PART 1: For years, I sought an escape from the corporate ‘rat race,’ dreaming of the day when I'll be running my own business - the ultimate dream. Escape from the 8 to 5 herd mentality. Freedom of time to do what I want, when I want, and how I want to do it. Choosing how to spend every minute of the day. Work-life balance. And the ultimate financial freedom.
But, being an entrepreneur and running your own business has its disadvantages. Let’s give you the facts, so you can decide if you want to venture on this journey.
It’s lonely out there – in the beginning when you are starting out, you spend many hours with “me, myself & I”. There’s nobody to talk to, except an occasional interaction with a potential customer, supplier, partner or friend. It can get depressing.
Need to manage yourself – there’ll be days when self-doubt, stress and anxiety creep in. It’s just your mind playing tricks on you. You will need to get yourself out of that frame of mind quickly – either by phoning a friend, talking to a coach or mentor, reading uplifting literature or through purposeful meditation. Programme yourself to live with passion each and every day.
Holidays, what holidays? – when you are starting out in your own business, it’s a race against time to become profitable as soon as possible. You work flat out, day and night, to build a profitable and sustainable business venture. As an entrepreneur, if you don’t work, you don’t get paid. Unless of course, you’ve planned to take it easy for a few years or have built an online empire that makes you money whilst you sleep, don’t think you’ll be taking any holidays anytime soon.
Your advice for a cup of coffee – you can value yourself as much as you want, but there will always be some friend, acquaintance or relative trying to score some free advice over a cup of coffee. Now, if you are a consultant for example, working for yourself means that your work is your livelihood. Time is money. A cup of coffee is in no way comparable to your knowledge and the invaluable input they will receive to grow their business. You’ve got to ask: "What’s my advice worth to them?" and charge them! Let's look at it from a different angle. Say for example, you may be in need of a room renovation. It costs money. Seriously, would they paint your room for free? I very much doubt it.
Who owns whom? – a friend once tried to discourage me from working in the corporate world by saying, “they own you”. Actually, ‘they’ don’t. In the corporate world you are selling time for money. 20 working days on average for a steady paycheck. But, how different is that from doing a favour for a friend who demands your time in exchange for money, which most likely you will need to haggle over, because nobody wants to pay your true value? No different. Most people would prefer not to have to haggle or chase their money after the service is done. Money is due when service is delivered, and working for a corporate means it’s an automated process with no uncomfortable money conversations.
Jack-of-all-trades – working for yourself means you will no longer be able to do only what you love. You will need to know how to troubleshoot IT problems, do the books, read financial statements, market and sell your products and services, schedule appointments, build relationships with clients, network as much as possible, and get the admin up to date! If you are not in a position to outsource all the stuff you don’t enjoy doing, be prepared for the new kind of DIY!
Work on Risk – don’t think working for yourself won’t land you some clients who want to win at all costs. They want maximum value for next to nothing. They take advantage by extracting your Intellectual Capital with no intention of giving you any compensation for your work. You spend hours on end preparing proposals that reveal your strategies. They then have this proposal farmed out or used as a brief for someone else who can do it cheaper than you.
Win-Lose - Sometimes you will need to extend yourself beyond your comfort zone. You invest your time in numerous meetings with prospective clients, they pick your brain, extract information, then try and do it themselves. In your heart you will know when someone is taking advantage of you or that you’ve settled for the raw end of the deal. Cut all ties and move on. There are people who will pay your worth.
Show me the money! – Sometimes the client won’t be able to pay all the fees upfront. So, you work on 50% deposit and 50% on delivery. Or, you may want to offer them a monthly repayment option. What sucks about this is that you do all the work upfront and then have to chase your money, deal with default payments, and have all those awkward money conversations. It’s best to be upfront about your payment terms and charge them more for monthly repayments. Think about the extra time you’ll need to invoice monthly. Don't forget the time it takes to follow up on late payments. Offer a discount for upfront payment instead. Who could resist that?
No more credit – when you start running your own business, getting credit from a bank is next to impossible. The economic system is designed to give money to those who don’t need it and to withhold it from those that do. This is what I mean: when you are an employee, earning a monthly paycheck, any bank or financial institution would be happy to give you a credit card, extend a loan and offer anything to get you into more debt. The minute you stop earning a salary, you have no more negotiating power. You need to plan for such eventualities. Get as much credit you can possibly get, buy a new car, a house and whatever else you need, before you leave the corporate world.
(Bonus Point for South Africans) Bringing on business partners – as fun as it sounds to have someone to work with on your business startup, do not listen to American business coaches who tell you to start a JV partnership in South Africa. They have no idea of the political, legal or economic climate of your country. Partnerships are too risky in South Africa. A JV would mean starting a new legal entity in the form of a Pty (Ltd). In addition, you will need a legally tight shareholder agreement with a clear outline what happens when your partnership no longer works. Who gets what in terms on Intellectual Property, business assets, clients, and so on? What happens when your 50:50 business partner suddenly moves overseas and you are left to do all the ground work and fulfill all client requirements on your own? Or if your partner takes on work in her personal capacity, which directly competes with your jointly-formed company? You’ll know when you’re getting the raw end of the deal. In those situations you need to have a quick procedure to follow to end things amicably.
Ok, ok, yes, this is enough to make anyone ever so slightly doubtful about running a business retreat into their comfy zone and continue with their paycheck addiction. But, read my next blog to find out the pluses of running your own business.