Making the financial transition from paid employment to earning a living on your own is probably the single biggest challenge facing many would be entrepreneurs. For most, the mere thought of financial insecurity holds them back from even trying. But if you have the vision, persistence and the ability to respond to market feedback the financial rewards will soon follow.
Two ways to make the transition.
There are essentially two main ways that you can make the financial transition.
1. Establish a revenue stream before you quit your job.
2. Quit your job and then build a revenue stream before your start-up capital runs out!
Establish a revenue stream before you quit your job.
Establishing a revenue stream whilst you continue to work, for most people is probably the more sensible of the two options.
The advantage of this approach is that it gives you the freedom to try things out at your own pace to see if there is a market for your pro or service before you actually cut off your regular income stream from your job.
A disadvantage of this approach is that it is often hard to devote the time necessary to get your business up and running particularly if you have a demanding full time job. Another slightly less obvious disadvantage is that the comfort of a regular income may make you less prepared to take the risks necessary to make your business succeed.
Quit your job and build a revenue stream before your start-up capital runs out!*
Now this is the riskier of the two strategies and definitely not for the faint hearted!
The advantage of this approach is that you have all your time to dedicate to your new venture. Another bonus is the uncomfortable fact that you don't have a regular income stream yet. It's incredible what you can achieve in life when you place you self in a position where you absolutely must succeed. This fact alone, if channelled effectively can rapidly propel you towards the achievement of your goal!
A disadvantage of taking this approach is the fact that it can put you under extreme financial pressure which can then impact upon the other areas of your life as well as the lives of any of your dependants. It could even mean depleting all you capital creating a need to return to paid employment.
The approach I took to set up my Coaching Business…
In setting up my own coaching business I decided to take the later of the two options. I gave up my ridiculously well paid corporate consulting job so I could dedicate all my energies into establishing a successful coaching business.
What I personally like about this approach is the uncomfortable feeling you get when you start eating into your start-up capital whether it be savings, borrowings or venture capital. This feeling has compelled many an entrepreneur to push forward rapidly and make breakthroughs that they would not have been able to achieve had they kept their job.
So which approach should you take?
This a question that only you can answer. Give deep consideration to how you feel about both approaches and determine which one is more suitable for you given your current circumstances. It is also important to consider the type of business that will satisfy your entrepreneurial needs. This may also impact upon your ultimate decision.
Regardless of your which approach you take, there is one thing that is for certain; if your will is strong enough and your idea compelling enough you will find a way!
* Financial Health Warning: if you do decide to take this approach please consult with your financial adviser first.
Copyright Damien Senn 2005. All rights reserved.
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