Six Truths to Understand as You Leave Corporate to Start Your Business
December 16, 2020
Despite a pandemic and one of the worst economic downturns in U.S. history, we’re in the midst of a “startup boom.” Literally millions of individuals across the country have either starting or are planning to open their own business.
You may be one of those promising entrepreneurs. You may have decided that life is too short to be working for a corporate employer you don’t like, and you’re ready to be your own boss. You may have an idea which is the big itch you absolutely must scratch. Maybe you were laid off and you decide that your now former employer has done you a favor and given you the kick you needed to take the plunge into entrepreneurship. You may have retired from Corporate America, but you’re bored, you’re convinced you’ve got plenty left in your tank, and your spouse wants you out of the house.
Whatever the reason, it’s important to understand six essential truths you will encounter as you embark on the journey of business ownership:
1. Nobody cares about what you did in Corporate
It’s a shock for some graduates from prestigious schools to realize how little their degree means to their employer once they are on the job. Suddenly they are at the bottom rung of the ladder, and all that matters is their performance on that job. The same holds true for those leaving Corporate America for entrepreneurship.
As a small business owner coming from the corporate world, it’s very difficult to focus your conversations with potential clients on their problems instead of your qualifications. You are used to giving presentations built around the capabilities of your company.
In the world of small business, your prospects are interested in how you can solve their problems. “But my qualifications,” you may say, “are exactly what will solve their problems.”
That may be true, but your clients want to know you understand what they are dealing with. The one sure way for them to decide you have no clue is to drone on and on about how brilliant and experienced you are, instead of earnestly asking questions, listening with sincerity, and showing empathy with what they’re dealing with.
Moreover, you may leave corporate for a business totally unrelated to what you were doing before. One of my clients left a major pharmaceutical corporation and opened a food service business. His customers love him, but they could care less what he was doing before; all they care about is the quality of the product he’s selling today.
2. Everyone is right: what you did in Corporate doesn’t matter.
You think your expertise matters. It does, but only to an extent. It may get you in the door to make several pitches right off the bat. Maybe you’ll be fortunate enough to snag your former employer is your first client, which is common for many new solopreneur consultants. If that happens, it will give your business a kickstart, but it may also give you a false sense of security.
My friend Joan signed on to consult with her former employer not long after she hit retirement age. “I was consulting with someone who used to report to me,” she said, “and I tried to explain to her that a certain course of action she was ready to take wouldn’t work with her bosses—the same ones I used to work for myself. I knew the political ropes, but she didn’t. She didn’t take my advice, and her course of action failed miserably.”
Joan said she finally realized that the need her former report felt to find her own way had overwhelmed good business sense. “For myself,” Joan added, “I realized that my opinion, while desired, was no longer that important. It was just another factor in the myriad factors which go into corporate decision making. That took me some time to adjust to.”
Joan made that adjustment successfully. Not only does she continue to consult with her former employer, but she now has more business than she can handle.
3. Owning a business will ruthlessly expose every fault you have
You think when you leave Corporate, you are leaving the most stressful environment anyone could ever deal with. The truth is that you are leaving a protective shell. You may end up longing for that sea of cubicles you formerly detested, because you realize that maze was a support system which could cover for your mistakes.
When you own your own business — and particularly if you are a solopreneur — you are completely and wholly exposed. Your faults will be found. If you are too impatient, lack confidence, can’t effectively deal with people, or can’t properly communicate, your business will mercilessly shine a spotlight on those deficiencies or any other ones you may have.
Look at your business like the crazy aunt you wish you didn’t have to see at Thanksgiving. The one who points out every physical flaw you have and wonders out loud when you are going to get married, have children, or why you got divorced. Get ready: your business will be like that obnoxious relative as it relates to all your professional faults.
4. It will take a toll on your personal life
Inventor, entrepreneur, and “Shark Tank” cast member Lori Greiner defines entrepreneurs as “the only people who work 80-hour weeks to avoid working 40-hour weeks." It’s a phrase which draws a chuckle from those of us who are entrepreneurs, but the chuckle is a knowing and sometimes uncomfortable one.
Your spouse, who may still be working in Corporate, may wonder why you are chasing your crazy dream. Depending on the interplay between you, stress, and food, you may end up unhealthily skinny or weighing more than you ever have in your adult life. Friends you had time for previously will find you hard to connect with and may give up on you, shaking their heads at your "obsession." You may miss some family events you never missed before.
5. Pricing will be your biggest problem
Here’s what I should have included in the version of this post I wrote five years ago: pricing will be your biggest problem. You might think acquiring clients will be your biggest challenge, and you’ll fall into a trap: you’ll believe the myth that you need to keep your prices low to attract clients.
The problem with this thinking is that most clients are value sensitive, not price sensitive. As David A. Fields observes, clients select you as a professional services provider not just because of the old “know, like, and trust” cliché. Clients must also need, what, and value the benefits of the services you offer in order to say “yes” to you. Here’s the issue with the “value” part: what clients value is not just rational, but tied to emotions and intangibles you may not fully understand unless you have the patience to have a value conversation. (Read more on this in Fields’ book, essential reading for new professional services providers, The Irresistible Consultant’s Guide to Winning Clients.)
If you fall into the trap of thinking you need to set prices lower to get started, then you’re missing a fundamental understanding of pricing: that prices send marketing signals to clients. The signals you’re sending may be of a quality offering, or they may send a message of inferiority. You may think you’re offering the client a great deal with all the extras you’re throwing in at that teaser price, yet what they’re thinking is something along the lines of “this is too good to be true.”
The stakes of getting your pricing right are high, as pricing is the most important lever in your bottom line. This statement is not a matter of opinion; it’s an accounting fact.
6. Business ownership is alternately thrilling, terrifying, and deeply satisfying, sometimes all at the same time.
At the end of the movie Parenthood, Gil Buckman and his wife Karen are in the aftermath of a particularly chaotic day they’ve had with their three kids. Karen is unexpectedly pregnant with their fourth child, and Gil doesn’t know whether he can handle it. Suddenly Grandma, Gil’s mom who lives with them, walks into the room, offering a seemingly unrelated story:
You know, when I was nineteen, Grandpa took me on a roller coaster. . . . Up, down, up, down. Oh, what a ride! . . . You know, it was just so interesting to me that a ride could make me so frightened, so scared, so sick, so excited, and so thrilled all together! Some didn't like it. They went on the merry-go-round. That just goes around. Nothing. I like the roller coaster. You get more out of it.
In the movie, Grandma’s wise words are a metaphor for parenthood, but they could apply as a metaphor for business ownership. Relative to the corporate merry-go-round, owning your own business is like being on that roller coaster. It’s thrilling and exciting to create a business by meeting the needs of your clients, but there will be days when you’re ready to throw up and you just want off.
Hold on and enjoy the ride! If you’re honest with yourself and have eyes wide open as to what you’re in for, you really will get more out of it than you can possibly imagine.
(My previous version of this post can be found here.)
©Ray Business Advisors, LLC and John Ray
About me: I’m enthusiastic about how changes in pricing strategy can significantly change profitability for a business and enhance life choices for business owners. I live this passion through Ray Business Advisors, my outside CFO and business advisory practice, in which my pricing is exclusively value-based, not hourly. I work with business owners on how they can change their pricing not just to increase their profits, but better serve the wants of their customers. Click here to learn more or call me at 404-287-2627.