Becoming Your Own Boss

Making the jump

What will it mean for me?

Making the move from an employee to employing yourself is an increasingly popular choice in recent redundancy programmes.

There are a number of reasons for this. A dissatisfaction with the management style and culture found in a lot of bigger organisations, the chance to design a life closer to your long held dreams or simply that a generous redundancy package makes other choices available to you.

You can start a business that works, one that gives you what you want, without having to change your personality. All it takes is the right information, used the right way. Perhaps you want to...

Whatever your reasons for wanting to Become Your Own Boss it’s worth taking the time to think through what it would really mean for you.

Why Employ Yourself?

Research shows that despite the stereotype, most businesses are not started by entrepreneurs pursuing an opportunity, most are started by craftsmen or technical specialists who are fed up with being managed and think that the grass would be greener if they managed themselves.

Many of these people are craftsmen in the widest sense of the word - a man or woman who loves their craft and longs to be left alone to pursue it to their very highest standard - something that the daily bureaucracy of a big company rarely allows.

This approach - wanting to move away from employee status carries inherent dangers though.

Firstly, it can blind you to the need to find people who actually want to buy your product or service. Moving away from a situation you do not like can cause you to miss the need to have something to move towards. Secondly, you can overemphasise the supposed freedom of the independent business person. A common misconception is that you will work less hours for more money. It frequently proves the other way. It can be lonely, hard work and requires constant mental, emotional and physical focus to make it work - particularly in the early days.

Write Down Your Reasons

At this stage it can be very helpful to be clear with yourself what your reasons are for wanting to be your own boss. Write them down. Make sure you have captured all of them. Now see how many are a desire to move away from your old situation and how many are a clear opportunity to move towards.

This can be instructive and if you find that you really only want to move away from the past then it might be that your desire to run your own business is really masking a desire for more freedom and control in your life. Starting a business is only one way to do this and may not be the right answer for you.

Consider spending some time daydreaming with yourself to explore these thoughts and see whether there are alternative ways of making some lifestyle changes that don’t involve starting a business.

Ewan Uzarmy was a successful senior manager working long hours at a job he used to enjoy in an industry that used to be fun but was now highly competitive. He lived in a world of cost control, meetings, “always on” connections and constant reorganisation. Just lately he’d begun to notice how dry and stale he was. He dreamed of the freedom of running his own business egged on by the occasional friend or contractor who assured him he could do it. TV programmes like Dragon’s Den sent him off day dreaming of the day he ran his own business. Fortunately, Ewan began to work with a coach who helped him see that actually what had happened was he’d let his life get right out of balance. Work consumed too much of him and he’d lost his way a bit. Self employment wasn’t the answer but acting as if he was the CEO of his own life very much was the answer. Ewan began to rebalance, cutting back work, taking up long forgotten hobbies, paying more attention at home. And with a new self determination at work he found that he could do more of what he loved and less of what he didn’t so he was able to keep all the benefits of work with the attitude of a businessperson. No-one was surprised when promotion followed.

What Does It Involve?

Research shows that there are three main things you need to have in place to start a business that works:

Mechanics

You need to understand the mechanics of how it all works - tax, national insurance, expenses, VAT, whether to be a partnership, sole trader, limited company or one of the other business structures you can use. This area needs constant attention and you’ll need to create systems, structures and new behaviours to manage it. You may well end up having to pay someone to help you with this.

The biggest problem with all the mechanics is that it will cost you time and money while not actually building you a business - it’s just mechanics. This guide - The Red Stuff Handbook - covers these mechanics in detail.

Marketing

You need to know how you are going to make sales by bringing together your customers and your product or service. This activity enables you to take money from their pockets and put it in yours.

Again, this requires you to learn some new skills, learn to manage sales and get used to asking for money for what you do. It is also the time you spend doing what you love and getting paid for it.

The Red Stuff Handbook does not cover marketing at all, it’s purely mechanics. For your marketing, I highly recommend you treat yourself to the Marketing Manual produced by Robert Middleton over at Action Plan Marketing. I have a copy and it’s the main reason why I haven’t written a Blue Stuff Guide. Read more about the Marketing Manual.

Me

You need to know some things about yourself - have you got the DNA to start, pursue and run a business? It's very different to working for someone else and needs a different approach. You’ll need to make sure you regularly take a step back from the mechanics and the day to day activity to take a helicopter view of you and where you are going.

These three areas are three balls that you need to keep in the air. Drop one or forget one and you’re soon in trouble.

Above all they require a willingness to actively manage your life from now on, making the move from subservient employee thinking to independent free agent thinking. Do you have the appetite for this?

It’s All About The Fish

If you want to catch fish there are two basic approaches you can take.

The first is to worry about the gear. What equipment do I need? What type of rod? Do I need an umbrella? and then, when you have all the right gear, go and look for fish. For a new business this will result in struggle and probable failure. The most common mistake new start ups make is to worry about their product / service, spend loads of time and energy on it and then set about looking for customers for it.

The second approach to successful fishing is to answer the only question that’s really important - Where are the fish? And then fish where the fish are. The fish will tell you what gear you need and in most cases, if you are fishing where there are lots of fish then you could use almost any gear and you would catch something.

For a new business this is the route to success. It’s a three stage process:

  1. Find a crowd of customers who want something
  2. Find out exactly, in detail, what they already want
  3. Give them exactly, in detail, what they already want

Instead of looking for customers for your product or service, get close to your customers and set about finding products and services for them.

How To Succeed In A New Business

Here are some general principles that will increase your chances of success.

Marketing

Start with your customers. If you want to grow you need new customers and if you want new customers you need three things:

(“Three things you need if you want more customers” Seth Godin, Feb. 2010)

Unfortunately, these days, if you don’t have the first one and particularly if you don’t have their permission or knowledge or word of mouth entry to that group then you are invisible and will have to resort to starting a business and waving madly at the market to attract attention. This is slow and painful. Just because it is a good idea or an excellent service does not mean that anyone will buy it. Increase your chances by making sure you start with a group that meets the criteria above.

Me

There are actually no special characteristics that successful entrepreneurs share apart from the fact that they are all human. In general though there are some behaviours that you see over and over again in successful people in any field including new business start-ups:

Are You A Driver Or A Passenger?

Most of the inventories out there that claim to test for entrepreneurial skills tend to focus on a particular form of sales based entrepreneurship typically on display in places like Dragon's Den. Loud, salesy, entrepreneurial extroverts who have built successful businesses make the typical mistake of assuming that theirs is the only way, so they write books in their own image. If only you can become more like me, the subtext reads, then you will succeed.

What if you're not like that though? Can you still become your own boss?

Whilst some of this has to do with the type of business that you choose to build, I tend to look for one particular mindset - the driver. In general, people who make the easiest transition from employment to employing themselves are those who think like drivers instead of passengers. Drivers, on the whole, will tend to make a success of what they turn their hand to. Passengers on the whole, won't.

If Your Life Was A Bus, Who Is Driving?

A driver…

Thinking like a passenger, on the other hand, can make it very hard to start a new business:

A passenger…

Drivers tend to use results based language while passengers tend to rehearse reasons (excuses) why things did not happen. It's easier to become your own boss if you operate as a driver rather than a passenger.

How Is This Useful?

As you grow your business you are going to run into brick walls; times or circumstances where someone or something appears to be an obstacle. At such times it is very tempting to think like a Passenger but the solution is usually to sharpen up your driving.

This means taking complete responsibility for where you are now (even if not your fault) and then looking for what to do differently.

This is not easy but it works a lot better than whinging. A great question for those challenging situations is “What is my role in creating this?” Once you begin to see how your choices have affected the situation, other options usually offer themselves.

You’ll Be Wearing Many Hats

Becoming your own boss means getting used to wearing many hats. Here are a few of them.

It’s a lot isn’t it? Becoming your own boss makes you CEO and also the accounts receivable clerk. Do you have the appetite to become a seven headed marvel or the willingness to manage others to do them for you?

Money

Starting a business requires you to focus on money a lot more clearly than employees ever do. It’s worth remembering that the route to success is to have more money coming in than going out. Although this seems obvious and banal it is astonishing how many people forget this basic approach. Even very big businesses occasionally miss the self evident truth that they must have more money coming in than going out.

Here's the calculation you’ll live by:

Negotiated prices minus costs equals profit.

You’ll pay tax on the profit and be able to live on what’s left. This means that two things need managing all the time - your prices and your costs. Do you have the appetite to explicitly manage money in this way? Without it you would probably be more comfortable in a job.

Who Can Help Me?

BusinessLink is the national support site for people interested in starting a business. From the site you can find your local BusinessLink office, most of whom offer a free consultation with an experienced adviser.

Inland Revenue Workshops. A search here will take you to the booking details for free workshops run by Revenue and Customs in your area. These workshops cover a number of the mechanics of starting a business from registration to payroll and offer a chance to meet directly with their Business Support Teams. This may be useful research as part of your decision making process.

Find a model

Perhaps the most useful source of help though is to find yourself a model, someone who has trodden this path before you. Most people who have made a similar change are only too glad to help someone else who has questions and you will often find them to be generous with their time and attention. Think about who you know who is already doing the kind of thing you want to do - friends, ex colleagues, family, customers, suppliers, other independents you know. Think about what you would like to ask them and then buy them lunch. If you know others in a similar position with similar questions, make it a bigger meeting. You can find out a tremendous amount by asking someone who has done it already and since the alternative is learning by trial and error you may well save a lot of time and money too.

Use A Checklist

There is a full checklist in the Red Stuff Handbook. There is also a very useful task manager on the business link website where you can generate a bespoke checklist for your new business - search for “Task Manager”.

You May Find These Books Helpful

Entrepreneurs book of checklists - Useful lists of 10 that cover all the areas of being in business.

Teach Yourself Running Your Own Business - A very practical guide divided into easily digestible chunks.

Anyone Can Do It - The story of Sahir and Bobby Hashimi who started Coffee Republic. Very detailed with lots of practical advice AND a copy of their business plan.