Photo by Pablo García Saldaña on Unsplash
We get a lot of corporate refugees here at Apex. They are tired of the corporate life and want to find out whether the grass of business ownership is really greener. They are often equipped with the funds to make purchasing a business straightforward. But what we often try to coach through the process is the shift that has to happen when leaving the comfortable corporate world and entering the uncomfortable self-employed one. Here are seven common shifts we discuss with our clients as they prepare to buy a business.
Employee to Owner
As an employee, you’re responsible for your role, and if you’re in management, for your team. As an owner, every decision you make impacts the growth of your business.
Most business owners don’t have predictable budgets and set reviews and promotions. There is a lot of uncertainty in business ownership, and that’s a good thing, because it allows for flexibility and rapid change, which is often unheard of in corporate life.
Corporate to Personal Financial Exposure
It used to be “the company’s money”, and now it’s all your money. You will find that personal guarantees are common for leases, bank loans, and vendor credit.
You’re also now responsible for your own health insurance and retirement contributions.
Corporate to Personal Cash Flow
Corporations have more working capital and so are obsessed with P&Ls. Small business owners need P&Ls too, but they have to manage their cash, whether that’s the cash conversion cycle of inventory turning into sales, or customers paying late while suppliers and employees need to be paid on time.
Corporate to Personal Legal Burdens
Your corporate job likely involved zero involvement in the legal affairs of the company. As a business owner, you’re involved at a granular level. You have to choose what type of entity you will create, which will answer the taxation question. You’ll also need to handle payroll taxes, sales taxes, licenses, employment law, as well as any contracts you or the company sign.
Building Your Own Infrastructure
In the corporate world, if you need a computer fixed, you “call the IT department.” If you have an HR question, you can call them. In a small business, there are often people wearing multiple hats across departments. You will either perform these functions yourself or outsource them to contractors.
Safeguarding a Brand
We have numerous cautionary tales in our lockers about know-it-all newbie business owners who come in and make changes that destroy what gave a brand its value in the first place. In corporate life it’s rare that you would have the sole ability and authority to make structural changes in a brand. In a business you acquire, you have all that power, and that power should be used to safeguard a brand, and if changes are to be made, they should be done responsibly and respectfully.
Time and Lifestyle
The corporate life often affords people routine and hobbies, if they so choose. In the early days of running a business a lot of that goes out the window. You’ll put in long hours and the time you spend with family and friends will be reduced. That won’t be forever, but the sacrifice will be necessary as you learn what it takes to run a business, not just be part of one.
That also means developing a new group of colleagues. These won’t be ones you’ll banter with around the water cooler, but other business owners you meet while networking in the community. They can give you the perspective and support as you find your way forward.
We love helping people move from the corporate world to the small business world. If you want to take a look at what businesses might be a good fit for you, reach out today.