This is part 7 of a series in making the leap to self-employment
You’ve made the decision to quit your job – or the decision has been made for you – and you’ve decided to try self-employment, or return to school, or do something else that will bring you more fulfillment. Now it’s time to put a stake in the ground and create a strategy for how you will get by or “make ends meet.”
Learn how much is enough.
What constitutes making ends meet? In the classic book, Your Money or Your Life, authors Joe Dominguez and Vicki Robin encourage readers to identify their point of maximum fulfillment.
“Enough is far less than you imagined and well within your means. Your enough will be a level of spending that evolves out of aligning your spending with your experience of fulfillment and with your life purpose and values. Enough is not the minimum amount for survival; it is the exact amount that gives you fulfillment without excess. … this enough is usually far below your income.”
Whoa! Read that last part again: “Enough is usually far below your income.” That suggests if you want to quit your job, or if you have lost your job, once you identify “enough” for yourself, you will find that you do not need as much money when you are creating your own living as you have become used to in your salaried job.
“Enough” is going to be different for everybody. Here’s how to determine what it is for you. First, establish your survival values — how much food, rent or mortgage, utilities, automobile or commuting expenses, clothing and other essential bills will amount to each month. Then, establish your luxury values – European vacation, a Harley motorcycle, diamond rings, gourmet dining. “Enough” will be a realistic intersection of the two values that you can live with while you are building a new life for yourself.
For Robert, “enough” was, literally, an amount necessary to survive on. Born into a large, poor family in Jamaica, he dreamed of coming to America to start his own business. He worked, saved his money, finished high school and set out to pursue his dream. In Miami, he bought an old used Ford and found a job as a doorman at a large hotel. The Ford became his transportation and his sleeping quarters as well. After he saved enough finally to buy a long white stretch limousine, he quit his job at the hotel and started a limousine service, still sleeping in his car, although by now he’d moved up to sleeping in a limo. When he bought his second limo, he hired a driver and moved into an apartment. The street address provided collateral he needed to go to the bank and borrow money for more limousines. By the age of 35, Robert was a rich man with a fleet of limos.
You may not be ready to live out of your car while you build your business, but you do need to come up with a bottom line figure you can work with.
If the “making ends meet” concept concerns you, consider this. One person who had struck out on his own calculated that job-related costs took up half of his income. He spent more money for gas, oil, repairs, and maintenance for his vehicle than he did when he worked for himself. He also found he didn’t need as much for clothing, and he ate far fewer lunches in restaurants. He realized that working from home, with the idea of making ends meet, he had to make only half of what he had been making on his job.
You may not get your expenses down fifty percent, but the lesson here is this: Realize you don’t have to find a venture that will generate the same amount of money as you were earning in a job.
How to make ends meet
Once you have psychologically prepared yourself to quit your job, you’ll have to plan how you will actually earn money.
If you hope to start a business without a fat nest egg to cushion your startup, you’ll do well to start building your business on the side, while you’re still employed.
Use extra time you have to gather information to spark a great idea. Go to the library. Join associations. Talk to others in the line of work you’re pursuing. Read. Take classes. Cruise the Internet. Check into free resources like the Small Business Administration (SBA), the Service Corps of Retired Executives (SCORE), local business development centers, and other federal and state programs designed to assist small business owners.
If the company you work for has an education program, take advantage of it and attend evening classes that will help prepare you for work you will create for yourself.
If you’ve been laid off, make the most of the time you are collecting unemployment compensation and go through the above exercises. When your unemployment compensation expires, you can begin creating your own work, not seek a paycheck from yet another company that could lay you off further down the road.
Whatever you do, start small. If the thought of going to school, for example, frightens you, simply send away for literature. Or have lunch with someone who’s doing what you think you would like to do. Begin with low-risk steps and you will gradually work your way up to the harder stuff.
To keep from being overwhelmed, break everything down into easily manageable steps. One day, contact someone to learn how to make a business plan. Another day, join a network group where you can get valuable information. Take at least one action a day, even if it’s only jotting down one new idea, reading an article, or making one phone call.
Part 8, “Create Mini-Businesses,” continues the series on making the leap to self-employment.