How did you handle the pressures? 6

[MissouriPE]

Still thinking about striking out on my own. Trying to help myself and my husband feel a little better about the sacrifices that will have to be made. So curious, for those of you who have "been there and done that", how did you handle:

1. The financial aspect of starting a business? (ie. going without a paycheck when those bills kept coming in, the uncertainty of when you would be able to draw money out, etc)?

2. The family aspect of starting a business? (ie. spending time with your kids, spouse, extended family and friends)?

3. The stress aspect of starting a business? (ie. knowing that it all comes down to you? meeting deadlines without others to rely on? being in charge of marketing, accounts payable/receivable, etc.)?

4. Overall, the uncertainty? I think this is the part that both my husband and I are feeling the most queasy about. And to top off the situation, we just came off a year where he spent over 3 mo laid off (he's an electrician).

I'm about 75% certain starting my own consulting business is what I want to do (and in the back of my mind it has always been where I wanted my career to eventually go), but we have these sticking points.

Thanks in advance to anything you can share.

Christina

 

[rb1957]

benefits could also be an issue (i'm an independent contractor, in part 'cause my wife (a teacher) has a full benefits package.

if you've got a job, i'd suggest before you quit you lay the foundations for being independent (line up some jobs, at least some good potential jobs).

i found the fiance side not too daunting ... incoproration was a simple on-line process, i have an accountant who does my year end book keeping. there are several government agencies you have to deal with (it'll be different where you are, but up here there were quite a few (and I'm finding out now there were some i missed).

but you're right about the big issue, you're trading security for uncertainity. For myself (again with my wife working a steady job) it's been great. I was "punted" (laid-off) and lined up a job the next day. Now the car is a company expense, i have an office at home (expense a portion of utilities), and the kids "work" so their pocket money is a salary (company expense).

good luck

 

[tygerdawg]

Like RB, I was punted also. "Every engineer dreams of starting his own business", so I gathered up my available cash, read the books, did the planning, incorporated and started. A month later those airplanes flew into the building in NYC while I was licking the envelopes of my solicitation letters. Nine months later my cash was gone. The "being on unemployment" experience, and a referral, motivated me to get started again. I HAD TO: I have too many degrees, too many years, the economy was in the dumper, so I couldn't BUY a job. I had to find work on my own to support my wife and disabled kid.

Lessons I learned in response to your questions:
(1) Cut your expenses to the bone, then cut more. Dump the SUV, etc., and minimize all household expenses. You can always buy another one when you have too much cash flow. If you don't REQUIRE a lot of monthly income, then you don't have to MAKE a lot of monthly income. My family survived very nicely on less than 1/2 of my previous salary. After the first nine months, I dumped my two business phone lines and all that other silly fluff that was draining my avaialble cash. My clients never knew the difference.

(2) I was working at home. I was there when the kid got home. Stay at home mom/wife had new freedom since I was there, so she was happy. She did all the finances and was my company's "VP of Finance". Dates were disguised as "Board Meetings" on company expense. Family went with me on consulting gigs as a vacation. It worked out well, and is within IRS guidelines.

(3) Stressful, yes. Be prepared to put in the hours necessary to make it work. I worked 80-90-100 hour weeks trying to get a gig that would float me for the month. After you get it rolling, and the reputation built, it will be easier. If you don't spend the hours necessary to do excellent, value-added work, on time, under budget, that absolutely thrills your clients, then it won't get any easier.

(4) You have to make your own decision about uncertainty. I tried to manage uncertainty by making my outcome into this venture more deterministic. Like I said, cut expenses to minimum, etc. Learn quickly what works, what doesn't, what fees to charge, and so on. Hit the pavement and attend every professional society and networking opportunity possible to schmooze with others.

Other insights I found:

For my market niche, there is money hanging off the trees and hiding under bushes. It's everywhere in abundance. All that is required is to put in the marketing & promotion time necessary to get that project commitment from your client. And travel to the work, which I can do only under limited circumstances. So I have embraced the power of the internet to handle that.

I learned to be creative and strategic about what it was that I could do in order to bring in money. Taught classes at the local Community College, did paid contract work, did volunteer work to get contacts, accepted charity from my church family. Good impressions made years ago pay off dividends today through referrals and contacts.

I learned how to accept rejection and how to cold call and be persistent. I quickly learned I needed to get told "Heck, NO!" about twenty or thirty times in order to get that single "Well, when can you come in to discuss this?" response that brought in some money.

It can be done, people do it all the time. You must search your soul to be certain you have the commitment and mindset to be successful. And since obviously you are a woman, you should take advantage of every Minority opportunity that you can: Minority ownership, government contract small business Minority set-asides, specialized grants, etc.

But beware: if you are even moderately successful, then you will be corrupted for life. You'll never again have any tolerance for silly idiotic corporate behavior.

TygerDawg

 

[josephv]

Hello Christina,

Here is something I read about (I can't remember where) starting a business...

There are 3 reasons why someone starts their own business:

1) They just got laid off and want to try something new

2) They are currently employed and feel that they could do the same thing their company does and make more cash

3) They see a "need" in every day life and design a product, service or company that addresses this need

People who fall into category 3 tend to be more successful.


Best wishes,

Joseph

 

[MissouriPE]

Thanks everyone (and anyone who has anything to add after this). I appreciate the insight.

The good news is that I have lived on so much less in the past, but it is going to be a sacrifice for my whole family to use up savings and cut back our expenses (although really, we don't have THAT many expenses - our only debt is our house). Frankly, I could probably just be a stay-at-home mom and with some frugality and the improvement in our tax situation, I could make it work as long as my husband wasn't laid off for a long time. Oh, and our health insurance is through his union so my job really only offers us the flexible spending account stuff and I could certainly set that up for us if I owned the business and shelter that income still.

I'm still talking with some firms and trying to figure out things. One large firm who is not located here would like me to build the business that I was thinking of building, but do it for them. The pros to doing it for them is the steady paycheck and someone else juggling the accounting and so forth plus having a large company's wealth of expertise at my disposal (and could learn from them). The con is that I will do all the work that I would have done for myself and not get as much of the reward, but with my kids being young - it might be nice to let someone else worry about all that stuff.

As for JosephV's post: I'm probably a mix of the three. I'm currently employed, but at a demoted position because I pissed off a boss who didn't like having a woman work for him that knew a helluva lot more than he did about the topic at hand. And I see a need for other communities to have the expertise that I spent the last 4 years developing for my community (I am a City employee). So a little of #1 (in that I was essentially "let go" in my previous position), a little of #2 (do have a job, but want to do something other than what I am currently employed to do) and a little of #3. My only fear is that my area is the bastard child of most communities and they aren't willing to pay for what they really need.

Letting some things play out since I do have a paycheck (even if it is a lot smaller these days) and planning that by the end of the year, I will either work for someone else or work for myself but can tell these jerks where to shove their job.

 

[weeeds]

You seem to have too many reservations about going it alone. Unless you are 100% certain that this is for you then don't do it. You need to have all the drive available within you to get things off the ground. Self employment is not for everyone, and there is no shame in that. There are huge risks because your success is not always in your control.
Only if you are certain that you want to do it should you venture out on your own, otherwise you will have that voice in the back of your mind telling you that maybe you made a mistake.

 

[GregLamberson]

A couple of possible options:

1 - One thing you can always do, as long as you are working, start setting everything up. Once you find a decent project to get kicked off on, quit your job and jump into it. That's basically what I did and it worked for me. I've also heard to "just jump in" and I know that works for some, but not me. It's kind of the old adage the best time to look for a job is when you have one, I applied it to going from employee to consultant.

2 - you mentioned another company want you to do it for them. You could always try that route, get the experience and contacts, see how all sides of the business work, while at the same time having a safety net and with the idea of, at some point, harnessing all of that experience and background to do the same for you.

Cut expenses to the bone as Tigerdawg pointed out, look at maiximizing your tax deductions, look hard at the business structure (there are some useful threads on that). If you have children, they are expensive little buggers (and not to mention lovable), but with some creative thought they are also a boon at tax time - don't consider children as only exemptions.

You may be able to get a line of credit at your bank. A couple of other things that I have done, include:

1 - get favorable terms, on my contracts. To date (the last 7 years) I generally get either a net 7 or net 10 days, once I got net 15 (worst terms I've had), but pay my bills at the end of the month. Also get your invoices in on time.

2 - try to neogtiate a "mobilization" fee from your client. I did that recently, negotiated a $50K up front fee and took a retention of 10% off each monthly invoice until it was paid off. As a marketing tool, and again, I do this, tell your client if they don't like your work, they don't have to pay for it. Some may say that is a risk, but I've never had anyone fail to pay, of course you should deal with reputable company's.

Greg Lamberson
Consultant - Upstream Energy
Website:

http://www.oil-gas-consulting.com

 

[FACS]

A little critical advice, if I may. I read things like this:

I'm currently employed, but at a demoted position because I pissed off a boss who didn't like having a woman work for him that knew a helluva lot more than he did about the topic at hand.

My only fear is that my area is the bastard child of most communities and they aren't willing to pay for what they really need.

I will either work for someone else or work for myself but can tell these jerks where to shove their job.[\i]

If you plan on starting your own business, you will have to check into that humility a bit. Customers are far more frustrating than bosses, and you can not piss them off, no matter how much you know.

Just an observation.





Charlie

http://www.facsco.com

 

[MillR]

Starting your own business is something like having children. Far more difficult than you would have thought. Far more rewarding than you could have imagined. You can't ever go back to the person you were before - your employee mentality will be broken - but then, you wouldn't want to. You can educate yourself ahead of time and try to minimize mistakes, but really, it's a leap of faith.

 

[michfan]

You are 100% correct, MillR.

It's an "all or nothing" undertaking.

And if you think you can give less than 110%, and you fail, you will always wonder if you could have done more.

That's why I haven't really slept in 2-1/2 years.

 

[DonPhillips]

And be ready for lots of little surprises, too. In today's mail, I recieved a notice forom my Secretary of State that my articles of incorporation have been cancelled. I have to get a reinstatement certificate from the Department of Taxation. Since I am an S-Corporation, I have to file a Notice annually with the department of taxation. I must have forgotten this last year (my records do not have a copy in the file) so I have a letter going to taxation and my 2007 notice in the mail. I hope there is not fine for failing to file although I do not owe any taxes, since I paid when I filed my personal taxes in 2005. It is things like this that makes it challenging but after you get through the paperwork, not too bad.



Don Phillips

http://worthingtonengineering.com