Steps that lead to a successful employee to entrepreneur move

If you’ve ever dreamed of setting up your own business you’re not alone.

According to the Australian Bureau of Statistics, (ABS), in the financial year 2023 – 2024 over 400,000 Aussies did just that.

Over the same period, almost 363,000 small businesses called it quits.

The reasons vary and to assume they all failed would be unfair. However satisfying being your own boss may be, there’s no doubt it’s a tough gig. It’s time consuming and can be mentally and financially challenging; going it alone isn’t for everyone.

You’ve probably already researched the pros and cons of being an entrepreneur, so here’s a list of practical steps to take before making your final decision.

Financial readiness

Assess your financial position and review the following:

• Debts and recurring bills.
• Other household expenses. If you don’t have a budget, now’s the time to create one and look at how much your household needs each month.
• Build a safety net. Start-up businesses may not yield income for months and could even run at a loss in the initial stages. How long could you manage without a regular pay cheque?

A readiness checklist will help you determine your preparedness.

Financial advisers can assist you with this – they are, after all, successful small business operators. They can help identify your financial vulnerabilities and guide you through them.

Create a transition strategy

A professional transition strategy will help get you ready for your shift to self-employment by looking at:

• Savings: how much you’ll need to save before leaving your job.
• Debt reduction: reducing or eliminating debt will see you best placed to maintain financial stability in times of irregular income.
• Create a new, trimmed down budget that anticipates your changed circumstances. Include income fluctuations, and new insurances like income protection and professional indemnity.
• Go part time and treat your new business as a side-hustle before quitting your current job. This not only helps transition your finances but serves as a dress rehearsal ensuring this is really what you want before you take the big plunge.

Test your business model

When going it alone, mistakes can be costly, which is why, when working through your transitional phase you must monitor your progress.

During this early period, assess how you’re going and tweak your business plan where necessary. You should also:

• Speak to potential customers.
• Study competitors; what are they doing? What seems to work?
• Offer your product or service on a small scale, priced accordingly, to identify operational or supply issues.
• Track your progress. Analyse metrics around sales, costs, production and delivery times.
• Seek and learn from customer feedback.