Harvard Business Publishing

The company and you have parted ways- now what?

In an uncertain economy, one of the things you can predict is that there will be people who lose their corporate affiliation - either through downsizing, or because they elect to take early retirement, or for some other reason - and decide explore the self-employment instead of joining a new organization. Many will become consultants (pretty typical) or go into real estate (not that I would advise that just at the moment) or otherwise start something entrepreneurial in retail. I'd suggest a couple of cautionary notes before making that big leap.

Losing the infrastructure

First, you need to be aware that the transition to working for yourself can be traumatic. When you run your own show, a lot of the support infrastructure of the big corporation is no longer available. Things like logistics, mail, travel arrangements, computer set up and so on can take a lot more time and cost much more than many newly self-employed people expect. It can be lonely - you're no longer part of a work team. Working from home, which many do, is a whole lot different than working in an office on a schedule. It takes a lot of discipline to resist the distractions that can inevitably intrude on the home environment - not to mention the non-professional noises (crying babies, barking dogs) that don't exactly go with the high profile image you may be trying to project.

Startups take time to develop

Secondly, remember that most of the time it's going to take a while for your new venture to be self-sustaining. Don't expect any new business to start throwing off cash immediately. That means you better have a source of income or savings to sustain you while you're going through the start up phase. Loving spouses, savings, and an initial contract with your former employer that will pay the bills are all good. Throwing money on your credit cards is not.

The purpose of a business is to create a customer - nothing else matters nearly as much

Third, recognize that many newly self-employed people haven't got the foggiest idea how to create a viable business. So they'll invest money in brochures, business cards, fancy office equipment and so forth, but fail to recognize that these things don't make you a viable business. Only customers willing to pay for your services make you a viable business! They often totally under-estimate how long it's going to take to generate real new sales. If one can, a much better route is to try to replicate the services you performed for your old company for a new one, and ideally set that up before you are out on your own. I can't tell you how many times I've watched in dismay as people sink the rewards of a lifetime of working into a "cute" retail concept, a restaurant, or some other fun-sounding business without realizing how much work and how long it's going to take.

Resources that can help you

There are many of resources available to you as you think about going out on your own. Here are some that I often provide to would-be entrepreneurs:

Small Business Development Centers
Small Business Development Centers are usually associated with universities. These offer training and consulting services, courses, and sometimes contacts and connections to venture capitalists and angel investors. The main web page, including a location finder, can be found at: http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html

SCORE program
Score is a program also sponsored by the Small Business Administration that uses retired and experienced executives to counsel new entrepreneurs. Their main directory page is at: http://www.score.org/

Entrepreneurship programs at universities
Most universities have a program of study in the area of entrepreneurship, often in connection with their business schools. Look up the university web site to find whether your business might be suitable for a student project or for student consulting.

Angel Investor Groups
Here is a great guide to a number of angel investor groups who are interested in early stage technologies. Angels are often experienced entrepreneurs who can take an idea forward on an advisory/mentoring basis. http://www.gaebler.com/angel-investor-networks.htm

I would also recommend subscribing to Inc magazine - it's intended for entrepreneurs, and often has some good tips and ideas.

Finally, don't be unrealistic about how much enthusiasm you can generate from customers before you've tested the waters. A good idea is to allocate a ton of time to marketing and outreach - probably more than you expected, particularly in the early days. I of course would recommend that you build yourself a discovery driven plan that allows you to plan to test your assumptions. (See my personal blog and search on the topic "discovery driven planning.")