You’ve been working for 15 years in the same area, amassing a great depth of knowledge, expertise and wisdom in your field. You could stay in corporate, climbing the ladder, yet you know deep down that this isn’t really working for you anymore.
You dream of more freedom, flexibility and control over your time and work life. You start to talk more earnestly to those consultants and suppliers you use for your work, wondering if you could do that too.
Leaving your job to start your own business can be exhilarating and immensely satisfying. Yet, when you are still in the job wondering if you should crossover, fear can immobilize you. If this fear isn’t dealt with, you will remain where you are always wondering.
From the research I conducted of 100 women all thinking of crossing over, the fear they all shared, was ‘would they make the same money they had when they had a job?” This is a very valid concern, and the easiest way to overcome it is to crunch some numbers. Getting into the detail will enable you to see how many clients you need, how much your charge out rate will be and then how many hours or days you will need to work. Once you have done the number crunching, you will then have a good sense of how realistic and achievable your plans are.
Let’s work through some examples so you can do your own number crunching!
Suzie – an HR Director who wants to start a boutique Organisational Design consultancy working with clients in the technology sector. She will charge a day rate for her services. Suzie is earning 150,000 per annum in her job. She wants to earn that in her new consultancy by the second year. In her first year she would be aiming for 75,000. Her day rate will be 700.
- Year 1 Revenue Target: : 75,000
- Day rate: 700
- Number of days needed to work: 105
Her client project work is spread out typically over 5 months, and she works 2 days a week on it over all, that means she would be working 40 days for one client. So to get to her target, she would need to have 2.5 clients over that first year.
In her second year, to reach her target of 150,000, she could double the number of days she works, and increase her client load. She could also increase her day rate to 1,000 and work 150 days.
With her rich network of contacts in the industry, Suzie thinks it will be very feasible to make these targets. She decides to crossover!
Helen is an in house lawyer specialising in IP law. She has a burning desire to leave the corporate world behind and consult on an hourly basis for women owned start ups. She earns 75,000 per annum. She wants to earn this right from the start as she is the sole breadwinner for her family, and all financial responsibility rests on her shoulders.
- Target turnover: 75,000
- New Hourly rate: 150
- Number of hours needed to bill year 1: 500
Assuming the average start up client will take 10 hours of her time, she will need to find 50 new clients in year 1. To think of it in another way, this is about one new client a week.
Helen knows she can do the work, but is hesitant about her ability to acquire new clients at such a fast rate. So she decides to do the following for 6 months while she is still working, to increase her confidence around customer acquisition:
- Join start-up and women-owned business networking groups to build her network
- Start writing for well known start up blogs about IP to establish her credentials as an expert
- Learn more about marketing to create an effective plan to acquire new clients
Whatever your situation, you can see how crunching the numbers gave Suzie and Helen an insight into the financial reality of starting their business. These broad brush calculations are effective at dispelling the cloudy fear about making enough money, giving you tangible parameters about charge out rates, hours/days work and clients needed. With this information, you will gain insights into what your next steps need to be, and crossover from your job to your own business with confidence.
*If you are thinking of leaving your job to start up, take Wendy’s free quiz (click here) to see how ready you are. You’ll also receive a free telephone consultation to discuss your results.
And if you want to start a business, but are feeling foggy in your idea, then take a look at her new online course : Discover Your Business Idea Click here…