1. What to Do When the Plan Comes Together
At some point during your writing, you will have time to reflect on where you’re at. You should have a flow chart or map that indicates what you need to do, including tasks as detail-oriented as you can handle or want to plan for. (This often depends greatly on personality type—as my husband will tell you, I would gladly make a list of items to be done and even write out the specific steps to get there, but that would drive him insane!)
Run your plan by others—other businesspeople or friends who you trust. If you show it to someone you don’t know and don’t completely trust, make sure that he or she signs a nondisclosure agreement. You can download many of these forms online, free of charge or for a very minimal fee. LegalZoom.com has some great agreements for a small price.
Once you think the plan is solid, it is time to begin marketing your plan for startup revenue, if you don’t already have it yourself.
1.1. Marketing Your Plan for Startup Revenue
If you do need startup revenue, a good place to start is your local bank or SBA office. In any event, no matter who you approach, they will most likely want to see a copy of your business plan, which is why you will want to have this done before starting your search for financial backing.
Regardless of who or where you ultimately get revenue from, you need to offer a return—even if it’s to family—and it needs to be in writing (remember my personal story in Chapter 4?!). Even if the return doesn’t begin for three years, note it and document it and then follow through by ensuring that in three years you indeed get that return you assumed by pushing the limits of your business within your comfort zone.
1.2. Family and Friend Investors
Family are often where startup businesses get their money initially. Family members certainly are a good source of investment income, as are close friends. However, there are risks with both options. If your business goes bad, how much worse will you feel about losing your mother’s money than a bank’s? Also, if the deal goes sour, it could strain family relations, no matter how strong your ties were when the loan was made. Last but certainly not least, do you want your family bringing up at family dinners that they haven’t gotten paid, or asking, “So how is business?” when you are trying to enjoy Thanksgiving dinner—knowing what they are really asking is “When am I getting my money back?!”
A good source? Yes, absolutely. But weigh the pros and cons carefully before jumping into the business bed with your friends or family, or both.
1.3. Angel Investors
Angel investors are a certain type of investor that is greatly growing in popularity within the world of entrepreneurs. Unlike venture capitalists, who lend pooled money from others, angel investors, or “angels,” invest their own funds. Some angels invest on their own, while others may team up with other angels to create “angel groups,” which are exactly what they sound like—groups of angels that get together to invest in small businesses.
One of the largest pros to going through an angel is the fact that, since it is his or her own money that he or she is investing, you only have to convince that person (or that group of angels—depending on the situation) that your idea/business is worth the risk. When you approach a bank or venture capital firm, on the other hand, your presentation must not only convince the person you present to, but do so in such a way that he or she will turn around and convince those above him or her, who actually have control over making the final decision on whether or not to lend you the money.
One of the largest cons to angels, in probably about half of the situations, is that you are limited to the amount of money that the angel has allocated to lend. If you need $100,000, but your angel only has $75,000 to lend, you now need to search for someone else to lend you the remaining $25,000. One fact that you can take comfort in is that angel investors often know other angel investors, even if they don’t belong to a group. Keeping this in mind, if you can convince one angel to back you, and he or she knows another angel, chances are high that you will be able to convince their “angel friend” to jump on the bandwagon as well.
Angels and angel groups are now going online or virtual. You can actually search for angel investors online, no longer limiting you to the angels in your neck of the woods. Sites such as FundingUniverse.com are popping up all of the time, connecting angel investors and entrepreneurs across the globe.
1.4. Saving Up Your Own Money
You could, of course, start your business with your own capital, as many of us do—myself included! You can take a 401(k) withdrawal, for instance (be careful and talk to your tax planner on the ramifications of this), or a home equity line of credit (HELOC). Don’t forget to include repayments to your 401(k) or HELOC and interest as well as opportunity costs in the startup costs section of your business plan.
You could save up for a business you intend to start sometime in the future, too. Any long-term, high-return account would be great for this, such as a high- yield CD.
1.5. Starting Your Business with $10,000 or Less
It is possible to start a business with $10,000 or less. Many people do—I did, and I continue to start my new ventures with less than 10 grand! How? I use the 10 grand as borrowed money and then repay a small amount at a time. If you are really a risk taker, you can even take a cash advance on a credit card and pay the high interest to that credit card. Where there is a will there is a way. I’ve done it five times and regretted it once. Not a bad ratio for me, but it may be more than you are comfortable with, or you may have other financial goals and ideas. Figure out what works for you. You can start your business out of your home with a simple website, relatively inexpensive marketing, and lots of word-of-mouth advertising, while keeping your day job going at the same time until the business is running full speed ahead.
1.6. Making Sure Your Plan Fits Your Goal
I want to go back to this a bit again, because so many people I have worked with have downsized after years of success. This section has a lot of personal anecdotes and things I have learned along the way because many of these lessons have had a great impact on my life, including quality of life, happiness, and marital satisfaction.
As a personal example, a good friend of mine was on the same path with his business plan that I’ve taken for years. We were comparing our successes and both of us were moving along quickly, referring new clients to one another. I thought life was good, but he got fed up. At some point it got to be too much for him and he said NO MORE! He dropped most of his clients, kept two, downsized dramatically, and went on vacation. I dream of doing that, but my personality doesn’t allow for it—I won’t allow for it. I guess one could say that ultimately it isn’t what I want. For me, that was failure. For him, quitting those jobs and taking back his freedom was success. For me, buying a bigger house in the hills was one of many markers of success. For him, it was adding onto his existing home and having his own quiet home office where he could be with his child. What do you want?
I can’t stress enough the importance of your business goals being aligned with your personal ones. If they aren’t, both your business and you, including those close to you, could suffer greatly.
I am reminded by little things every day that one woman’s definition of success is not another’s: my family who have corporate jobs with no potential to expand earnings beyond a specific corporate salary (yes!), my friend’s 18-year-old sister who has “low aspirations” (but high for her) to earn an associate’s degree and be a mom, the family members who don’t understand or appreciate my lack of desire to replicate my DNA and have children at this stage in my life due to the interruption it would bring to my business, and so on. Everyone has their own personal priorities and you shouldn’t sacrifice yours. You may find however that they change over time.
Whatever decisions you make, you will constantly be tested and reminded that what is good for you isn’t so for everyone else. Also be prepared to take criticism. I hear the snickers and feel the lack of warmth from my extended family who
aren’t happy about the fact that we don’t have a bunch of little babies running around and all the cousins aren’t growing up together. Being the sarcastic one in the family, I played an April Fool’s joke on my family, saying that my husband and I were combining names to create one family name. We would become Babbica—a combination of both of our names. My husband’s family did not find this funny (although they play it off as though they did). While I justified the joke idea as being easier than hyphenating for those future babies they so badly wanted, they didn’t find it funny at all.
While this is a bit of an aside, remember that all the decisions you make in your personal life, once you’re tied with family in business, will take on a whole new meaning. If you join the two together, you have to watch your boundaries a bit more (and, in my case, your choice of practical jokes, too).
To be blunt, the point is—whatever makes you feel successful is what your plan needs to assume. Unless of course you get very big very quick and become a large-scale corporation—then what your shareholders want will matter more.
But that is another book for another day!
2. Keeping the Plan Updated and Relevant
If you don’t know where you want to go, you certainly won’t get there—unless you are darn lucky. You need to keep your plan relevant, current, and updated. Did market conditions change? A new competitor come on the horizon? Did your target demographic change their purchasing habits? Is the economy in your market sector not doing so hot? Update your plan and figure out what you’re going to do about it! A relevant and current plan is a useful plan. An outdated plan is useless to you, and to your team, should you bring one on.
Also keep in mind that if you have investors, whether friend or foe, they could request to review your plan at any time, so it also benefits you to be able to produce a current plan. Keep your investors happy and stay in charge and on top of your business—running it rather than letting its last minute changes run you.
2.1. Don’t Be Afraid to Change Course!
This is an important lesson that I had to learn time and time again before it really sank in. Sometimes your career and business takes you places you hadn’t imagined or didn’t originally want to go. Your ultimate goals may even change entirely—don’t be afraid to change course. If you are enjoying what you are doing, if there is a market for what you’re doing (and it pays the bills), and if it falls in line with your personal vision and mission as well as your business mission and vision, go for it!
This brings up another important point—we talked earlier in this chapter about your company mission and vision. But you need to have a personal one, too. Make sure the two align, or you will be miserable.
2.2. Revisit the Plan—Be Sure of Its Accuracy
Revisit every element of your plan from start to finish at least once per quarter; more often if you’re having unpredictable revenue fluctuations—either positive or negative. Be sure your contingency plan is updated, too, and be certain you are taking into consideration market changes that you have no control over, like exports, the value of the dollar, consumer discretionary spending (if that affects you), and so on.
2.3. Initial Phase Importance
It is extremely important that you plan out your initial phase—those first few months—with extreme precision. Know what you’re going to do then roll with the changes. Not doing so could throw you off kilter for a very long time.
3. Transition Time-Decisions, Decisions!
You have a plan, you have some startup capital, and you’re ready to transition to your new job. You may have been unemployed or underemployed throughout this process and you’re ready to tackle this new challenge. Whether you are underemployed or unemployed or just wanting to change jobs, it’s decision time! (Again!)
3.1. Move Slowly or Make the Switch All at Once?
First, are you going to move slowly into the new business or make the switch all at once? Obviously, moving slowly means you’ll have time (if you are employed) to continue earning a paycheck, but you’ll have less time to spend on your new business. Moving at once has the opposite affect: less money but more time for your business. Take into consideration personal bills, finances, and your family’s worries and concerns when making this very important decision.
3.2. Transitioning Into Your Business Plan
It is tough to not just begin one day typing e-mails to people to talk about your new business. Make sure you do your homework first, and put your business plan into action. Follow your first-few-months plan, marketing according to what you thought best. Update that if you need to—but remember that your business plan was written when you weren’t in the heat of the moment, which means you were probably of sounder mind then.
3.3. Putting Your Plan Into Action
Sometimes your enthusiasm becomes contagious and your plan has to be modified to make that work for you. If it does, go for it. The most crucial step here is putting your plan into action. If that means leaving your day job, time to write the resignation letter. If that means launching the website, do it. You should be
doing everything in your plan listed as prelaunch. If you are unemployed, you should be doing that and more now! You should be bouncing your ideas off of family members, focus groups, really grasping the concept of your target demographic, and working to immediately build a business—even if it’s only a web presence for now.
4. Quitting Time-Leaving Your Day Job
If you are underemployed and quitting your part time job or fully employed and also leaving it behind, you will already have planned your quitting time. If now is the time, don’t burn any bridges. Write a great letter of resignation, and even perhaps get your bosses on board (if you think they will be) ahead of time and ask them to allow you to even promote your new business. Imagine an e-mail blast to 10,000 workers telling them about your new adventures! Sometimes the best contacts are those you already have through other people and the networks you’ve built.
Send an e-mail to your officemates informing them of your decision—and your new business. A simple but effective template that I have used many times myself is:
Dear <enter name>,
Let me start by saying how much I have enjoyed working <with, for, alongside, etc.> you. I have learned a great deal from you and I hope I have been able to offer the same.
Recently I made the decision to <insert decision>.
This has been a decision that I have spent many hours analyzing and feel that it is in my <my family’s, etc.> best interest to pursue. My final day with <enter company name> will be <enter date>. During my future endeavors, I plan to start a business doing <enter the business>. I hope you will join me in celebrating this moment that I have dreamed of.
I sincerely hope that we can remain in contact in the future. My contact information is: <enter contact information>
Please do not hesitate to contact me anytime. If you wouldn’t mind taking a moment to reply to this <e-mail, letter> with your latest contact information, I would surely appreciate it. Also, don’t hesitate to ask any questions you may have about this latest chapter of my life; I would love to answer any you may have. 🙂
4.1. Coping with Anxiety and Stress
This is going to be a high-anxiety, very stressful time for you. You will need coping mechanisms that preferably don’t involve things that will limit your ability to do your job or the time you can spend on it. Hitting the gym, eating well, meditation, and so on are all listed as common and healthy ways to combat stress and anxiety. Sometimes it helps me to revisit my plan and to document my income sources so that I know, in fact, that bills will be paid. I often even hold onto money for three months of mortgage payments to make myself feel better in case I lose a good contract.
As one of my dear friends writes in my newsletter column: don’t forget to laugh, don’t forget to spend at least a few hours a month with friends, and don’t forget to share your burdens and your success with others. It makes hard times that much less difficult, and happy times that much more sweet. If you’re like me, you rarely celebrate an accomplishment, feeling like it is a beginning rather than an end. I remember earning my Ph.D., hanging up from my dissertation defense call, and thinking, “Okay, delete ‘get Ph.D.’ from my PDA.” Guess what? That is exactly what I did, and moved on. I don’t even recall having a dinner to celebrate until I met a man that I would later marry—we celebrated about two months after my degree was officially conferred. If you are a go-getter, every success feels like one more step to the “ultimate,” whatever that is. Try to remember the accomplishments along the way, though, because it makes it easier to fight burnout and to feel successful. That is important for your own mental health.
4.2. Setting Limits and Boundaries
Now is the time when you will be so excited that setting boundaries and limitations—especially with a home-based business—will be critical. Set them and stick to them. I don’t encourage type-A personalities to avoid their business after certain hours—some of us work best at 10 P.M. Just be sure you keep a balanced life or you’ll burn out, like my aforementioned friend who drastically changed his job after not having enough time with his family and friends.
Source: Babb Danielle (2009), The Accidental Startup: How to Realize Your True Potential by Becoming Your Own Boss. Alpha.