How To Switch From Employee To Entrepreneur

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You’ve been laid off, and after a period of discernment, you have decided to switch from employee to entrepreneur, but how can you make the switch successfully?


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ManpowerGroup South Africa’s MD, Lyndy van den Barselaar shares that successful entrepreneurship requires a focus on creativity, integrating innovation, and strategic business practices.

Being an entrepreneur is very different from being an employee, especially if you do not subscribe to the idea of being the “CEO of You”.

Starting a business is a big leap, a serious step, and to top it off, statistics from Small Business Administration say that only half of new businesses will survive to see their fifth year.

To succeed in transitioning from employee to entrepreneur requires a shift in mindset, and if possible, don’t try to make the leap all at once.

South Africa has very few self employed individuals and employers. The structure of the employment market in South Africa is extremely rigid as nearly 85% of all people who are employed are employees.

According to the Global Entrepreneurship Monitor (GEM) 2016 report, this means that only 15% of the employed are employers or self-employed, in South Africa. However, the digital transformation is allowing more businesses to take advantage and meet the requirements of today’s digital era, one in which we are facing profound and far-reaching changes in the way digital technology is created, managed, analysed, and consumed.

African tech start-ups raised US$129m in 2016 with secured funding up by 16.8%, according to Disrupt Africa Report (2016). This growth could be attributed to the increasing role of business incubators and accelerators having an important role in helping entrepreneurs gain access to markets and clients.

Van Den Barselaar explains:

Throughout RightManagement® workgroups we have seen that almost every single person that has participated in the programme started with the belief that they would need to either move sideways or downward within the same industry in order to find employment, and did not consider any alternative option – such as moving towards a new career altogether or starting their own business.

“However, some inspiration and shift in mindset can change this.”

How will you survive?

When starting a business it will take some time to get it off the ground, so how will you live during that period? Will you survive on a severance, or will you secure some consulting projects? Ideally, you should aim to have a financial cushion of six to twelve months of business and living expenses.

“Financial and business planning is essential, and should be the foundation for all actions going forward. Consult with as many people within your social and professional sphere as possible to ensure you are prepared for starting your own business, and the financial requirements that come with this,” she says.

Understand the business numbers

As an employee, unless you worked in the finance department, or you were head of a division, there was no need for you to understand the financials of the business. As an entrepreneur, you have to know how much money is coming in and going out, and you have to know how to read financial statements.

“This requires individuals to come to terms with the fact that what they do, or don't do, might have an impact on their business,” says van den Barselaar.

Wear multiple hats

While working as an employee, you had a job description, which required specific skills to perform effectively in your role. As an entrepreneur, you have to wear many hats, unless you have money to hire or outsource roles. One day you are tech support, another day you could be a salesperson, or marketer, or researcher, or content creator, or social media strategist, or idea generator. The point is, the life of an entrepreneur is filled with a variety of roles and functions to perform.

“This is where a real and true passion for your business comes into play. You have to be dedicated in every way, and willing to do whatever it takes to make the business succeed,” she says.

Lifelong learning is a way of life

As mentioned before, employees have job descriptions and specific skills to perform the job.

“Learning is a continuous journey, and whilst employees are concerned about working hard with the intention of getting a better position and a higher salary, entrepreneurs must work hard with the intention of learning new skills and generating new ideas to uplift their business, and reach their goals,” says van den Barselaar.

Feel socially isolated

One of the things that people who work for themselves often complain about is the social isolation that they feel. As an employee, you had colleagues to discuss ideas with. To overcome feelings of social isolation, keep your networks active, scheduling lunch meetings, joining industry associations, and attending networking events. Using co-sharing workspaces will also stave off any feelings of aloneness.

Make all the decisions

The decisions you made as an employee were determined by your level in the organisation. As an entrepreneur, you have to make all the decisions, big and small, and you also have to live with the consequences.

Keep a schedule

As an employee, you had a work schedule to abide by, and although many people like the flexibility of entrepreneurship, to succeed and get work done requires a schedule. Stick to a planned work schedule as close as possible, knowing that you may well be working longer hours to get your business off the ground.

“A shift in mindset and awareness are key to successfully switching from employee to entrepreneur, and paying attention to the elements listed above will go a long way to helping you make a success of becoming a successful business owner,” concludes van den Barselaar.

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