The jump from being an employee to steering your own ship involves a transition on many fronts. Saurabh Shankar would know. This year he launched his own outfit In Stealth mode; after moving on from being an employee at PaySense, eBay, Yes Bank. Citibank and ICICI Bank.
Here he demonstrates how he geared up for the realities of entrepreneurship.
Everything requires preparation. You cannot just get up in the morning and decide to cut the cord with your monthly paycheck. You need a fair amount of time for preparation, a minimum of a few months. Transitioning from employee to entrepreneur requires a change in mindset, as well as sorting out practical issues.
Guard yourself against large impact but low probability risks. You don't want a black swan event playing havoc with your savings and cash flows.
Start by taking a look at your insurance, both life and health. A number of individuals would have health insurance provided for by the company that employs them. If you and your family are not insured medically, take out a policy.
Evaluate your savings. Ensure that you have sufficient money to keep living until it takes off. I would suggest cash reserves for at least 8-12 months. This should enable smooth running of the family. Err on the side of caution when you are arriving at this figure, you don’t want to find yourself in a soup here. Neither should you budget for a lower time frame. This is the time you have for your moonshot and you must have the financial issues taken care of.
Changes in lifestyle don’t happen overnight. No one is asking you to be frugal, but you can at last be conscious.
Cut out all frivolous expenses. I cut down on almost all outside office parties, and instead entertained at home. May sound clichéd, but eliminating the outside coffee dose helped curb expenses. I stuck to one brand when it came to attire and did not upgrade.
Ensure that similar changes start to appear at home. Eating out or ordering in would have to take a backseat. Cut down on shopping. Ordering online in bulk could help reduce expenses. Have a look and you will find savings in each corner. Individually, they are trivial, but when your card bill starts to go down, your confidence level will take a leap.
Rope in the family. Let them know what you are up to. This works in two ways. They understand where you are coming from when you talk of cutting down on expenses. But they are the ones who are going to be your most vociferous cheerleaders. You are the role model as far as your children go, and they are the ones who will egg you on. Feed on that energy.
Despite having put some savings aside for the running of the house and paying of bills, you may want to focus on alternative income. Don’t be too ambitious and set a high bar. Instead, set a low bar and start working on it when employed at your salaried job.
For instance, let’s say your monthly salary is Rs 2 lakhs. Don’t naively assume that you can somehow gain an alternative income of the identical amount when setting up your business. If you dedicate time and energy to earning that much, you won’t have the bandwidth to give to your startup. You would be wise to keep a lower benchmark of say Rs 30,000. This will cover your travel and the meetings at coffee shops, and give you the confidence to keep going. In my case, I plan to start writing blogs and teach on topics that complement my business.
As an entrepreneur, it will be extremely difficult to silo work and personal life. For starters, where are you going to work from? If from home, you need to be disciplined. When working at a job, the system and structure takes care of time “wasted” by employees either on tea breaks or surfing the web. You can still engage in such activities when on your own, but this time, every minute spent will be eating your savings.
Start getting the clutter out of your life and build focus work zones. It’s not easy. It is gradual. But extremely necessary. A few changes I have made are - putting a social timer on phone with only 15 minutes for social media, a DND mode from 11am to 6pm, and reduced my reading to a few focused sources.
Now take the plunge.
Fix a date and inform close friends and business acquaintances about your idea and timeline. Have conversations around it. Don’t shirk from discussions. Not only will these help you get perspective and sharpen your focus, but we are conditioned to meet our commitments once they are declared socially.
