So you wake up on Monday morning at 6.30am to the sound of the alarm. It’s freezing outside and the central heating has barely taken the edge off. There is a dawning realisation that you have to go to work. You have no choice, you need to get ready, scrape the ice off the windscreen, sit in endless streams of traffic for an hour, spend 8 hours with other people that see more of you than your own family. You sit in meetings discussing policy statements or developing marketing strategies, you stare at spreadsheets, you feel undervalued, demotivated, you think your boss is an idiot, you then get to drive home and sit stationary for another hour. You make it home, you have your dinner, you sit and watch the TV, and you glance at the time. Off to bed and same tomorrow, and the next day, and the day after that. Have you asked yourself why you do it? No, really ASKED yourself, Why do I do it.?
Doubtless you are reminded, I have a mortgage to pay, my family to support and feed, cars to insure and put petrol in, my hobbies to finance etc. Then you stop day dreaming and set the alarm for the morning.
Try this exercise. Work out your hourly rate. Just take your salary and divide it by the number of hours you work per year, thats the hours you work including all the unpaid ones, not the hours your contract says you do. This includes all the hours commuting, all the hours, preparing for a meeting, the hours spent waiting at weekends for planes for business trips, doing the ironing and washing for your business attire. Now add in the hours you spend thinking about work, what your boss said to you last week, whether I will still have a job next week etc.
If you’ve been honest in your assessment, you might probably find you are working for less than minimum wage. Now ask yourself, Do I really like my job enough to dedicate this much time to it? This is your life, you are spending the considerable part of it doing stuff you don’t like. Why? because you are scared that you won’t be able to pay your credit card debts, or the mortgage, or afford that new car that’s better than the neighbour’s one, or the new sofa that you’ll never get to sit on because you’ll be sat at work all the time.
18 months ago I walked away from a position as a Director of a small Water Engineering Consultancy. The business was struggling, and far too top heavy with Directors for it’s tiny size. I sold out my share and effectively made myself redundant. I walked away with a year’s salary, enough to pay off the existing mortgage. I had a plan, which was to turn my hobby of restoring and selling vintage watches into a full time business.
Back in 2001 I bought an Omega Speedmaster and got the bug, 2 weeks a later I bought another watch, then another. It was pretty clear that I couldn’t afford this habit. My dad was going through the same obsession. Together we bought every book on watch repair and together we taught ourselves over 5 or so years how to repair and restore vintage watches. I also bought a book on PHP Web Development. It must have cost me £7. It was singularly the best £7 I have ever spent and have turned over hundreds of thousands of pounds as a direct result of teaching myself how to produce database driven websites. I’m not a web developer though, I just learned enough to do the job, nothing more.
In 2002 we launched Madaboutwatches.co.uk it was one of the first watch sites on the internet trading secondhand watches (there are hundreds now) and definitely the only one offering the sheer number and range of choice that ours did.
In 2003 I created a spin off site Poshtime.co.uk concentrating on more expensive pieces which seemed to be attracting more and more interest. The two sites consistently supplemented our main incomes for many years, until the day in 2009 where I chucked it all in and went full time.
Within two months turnover doubled, and now with my wife Linda partnering me in the business, in our first year trading as a limited company, we are approaching a turnover 6 times what it was when we were trading part time. We are now earning a good living, not a fantastic one but nearly as good as when I was an Engineering Company Director in the Water Industry. The great news is because our outgoings have dramatically decreased as a result of working at home we are now better off financially than we have ever been. There were sacrifices though, nothing comes for free.
I’m not a business guru or successful entrepreneur and can offer no magic formula but I have got out there and had a go at turning my hobby into a home based business, with some success. It’s surprising how many people have had similar thoughts at one time or another only to dismiss them as pipe dreams. Here’s my advice for what it’s worth.
Step 1 - Clear your debts
The first step to being able to do this is to limit your financial commitments. The big one for me was the mortgage, but the next big one for a lot of people is loans and credit card debts. You will never be able to indulge your hobby full time as a business all the time you are paying a big mortgage, car loans and credit card debt. This is how people end up trapped in the corporate world, endlessly slaving to pay the interest on stuff they shouldn’t have bought in the first place. Limit your spending. Do I really need a new car? No. My wife still drives a 12 year old Focus worth about £700. She will now be able to replace it with something far more newer and shiny but you don’t get the opportunity all the time you are trapped paying off your debts.
In 2004 I took a friend’s advice and opened a Virgin OneAccount, it was the best financial advice I ever received and cleared my sizeable mortgage within 5 years through a combination of steadfast saving, prudence of the highest order and selling a few expensive assets along the way such as a BMW M3 and a Mercedes 500SL which I still miss now. The foreign holidays were replaced by an annual week in Cornwall and the last time I went for a meal out with the wife was over a year ago.
Step 2- Start Part Time
You can’t end your full time job and then expect to start full time making money the next day. Unless you are very talented, dedicated and have lots of money behind you, you are likely to be overwhelmed by your financial commitment and will be forced back to the corporate grindstone. Get it up and running now. If you tell yourself you don’t have time then, sorry, you don’t have the commitment. Make the time. If you can’t make profit now working part time, again there is little hope of it being a success as a full time venture. Chucking more hours at an unprofitable pursuit won’t make it a success. If it works and makes money for the few hours per week you are putting in now then there is no reason at all it won’t make much more money when you give it more time. I didn’t jump until I was fully comfortable that my part time business would scale to full time.
Step 3 - Go Guerilla
There are two stages to this, you need to work out the bare minimum you can possibly live on. This is much lower than you think, especially if you clear your debts. Compound interest is scary, calculate how many hours you have to work just to pay for the monthly interest on your loans, then multiply that for the time you expect to have to keep paying them. if you are planning to work from home you’ll save a fortune in petrol or train fares. You won’t need to buy new suits or expensive sandwiches from your work based deli.
The second phase is ‘run it on a shoestring’. You don’t need flash offices, you don’t need flash IT equipment. You certainly don’t need staff , to start with anyway. Do it on the cheap or even better for free. Google is your friend. Bribe a friend to write a great website for you, but you will save and make thousands if you learn to do it yourself. Get your presence out there in Google. Setup a desk in a bedroom or the garage or whatever. This is your new office, get used to it you are going to be spending a lot of time there. There are clever ways and means of making your business look much bigger and more professional than it is.
Step 4 - Learn what makes business Tick,
If you don’t know what a profit margin is or the difference between net and gross profit, find out or find someone that does. It’s amazing how interesting accounts becomes when it’s your money you are accounting. Find out the implications of being a sole trader, partnership or a limited company, but don’t let any of this scare you off. Get the business running first, worry about the paperwork later. You have to be making money for any of this to be a concern, and many people get scared off trying by horror stories of how bureaucratic it all is. We only registered and got accountants involved in our business when we knew there we trading at a level that could no longer be considered a hobby. There are many reasons why you shouldn’t start your own home based business, but fear of the admin involved shouldn’t be one of them. Admin wise we use an Excel spreadsheet, a copy of Money Manager for Payroll and a good knowledge of the HMRC website. The rest my accountant deals with.
Who shouldn’t start a business -
If you are sort of person that can’t live without 3 holidays a year, you will probably fail, sorry. I had 5 days off last year. I’ve spent 2 days in the last year out of email contact, that was Christmas Day and Boxing Day. You really have to love what you do because you will be spending a lot of time doing it, far more than when you thought you were working hard for someone else. The thing is when you are doing it for yourself it feels OK. You can work Saturdays and Sundays without that gnawing resentment that your company is taking you for granted. Making a business out of your hobby will spoil your hobby a little though, you will find a pressure to monetise it that wasn’t there before. The good bit is though when there is a nice day and you don’t fancy working, you don’t. Try that one on your Boss. “I’m not coming into work today because I can’t be arsed”. I regularly can’t be arsed but thankfully my work ethic and self motivation is sufficient to make up the effort at another time.
If you are the sort of person that needs someone to tell you what to do next, again I’m afraid this isn’t for you. Self guidance is mandatory for business owners. If you are the sort of person that struggles to get out of bed in the morning, then join the club, thankfully I’m also the sort of person that can work past midnight if circumstances dictate.
Common misconceptions. “I’ll have more free time” . No you’ll have less, certainly initially. Tuning your business to run itself is a whole other ballgame which I’m currently exploring. The trick is to make what you like doing, your business, then it doesn’t matter any more.
Who should start a business?
Those that are frustrated making money for someone else. Those disillusioned by corporate nonsense. Those terrified of getting to retirement age and looking back on their 50 years at work and wondering where it all went. The grass is always greener on the other side if you dig out the weeds and feed it with fertiliser.
Will you be happier?
Maybe but maybe not. I’ve personally struggled with the isolation of working alone and also working with your wife which has it’s pitfalls. You may also have significant issues with loss of status if you were previously a company Director or Team Leader in charge of large team of people. I even sometimes feel guilty when friends and family have to struggle their way to work at that 06.30am alarm call on a cold, snowy morning. I should be there fighting the corporate fight too?. Then I realise this is the trap we are conditioned to fall into. All you are fighting for is to line someone else’s pockets in the hope they will line yours.
You will have a better life. Being master of your own destiny is a great feeling though, and can be especially liberating when you are also not expected to be a master of anyone elses. Since giving up the corporate world, I’ve opened the doors to many opportunities that i wouldn’t have even considered previously. I’ve made wonderful new friends, indulged some lifetime ambitions including building a recording studio and recording progressive rock music with some very talented people.
I somehow think this is only the beginning. Good Luck!