4 tips for taking the leap from employee to business owner
April 12, 2017
If you’re considering taking the leap from employee to business owner, congratulations!
Whether you’re planning to contract, freelance or start your own business, becoming an entrepreneur is exciting.
Here are our top 4 tips to help ensure the transition is a success.
1) Time the move carefully
In life, timing is everything. You need to wait for an opportune moment to make the shift from employee to business owner.
Perhaps you’ve progressed as far as you can in your current role and feel it’s time to go out on a limb? Maybe you’ve been contemplating doing your own thing for a long time and a change at work cements your decision.
Whatever you do, don’t make a rash decision, like pulling the plug after a row with your boss. Starting your own business is a big decision that requires careful forethought and planning.
2) Have a contingency plan in place
Before you leave paid employment, make sure you’re in a sound financial position.
Having some savings behind you will provide a welcome safety net, should business be slow in the beginning or to cover periods where cash flow is unpredictable. Put together a cash flow forecast that lists expected incomes and outgoings. Test it by adding or subtracting 10% to key items to understand potential cash flow sensitivities and to see how secure your safety net actually is.
Most people underestimate how long it takes to set up a business, so it might be a good option to continue working and being paid while you develop your business on the side. Is going part-time in your current employment an option?
3) Adopt a business mindset
The move from employee to business owner gives you more freedom, but also more responsibility. You need to start thinking and operating like a business owner.
Suddenly, you’ll be steering the ship and having to make big decisions – and be accountable for them – on everything from customer relationship management, to marketing and accounting.
The secret to success is to be proactive. Always be forward-thinking and seize opportunities when they present themselves. That means taking measured risks to achieve your goals and planning ahead for business growth.
Remember, with the right mindset, you can achieve anything!
4) Watch your finances
Once you’ve set up an Australian Business Number (ABN) and you are open for business, be sure to have a working budget and be particularly vigilant about managing your cash flow. Businesses often have irregular income compared to the regularity of an employee’s pay cheque.
Lastly, ensure your financial tax obligations are met. Maintaining a strong compliance history will assist in dealing with the Australian Taxation Office (ATO) if any issues do arise.
Need business advice? We can help
LDB’s business advisory experts are ready and waiting to help you with the transition from employee to business owner.
To find out more, give us a call on (03) 9875 2900 or fill in the contact form below.