According to Google’s latest search data, “how to start a business” beat “how to get a job” in Google search queries in 2021. This information comes from Google’s “Year in Search,” which features data from the last year broken down into a list of trends by category. It appears that while millions of Americans are quitting their jobs in search of higher salaries, many of them are doing so in the hopes of becoming their own bosses.
Government data supports this trend. U.S. Census Bureau figures reveal that Americans submitted a record 5.4 million business applications in 2021—the highest in almost 20 years. Moreover, applications are on track to be even higher this year. So, if you are thinking about going from corporate life to being self-employed, you’re not alone.
The pandemic has presented many opportunities for would-be entrepreneurs. But, of course, the transition to being an entrepreneur is not an easy one. Working for yourself may give you the freedom to choose your own lifestyle, but then again, you aren’t relying on a steady paycheck. So, if you are thinking of quitting to start a business, here are some key considerations to make the leap successfully.
Start a business you are passionate about
Starting a business is like having a baby. Not only is there never really a “right” time, but it also requires a lot of planning, preparation, and dedication. There are going to be ups and downs. You’ll even have days when you are pulling your hair out thinking, “did I do the right thing?” But if the passion is there, it will help you through those rough spots. If you’re going to make a giant leap, it should be to do something that makes you want to get out of bed in the morning. Then, when you find yourself involved in an activity that feeds your soul and leverages your strengths, you’ll know you are on the right track.
Start a business for the right reasons
Some people are destined to be entrepreneurs. Maybe you love variety, calling the shots, and building something from nothing. Or you dream about pursuing your passion while having more flexibility and leaving behind a legacy you can be proud of. And then, of course, there is financial independence. But if you want to start a business because you hate your job, despise your boss or want to get famous, it’s probably a good idea to reconsider entrepreneurship.
Know what you don’t know
One of the keys to being a successful entrepreneur is leveraging your strengths and finding resources to supplement your weaknesses. You cannot do everything yourself. Even as a solopreneur, you will need to rely on freelancers, interns or other assistance to get the business up and running. Another suggestion is to find trusted advisors, coaches or mentors that can provide valuable guidance and feedback along the way. Find people whom you would like to emulate. A mentor or coach can help hold you accountable while giving you the support and confidence you need to continue moving forward.
Start slow but think big
Starting a business requires planning and dedication. Allow yourself at least 12 months to prepare your exit strategy. Ideally, you will want to start your business as a side hustle while still employed. Take time to get to know your target audience. If possible, conduct formal or informal market research. This approach will reduce your risk and give you more time to validate your business idea.
Financially prepare to start a business
It’s no secret that most small businesses fail within the first five years. But a study by U.S. Bank found that 82% of the time, poor cash flow management contributes to that failure. So before you make the transition, sit down with your accountant or advisor to review your financial situation. Having a healthy cash reserve will help you through the inevitable peaks and valleys that come with entrepreneurship. The amount of money you set aside will depend on your industry, expenses, and when you expect to begin generating income. You will also want to choose a legal structure, register your business, get federal and tax IDs and open a business bank account.
If you want to start a business, there is no better time than the present. You can benefit from the surge in entrepreneurship to network with other potential small business owners. Chances are, you are also working remotely, which gives you added flexibility. As Steve Jobs said, “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”