Like it or not, more people are going to be joining the ranks of the self-employed whether they do it in my parents’ style, in mine, or in some other way altogether.
If you didn’t grow up with entrepreneurship in your DNA, one way to catch up is to study at the heels of Pamela Slim, a consultant, life coach and blogger whose new book, Escape from Cubicle Nation, is a roadmap to self-employment. It’s a quick-read peppered with solid advice and engaging stories. And it covers both the emotional stuff that keeps people from taking the leap to working for themselves, as well as practical concerns like cleaning up your credit, making sure your venture solves a problem, and how to tell if you’re “just not that into” a business idea. I chatted with Slim about how the current economy is affecting people striking out on their own, how to launch a business on the side, and whether it’s possible to warm to self-employment when it’s not your natural inclination.
Do you think the climate for starting a business today is different from what it was a year ago?
I do. On a pure economic basis, there is just not as much access to credit or capital. So people have to think creatively about how rapidly they can grow their businesses. But there are positives as well. I don’t think there’s any question anymore that a corporate job is no longer stable. I’ve been saying this for 10 years -- that we’re all self-employed -- and people are starting to realize that it’s not a smart strategy to rely on employment as the sole source of income or even something to count on. Which means we’ll be seeing a lot more people doing entrepreneurial things, even if it’s just on the side.
So many would-be entrepreneurs are put off by their financial responsibilities. What to you say to people who say they’d work for themselves if only they could figure out how to pay the mortgage?
You need to look at your financial situation with open eyes. And it’s all about your own your tolerance for risk and your financial planning. On the risk side, people have told me that they have hundreds of thousands of dollars in savings yet they still felt anxiety around starting a business. I’ve also talked to people with a thousand dollars in the bank who felt very little anxiety. As for the financial planning, if you are the only income earner or have dependents, then you absolutely need to know how much money is required to maintain your household. As enthusiastic as you are about your business idea, if you haven’t planned for cash flow, you can be crushed by anxiety if you can't pay your bills. All the experts say to have a six month cushion at minimum, but again, it’s really about knowing yourself. Some people feel really motivated if they don't have money in the bank because they know they have to make things happen quickly.
These days, many people are coming to the realization that they might have to work for themselves even if that’s not what they would choose to do in an ideal world. Have you seen people embrace and thrive as entrepreneurs when it’s not their decision?
I think there’s always a choice. If you approach working for yourself the way you would act as a disgruntled employee, saying, “I have to do this,” that’s a recipe for failure. But there are many different ways to be self-employed or work independently. You can be hired as an independent contractor, which can look very much like being an employee since you can earn a steady paycheck and remove yourself from the need to be out there chasing work. That’s one example of working independently, but working in a way that gives you the same predictability and stability as a job might. The other extreme would be someone who creates a new software company and pursues venture capital funding. We tend to have a view of entrepreneurship where everyone thinks they have to be Richard Branson to be successful. But if you look at self-employment as anything you do that generates revenue for yourself, then you can find the model that fits best with who you are and how you’re wired.
Starting a business on the side seems like a safe bet in this economy. What’s your advice for keeping sane for starting a side business while hanging onto a job?
First of all, make sure to cut back on all non-essential obligations in your life so you have time to work on your side business. Start with a small project so you have the time and resources to complete it without losing all quality of life. In pursuit of a long-term business, you might try a couple of different ideas. Then you can see what feels best, what has the best market reception, and what has the ingredients for success as a bigger endeavor. That’s when you’d launch into a different set of questions, planning and analysis that will help you figure out what it takes to set up a long-term, viable business. At that stage, you’ll then look at, “what’s my niche, my business model, and what do I have to have in place to go into it full-time.”
If you could cure one misconception about entrepreneurship, what would it be?
I think it is that you have to have your big idea totally figured out before you launch it. The reality is much quicker and scrappier. You need to get used to testing often and failing fast.
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And now a question for you: Have you recently made the leap to self-employment? If so, how's it going?
