Am I an Entrepreneur?
Your company recently downsized its workforce and eliminated your position. While this may be a good opportunity to start your own business, what are some of the things you should consider before your last day on the job?
With the ranks of the self-employed swelled by former employees with an entrepreneurial spirit, planning ahead for your career change while you are still on the job is a wise and cost effective move that will likely improve your chances for success. Several things to keep in mind though during your planning are;
Your rights as a former employee.
If you plan on bringing any of your current customers/clients with you, make sure you are aware of the terms of any existing non-competition agreement with your employer. Violating such an agreement can put you out of business before you even get started. Consult an attorney if you are unclear on any of the details to avoid any legal headaches.
Save for a rainy day.
It may take a while to adjust to living without a paycheck while building your new business, so make sure you have decent cash reserve set aside before you leave your job. Small businesses can take a year or more to become profitable, so it pays to have something to fall back on. Restrict expenditures to only items that are absolutely necessary. Consider using credit cards and/or lines-of-credit to buy furniture, inventory and other essentials for your business to conserve cash on hand. The use of credit should, of course, be watched carefully as you don't want get in over your head. As well arrange for adequate credit before you leave, as the same credit may be difficult to get once you lose your employee status and become self-employed.
Keep your health insurance.
Finding the right health insurance as a self-employed individual can take time. If your spouse has insurance through his/her employer, you may be able to be added to that policy. However, if you would like to continue with your current insurance, consider negotiating health insurance benefits with your employer as part of your severance package.
The decision to go out on your own can be exciting and unsettling at the same time, but if you prepare well before you leave your job, your chances of a smooth transition should greatly increase. Please let us know if you need any assistance or support in this area.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.