as inspiring as you do yourself, you can improve your delivery or change gears without endangering your lifestyle. Teach a class at your local community college. Listen to feedback about how you come across, so you'll know whether to dare make this your sole livelihood.
Or think you've had it with corporate politics and would be much happier bottling that spicy barbecue sauce your family is famous for? Use your ingenuity to elbow into a part time job working with commercial foods so you can experience the reality of what has to happen to make your recipe a financial success. See how another company deals with FDA requirements, packaging, bottling, distribution, marketing, and selling via wholesalers, direct, and on the Internet.
Entrepreneurship is not a bi-product of academic study, but if you have time, go to classes at your local SBDC (Small Business Development Center). They offer night and weekend classes to give a quick overview of topics like start-up planning, protecting intellectual property, marketing, plus hands-on experience with small business accounting and software programs you may not currently know. Locate your closest SBDC.
7. Talk to entrepreneurs themselves. Take an entrepreneur to lunch and ask what it's like, what the biggest problems are, what's the most fun. He or she will probably be flattered by your invitation, and glad to describe what they've been through in starting and running a small business. Hearing it "like it is" will give you insight on whether and how to take the plunge yourself.
To get the inside scoop, go listen in as biz owners chat with each other in Idea Cafe's CyberSchmooz.
Francie Ward is CEO of Idea Cafe, which serves A Fun Approach to Serious Business -- online at www.ideacafe.com
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DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages. TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.
DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.