Earlier this month, I shared 12 Steps to Transitioning From Employee to Entrepreneur, Step 1. The focus there was on defining exactly what you want your life as an entrepreneur to look like, and being as specific as possible about what you want a business to do for you. Your homework was to write a full and complete description of what is important to you and what you want your life to look like in 5 years. (Did you do your homework?)
Now that you know what you want your life to look like going forward, you are positioned to assess what industry you’d like to be in. Let’s dive into this now.
Beware of Hobbies
Many people transitioning from employee to entrepreneur think they can easily turn a hobby into a business. After all, they already like doing something, so why not start a business to make money at it?
Many people are successful at this, but many are not. Just because something is fun to do as a hobby does not mean it can form the basis for a profitable business.
When I was a young girl, my mother sewed clothing for the entire family. She enjoyed it immensely, and the items she made were of far better quality than anything available in the most high end department store.
One day, I asked her why she didn’t start a business and sell some of the things she made. I can remember her reply almost verbatim: “Because I like doing it too much to make it a business. I don’t want to have to do it.”
My mother was a wise woman. She knew that turning her hobby into a business would make it a job and not a hobby. I have always admired my mom for having that insight.
When you have to do something, it can quickly become anything but what you want to do day in and day out.
If you want to turn your hobby into a business, make sure you have some other hobby you enjoy that is not going to be a business. As you go from employee to entrepreneur, you’ll need to have things to do that you can actually enjoy doing when you feel like doing it, and not when you have to do it.
Do Your Research, a LOT of Research
It’s easy to become carried away with the excitement of entrepreneurship and the idea of making money, and forget about laying a firm intellectual foundation for your new venture. This is where research comes in. Despite the fact that we have access to more information than ever online, a surprisingly large number of new entrepreneurs do not conduct thorough research before they start expending enormous amounts of energy and money on their new business.
As the founder and CEO of the Indie Business Network, I see this quite a bit among clients and some of my members. It’s easy to become excited about participating in an industry, and spending thousands of dollars and countless hours on your business, only to discover that the industry is filled with surprises — most of which you missed even though they were hidden in plain site on the Internet.
For example, last year, Beth (not her real name) began making bath and body care products in her Florida home. After spending thousands of dollars on ingredients, supplies, packaging, a website, and business cards, Beth discovered that it is illegal to sell cosmetics in Florida if you make them in your home. Instead, you must have a non-home manufacturing premises that is inspected by the state, and you must pay a fee in order to make and sell cosmetics in Florida.
Blindsided by this, Beth quickly shuttered her business, and has gone back to making products for fun and personal use. A quick Google search would have saved her energy and financial resources by turning up the regulatory information she needed to know in advance that a beauty business was not right for her.
Here are some illustrative examples I stitched together from real life situations to illustrate my point. Kara and Denise don’t really exist, but these situations are ones I know about personally from other entrepreneurs. One of them actually happened to me. (Can you guess which one?)
Kara and Denise are creative friends who love to make candles, so they decided to open a shop in an historic part of town. They signed a lease and began the process of turning on the utilities.
They were in for a rude awakening when they discovered that they had to pay historic land use fees to the city in order to rent the property, and that they needed at least $1,500.00 in deposits just to get the electricity and gas turned on. Plus, the city collected a monthly fee for garbage pick up. (The fee could not be waived even if they took the trash away themselves and never once used the service.)
The property they were renting had two bathrooms, but not a lot of storage space, so they decided to use one bathroom as a closet and make the other one unisex and public. Imagine their surprise when they discovered a city ordinance requiring them to maintain two separate bathrooms, one for each gender. Bye-bye storage space.
Empower yourself. Do your research in advance. And no matter how much research you do, you still need to be prepared to miss something. But if you are diligent and intentional about your mission, you minimize the chances that you’ll miss big things that could thwart your entrepreneurial dreams entirely.
12 Steps to Transitioning From Employee to Entrepreneur: Step Two
Step 2: Homework: Research Industry Options
Assess the pros and cons of your different industry options. If you plan to turn a hobby into a business, are you sure you want to have to participate in your hobby day in and day out, even when you don’t feel like it? (And there will be many hundreds of days when you don’t feel like it …)
Have you researched your industry so you know the potential pitfalls? Are there regulations you cannot or do not want to have to comply with? Do you actually see other people making money in the industry of your choice, and are you willing to do what they are doing to successfully compete?
What are the pros and cons of each of your industry options?
If there are cons, how will you overcome them? Does one have more industry regulatory hurdles than the others? Will you have to invest in more equipment for one than the others? Will one require you to comply with complicated local zoning or employment laws?
Zoom out and look at the big picture as you assess your options.
You might even want to interview people in the industries you are considering so you can get a real look at what life is like for them. If you cannot find anyone to interview, search online for media stories about the real lives of entrepreneurs in your chosen field. Those are great places to get the low down.
After looking at the pros and cons, and assessing the risks as best you can, you will be ready for the next step.
Follow this space for the next 10 weeks to continue the journey!
Next Installment: Step 3: Include Your Significant Other(s)
I’ll be back with step 3 on February 8, as we continue your quest to transition from employee to entrepreneur. Meanwhile, post your comments, questions and feedback below. I promise to come back and answer you!