Make the Transition From Employee to Entrepreneur

Small Business Trends writes a lot about how to grow your business, but what about those of you who either want to start a business, or who have started one but are still working your “other” 9 to 5?

business parachute

Here’s why you should dive head first (assuming you’re ready financially) into starting your small business:

  • You’ll never be able to fully dedicate time or energy to your business if you’re working for someone else.
  • Quitting your job says that you have faith in your company. That’s half of the formula for success!
  • Once you take that first step, good things start to happen.

Why the Reluctance?

Sure, I understand you want the stability of a job and medical benefits. But have you looked around? We don’t live in stable times. And rather than wait until you get the boot or get laid off, why not take matters into your own hands and quit with a plan to do what you’ve always wanted to do?

It’s scary, believe me.  But as they say, without risk, there is no reward. If working for someone else is all you want out of life, then kudos to you (but then, why are you reading this post?)  But if you dream of running your own consultancy, pet store, salon, virtual assistant business or anything else – the only way you’ll make it happen is if you take that first step.

But Wait! Before You Quit. . .

Don’t jump out of the plane without a parachute!  Make sure you have a business idea and plan, as well as savings to cover your first year or so of expenses. And look into small business or self-employed health insurance. It’s not as expensive as you think.

Now, don’t get me wrong: Sometimes working full time while you start your business is the smartest way to go, because you minimize risk and ensure you have income while you’re testing things out. But you reach a point where you can’t do both. If your business is picking up, you may find yourself tempted to work on it during office hours working for someone else (never a good idea), or may find yourself sacrificing what could be increasing revenue in your new business because you simply can’t juggle both sets of responsibilities.

At this point, it’s time to form an exit strategy. . .from your job. Do it tactfully, and explain to your boss that you’re pursuing your dream of running a business. Don’t burn bridges! Your former boss might end up being a customer or someone who refers business to you.

Gearing Up

If you’re not quite ready to quit, balance your schedule so both your new business and your job get as much attention as you can give. Read books that help you plan your business strategy, and read as much online content as you can (after work) to soak up other business owners’ experiences.

Set a date to quit your job and stick to it. Let your family know what to expect after you’re a full-time entrepreneur. Before you know it, you’ll be done with the 9 to 5 and on to your exciting future as a small business owner!


Susan Payton Susan Payton is the Communications Manager for the Small Business Trends Awards programs. She is the President of Egg Marketing & Communications, an Internet marketing firm specializing in content marketing, social media management and press releases. She is also the Founder of How to Create a Press Release, a free resource for business owners who want to generate their own PR.

12 Reactions
  1. Really…there are a ton of truths in this article! I totally think this is spot on. Great writing! Cheers.

  2. Walk before you run, or in other words, try starting a business before quitting your J-O-B. Then you’ve already got some momentum when you do pull the rip chord.

  3. I agree with Robert, I think far too many former employees do not understand what is required of them as a business owner. I always recommend reading The E-Myth to any would be entrepreneur.

  4. Lionel Bachmann | Model Trains

    Completely agree. If there’s one thing this economy has taught us it’s that there’s no such thing as job security. Being your own boss is the only way of making sure someone is looking out for your best interests. But careful planning and research must be done beforehand.

  5. @James–

    Exactly. Nothing like quitting your job to start a business, then come back with your tail between your legs when you run out of cash.

    The E-Myth should be required reading!

    We could all stand to be a little less mentally dependent on our jobs, given the instability of the market.

  6. Great article and I would like to add my two cents here:
    There are certain mindset shifts that need to be made when we transition from an employee to an entrepreneur.
    1. We must learn to think in terms of profits instead of wages.
    2. We must let go of the need to feel secure with a paycheck and ALLOW ourselves create multiple streams of income using our creativity.
    3. We must be ready to face fear of failure, fear of rejection and fear of the unknown.

  7. Self-employment–like anything–can be dangerous if you don’t pay attention to risk. There are risks with self-employment–just like there are risks with staying at a day job–but, done right, the upside to self-employment is tremendous. That doesn’t mean it’s for everyone, but in my experience, entrepreneurship leads to MORE financial security, since you’re relying on multiple sources of income (customers/clients) rather than a single source (your employer).

    You can completely change your financial picture by creating a successful business (hint: don’t fall for multi-level marketing scams or franchises). The trick is to choose a business model that allows you to learn how to run a business without risking a bunch of money or time. Starting any business, you need to test the viability of the business idea, and keeping expenses and risk as low as possible lets you test your idea without risking bankruptcy.

    I truly think that freelancing/consulting is a great business model–either as a side business or with the intent of building it into your full-time endeavor–because a freelance/consulting business has:
       –>very low start-up costs,
       –>flexible hours,
       –>a high hourly pay rate, and
       –>you likely already have the expertise to get started.
    In addition, consulting is a simple business model that let’s you learn the ropes of running and growing a successful business.

    I started my own consulting business in January 2007 while working full-time and with 2 kids.  I gradually built up a list of a few dozen clients, so that I have a steady workload and income.  It can take a while to get things rolling–as with any business–but the hard work can definitely pay off.

    Since I started my consulting business, I’ve QUADRUPLED my former day-job salary, work less, have a lot more flexibility, and have more financial security.  

    Greg Miliates

  8. Ok – I was starting to panic a little bit there until I got to the “Now, don’t get me wrong” part – WHEW! I was reading and my brain was screaming “QUIT? How are you going to pay the electric bill so you can so you can even operate your new company??” BUT I get it – and I agree, there will be a “cros-over” time – a time when you’ll want/need to choose to stop working to move your new bauiness past being “new” and grow it. A life coach can REALLY help you do that, by the way – you hire a life coach to help you to see what you can’t see currently – they are your mirror. And the other bonus is they come armed with tools and techniques for getting you to your goals. I know – because it’s the ONLY way I got to my goals. Starting and/or growing a business and entrepreneurship are the top 3 goals we coach for.

  9. Quitting without back up plans or even without enough marketing strategies can be very destructive. If planning to start your business, it is best to really plan ahead and make great strategies and that requires great effort on your part but it’ll be worth the sacrifices. Like what you said, don’t jump off the air[lane without your parachutes on. Aside from planning, let’s not overlook the fact that when you have really decided to quit and go full-time in your dream biz, there will be great concerns that will surely arise. How to explain to your employer? How will you manage the changes? etc.

  10. My dad and I have started manufacturing business in 2010. Partly with our savings, partly with loans. As of now, for the last 2 years my Dad is doing business and I am doing my job. By this year end, I will join him with a job experience of 6 years in total. I hold a masters degree. I think everyone should first undergo job experience which is important and then think of joining the family business. I always wanted to be an entrepreneur, but in the last 6 years I have a learnt a lot which will help my in my entrepreneurship role.

  11. I am very much at this stage in my business. I know that if I do not quit my job and focus full time on my business it will not progress. We have been bringing in business solid for over 6 months now, and I have been working full time for someone else the whole time. My problem is that if I wait till I have a year of my expenses covered, then it will never happen. It’s a huge risk, but I see no other choice but to jump. I would rather have gave it my all and failed, then let a little thing like lack of a parachute hold me back.