Josephine Thomas quit a $30,000 a year job at Mountain Bell in Denver and started her own business the minute she got her real estate license in 1985. She was 31, the divorced parent of two boys, David, 12, and Brian, 8, and felt she possessed the right skills and knowledge to be successful in Denver’s bustling real estate market.
“The first years were great,” says Thomas, now a manager with Lucent Technologies in Basking Ridge, New Jersey. Then the bottom fell out of the real estate market in 1987 and her business collapsed right along with it.
Today, Thomas says she has learned the hard way that you don’t quit a job and jump into business without adequate finances and a strong support system in case the going gets tough. But it takes more than that to keep from winding up like the 83,384 failed businesses that Dun & Bradstreet tracked in 1997. To make a successful transition from full-time employee to full-time entrepreneur, you also need experience in the field, a good business plan and a job that lets you start up part-time.
YOU’VE GOT TO HAVE A PLAN
Don’t even think of giving up your livelihood to become an entrepreneur without a business plan, says Emily Miklis, chair of the Cleveland Service Corps of Retired Executives (SCORE), Chapter 30. A business plan helps you determine if there’s a need for your product or service; your consumer base; pricing; your competitors; growth potential; and if you have adequate financial resources to get started and expand. (See “Small Business Checklist” at blackenterprise.com.)
Cheryl Prince, the owner of Ethnic By Design, a $50,000-plus mail order and e-commerce ethnic gift and collectible company in Atlanta (www.ebydesign.com), developed a solid business plan, says Lloyd Atkins, assistant director of the Small Business Development Center (SBDC) at Georgia State University in Atlanta.
Prince, 43 and single, left a near six-figure middle management career at a Fortune 500 company in February 1997. She opened her own company one month later. Before quitting, she negotiated a package to help pay living expenses, researched the market, wrote a business plan, obtained a loan of $20,000, matched by $20,000 of her personal savings, and started up textbook perfect.
Writing a business plan is time-consuming, but easy to do. Pick up a copy of Business Plans Made Easy: It’s Not as Hard as You Think by Mark Henricks (Entrepreneur Media Inc., $19.95). And go to the library and check out Annual Statement Studies from Robert Morris Associates for hard data on businesses like yours. Log on to the U.S. Census Bureau’s Website (www.census .gov) or a chamber of commerce site like the New Jersey Commerce Business Resource Center (www.njbrc. com) for state, county and municipal demographics. Then, go to your local SBDC (contact 703-271-8700 or www.asbdc-us.org for locations) and let a counselor help you write the plan.
GET EXPERIENCE IN THE FIELD
“If you haven’t already worked in that business, there’s no way you’re going to succeed because you don’t have the background for it,” says Cleveland