This article is from our friends at LearnVest, a leading site for personal finance.
In today’s Lean In culture, we’re encouraged to climb the corporate ladder, bust through glass ceilings, and achieve our executive dream jobs.
But what if—after rising to the top of your field, complete with a fat salary—you find yourself fantasizing about leaving it all to strike out on your own?
Even those of us who haven’t jumped ship certainly have pondered the idea on an idle Tuesday—which is why we asked two former corporate workers who struck out on their own, then came back to the mother ship, for lessons they learned in the process.
In the late 1990s, Gail Silverman, a now 49-year-old MBA, landed the perfect job in NYC: marketing director for daytime programming at a major TV network. Her nearly six-figure salary allowed her to do and buy many things. Yet the Renaissance woman always yearned for more time for two of her passions: music and yoga.
So when the company decided to move her position to the West Coast, she took a $30,000 departure package so she could stay put, hoping that she could make money as a freelance marketing contractor while ultimately turning a profit by doing something related to music.
In 2008, after several up-and-down years of balancing bread-and-butter, contract-based freelance marketing work with music-related pursuits (including the launch of Girls Rock & Girls Rule, a nonprofit organization devoted to promoting women in rock ’n’ roll), the economy started taking its infamous downturn. And while Silverman had generated a lot of buzz for that venture, not to mention her own recorded music, she started seriously considering going back to corporate life.
“I was doing it for the love of it, but the hope was that it would become something sustainable,” says Silverman. “Starting in 2008, it became hard to pay the bills.”
Call it the Eat, Pray, Love fantasy: While there isn’t an exact figure, it seems anecdotally that hundreds, if not thousands, of men and women, like Silverman, leave salaried positions to launch independent ventures. And while some are successful—and even write books about it—many, if not most, are not.
For those who are still eager to take the risk, here are four essential lessons learned from those who made the leap, and didn’t achieve the success they’d envisioned—so you don’t follow in their footsteps.
Lesson #1: Save, Save, Save
Money doesn’t guarantee future success, but it does provide an insurance policy that can help you sleep easier at night after you bid adieu to that steady paycheck.
Stacy Cullen* had a high-pressure job as a chief marketing officer for a brokerage firm when the idea for opening a branded retail chain—a “Starbucks for flowers” as she puts it—started brewing.
After figuring out how much it would cost to purchase a small business, pay herself a salary, and make everything work financially, the wife and mom of three quit her lucrative job, cashed in her stock options, and bought a small flower shop near her family’s home in Larchmont, NY. That was August 2009. Just one month later, the stock market crashed.
“I realized it was going to take me much longer to turn around the business once the recession hit,” says Cullen. “Flowers were a luxury item, and I had all these plans for sales growth, but discretionary spending just dried up.”
Fortunately, because she had saved so much money, she was able to cut her losses after just four months and return to the corporate world relatively unscathed—losing about $30,000 total—and work just part-time at the flower shop until a corporate buyer showed up to buy the business.
Silverman, meanwhile, says she wished she had saved more money, and spent less, before striking out on her own. Shortly after she left her full-time job, she was enjoying a “comfy retainer” from a freelance contract—until 9/11 happened and she was forced to hustle for work.
“I think that one thing that I learned is that if I managed my finances better when I was making a lot of money, it might have been easier when I wasn’t,” says Silverman. “Manage your money well while you’re making it.”
Lesson #2: Know Thyself
Cullen liked flowers as much as anyone. She just wasn’t passionate about them. She also discovered she was even less passionate about the nuts and bolts of running her own operation.
“Being a small business owner wasn’t for me,” says Cullen. “There’s so many logistical tasks that you have to do.” Among them, she cites all the government paperwork just to set up shop and managing payroll for her employees. Plus, “if you’re out of flowers, you’re the guy who’s got to go pick them up,” she says. “There’s just so many tasks when you’re the owner-operator that I wasn’t really prepared for, to be honest. I came from a world of having a big staff and a lot of employees, and what I completely underestimated was how all-consuming being a small business owner is.”
Lesson #3: Do a Test Drive
Before making a life-changing commitment that could affect your long-term future, consider doing a trial run. For example, if you want to start a business, consider a part-time job on weekends at a similar type of business.
“What I wish I had done is volunteer in a flower shop for a month,” says Cullen, advising entrepreneurs to try to “taste the experience” before taking a leap.
For example, “You can take a month off, a leave of absence, and instead of going to the beach, say, ‘I’m going to go try this,’” says Cullen. “If you don’t like waking up and going to work every day, then it’s a bad fit.”
Lesson #4: Know When to Fold
While it’s OK to follow your passion and take risks, you also have to be realistic.
“What was happening was I wasn’t growing the business as fast as I thought,” says Cullen. “I was burning more than I thought, and I was ultimately realizing I didn’t really love being a small business owner.”
The bottom line: Give yourself a realistic time frame and specific milestones to measure whether goals are being achieved.
Also, you should trust your gut. If something doesn’t feel right, maybe it isn’t.
“I’ve managed millions of dollars, and I’ve never been stressed out,” says Cullen. “But my stupid flower shop stressed me out so badly that I had to get acupuncture so I could fall asleep at night.”
*Name has been changed.
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