The disruption from COVID–19 has resulted in many employees eyeing off a future as a small business owner. Certainly, independence and being in control of your own destiny are appealing to those from the corporate world.
The world of small business is a specialised skill that requires the owner to be the CEO, CFO, COO, and CMO. Just like any good CEO though, as the owner, you will gravitate to your strengths and rely on others in the areas you are not as proficient.
Accounting Professionals founding partner Garry Pinch is an experienced business mentor and outplacement adviser.
In this blog, Garry offers 8 practical tips for would-be new business owners looking to transition from corporate life.
- Be prepared to reinvest in yourself in learning new skills. You may have to seek out educational opportunities to reskill in your weaknesses or learn on the job from internal and external experts. Fortunately, with the abundance of online learning opportunities, this has become so much easier and less costly.
2. Be prepared to take a pay cut. It is likely your new business will only be able to support paying you a modest salary for the first 12 months ($30,000 to $100,000 per year) until it is operating efficiently. You may have to rely on your corporate payout to supplement your income in the first 12 months.
3. Avoid using your corporate superannuation savings to buy a business or a share in a business. Far too often, those nearing retirement use their retirement savings to become small business owners, only to lose their employment payout, superannuation retirement savings, and their homes when the business fails. Using retirement savings and a healthy personal balance sheet to leverage into a bigger small business is a risk strategy that I would discourage if you are putting your life savings at risk.
“Being a small business owner is a specialised skill, so either start small and be prepared to learn or partner with an experienced small business owner and grow with them.”
4. Be prepared to do tasks that only the “junior or trainee” should do. As a corporate leader, you may have had access to support workers to complete all the menial tasks that keep the business moving. As a small business owner, there will be many instances you will look around for assistance, and then realise that the buck stops with you – because you are all there is. As the business grows your access and capacity to pay for internal and external resources will be enhanced.
“The time that you spend in learning and understanding the skills required in the business, will be invaluable in ensuring the quality is maintained when others are doing the same jobs.”
5. Invest in maintaining your existing personal and corporate relationships while building connections. Being in a small business can be isolating, so maintaining connections to share experiences and establishing mentors as sounding boards for new ideas is invaluable. Most successful business owners have very strong personal and business networks.
6. You may need to learn to make and own your decisions. One of the strategic benefits small businesses have over large corporate businesses is the speed to make decisions. In small businesses a strategic decision to pivot can be made overnight, in corporate life after feasibility analysis, trials, focus groups, etc. the board may decide to trial a new product or service after 6 to 12 months. But as a small business owner, you might use some of the skills learned from corporate life to ensure decisions are based on sound analysis rather than simply a good feel.
“As a small business owner, use the speed of decision making as a strategic advantage.”
7. Have a clear financial plan from the outset. It is hard to determine whether you have enough capital to start, to grow and prosper, without a clear plan on where you are now, where you want to be when you want to get there and what you will do when you get there. Some initial financial forecasts and regular measure, monitor and managing, will ensure you remain on track.
8. Undertake a due diligence review of the business before you take the plunge into small business. Fifty percent of the businesses we review for prospective business owners, do not proceed after the release of our initial due diligence report, either because the prospective owners identified the business was not suitable or we have advised the business was not financially viable.
Email Garry at Accounting Professionals or call on 4297 0066 if you need personalised support for your career transition.