A few days ago, I had the chance to talk to a transitioning entrepreneur who has had a side hustle for years and is now considering leaving his cushy full-time job.
His biggest concern, understandably, is money—as in, could he quit his job and make enough money to do his side hustle full time?
Up until now, he has gotten clients primarily through talking about his business in casual conversation, and through referral. He’s done all the right things—he’s experimented with his offerings and gotten to deeply know and understand his customers’ pain points. He knows how much he can charge for the services he provides.
So he asked me, how does he make the transition?
Personally, I’ve been through this transition more times than I can count. Yes, I first did it going from full-time work to freelancing, but the truth is the transition never ends when you are an entrepreneur. You are constantly building new streams of income as old ones fade out of interest and/or dry up.
The transition is scary if you don’t know what to do next or what to expect in your bank account. If you are considering this transition yourself, here are three things to have in place before you pull the trigger:
1. Build and test your system for getting clients (or sales) first
Not knowing where your next paycheck is coming from is scary. The only way you are going to feel safe is to know you can get clients or customers when you need to.
This means you need a process that looks like, “I do X and it produces Y clients/customers every time.”
One process like this is a good start. Three will make you feel pretty good. Five will make you feel confident enough to make the leap.
How do you find these processes? Unfortunately, there is only one way. Experiment! Try a new experiment for getting clients/customers every single month, or every single quarter. Document which ones work consistently, which ones work sometimes, and which ones don’t work. (The ones that work consistently go on your list of five, while the ones that work sometimes go on your backup list that you keep in your back pocket for when the rain pours.)
When you transition to working for yourself, a lot of “bad” things are going to happen:
- You’re going to have months where you don’t earn as much – your biggest client moves on, people don’t pay you, clients are too busy to work with you, loyal customers can’t be bothered to grab your new release because they are on vacation, seasonal changes affect your business (for example, summer sales for books are always down), global changes affect your business (for example, the housing market crashes)
- You’re going to make costly mistakes – you mess up your taxes and owe backpay, you hire a service provider who screws you, your equipment breaks and you have to replace it, you invest $10k in X thinking it will get you Y result and it doesn’t
- Your top method for getting clients/customers goes belly up – Amazon changes their terms (ahem), Bookbub stops delivering on their ads, Facebook changes its algorithm (ahem)—of course, this is why you have five processes, not one, because a lot of this is out of your control
None of these things are actually bad—they are all just a part of being in business for yourself, aka “business as usual” for an entrepreneur. But when you are coming from the employee mindset, you likely aren’t used to experiencing these small setbacks, which makes you feel bad. You may take on that guilt, anger, depression, and frustration as a fault inside you, rather than just seeing it for what it is—the natural ebbs and flows of the entrepreneur lifestyle.
Having a Plan A, Plan B, and Plan C is going to greatly help you avoid panic and also know exactly what step to take next. Knowing what step to take next is a very important and underrated sanity strategy for if/when things go south.
2. Do the math assuming you will spend 20+ hours per week on marketing
When I started freelancing, I thought it was great to make several thousand dollars on one project. I would think, “oh, just a few of these a month—easy peasy.” The numbers can look big, but it all needs to add up.
Don’t leave your day job until you can create and deliver the same amount of value to your clients/customers in half the time as you do at your job.
Why? Because when you are running your own business, you will literally only have half the hours to provide your service to others. The other half you will spend marketing your service, finding clients/customers, and steering the ship—which is what your boss (maybe several levels up) does now.
That means that if you make roughly $50/hour at your job, you need to make roughly $100/hour as a freelancer. This may mean you need to raise your rates, streamline your processes, or find a higher-end clientele.
Are you an author? If you are making $5000 per month at your job, you would need to write a book with a $5000 guaranteed launch every single month to cover that before you quit. Or a $15000 guaranteed launch every quarter—the equation is flexible, but the numbers themselves are set.
Of course, this means you need an audience to support this launch level. 5,000-10,000 True Fans is in the ballpark—though again, if you play with pricing, the equation is flexible.
You would also need to be capable of doing this much output on 20 hours per week, or you would need to be willing to work significant overtime. Eventually your backend sales and audience growth will kick in to expand this timeframe, but until then, this is what you would need to do to feel secure.
So play with all the numbers and make sure you understand what it will really take. Know that the number you come up with is a best case scenario and doesn’t account for challenges and emergencies that arise.
Then, make a game plan for what you will do next in those challenges and emergencies. Plan A, plan B, plan C.
3. Productize your service or Servicize your product
If you have a service, you probably know the 85% of pain points that every single one of your clients struggles with. This 85% is packageable in the form of a product. You can diversify your business and bulletproof it by creating this product and selling it to either your current clients/customers, OR to clients who are not quite ready for your services.
This is called a front end to your sales funnel and can help you attract more clients.
If you have a product, you probably know the customers who want to go deeper than your product allows. You can create a service for them. Don’t be intimidated by this—a service is simply delivering on two of Kevin Kelly’s generatives—accessibility and personalization. You are giving your personal time and customizing your efforts to a single person or a small group. You can actually incorporate other generatives too, if you want—interpretation, authenticity, embodiment, and patronage come to mind.
This is called a backend to your sales funnel and can help you build True Fans and Evangelists for your products.
Even if you’re a fiction author, you can create a service of some sort. There are a number of authors who already do this:
Stephenie Meyer used to host a Twilight Prom (her characters go to prom at the end of Twilight)
Plenty of authors charge for a fan club subscription service that gives accessibility (see musicians to really get how this can work)
Neil Gaiman and Amanda Palmer often host live performances that include readings from their works
You can sell physical products you already have (like print books) but provide services on top of them—gift wrapped bundles, personalized notes, and more
JK Rowling has auctioned off handwritten copies of her book, Tales of Beetle and Bard
Hundreds of indie authors do free “Ask us Anything” sessions, free coaching sessions, free webinars, and more.
Keep in mind that having a service doesn’t mean you need to charge for the service. Services create True Fans and Evangelists, which bring more people to your books, which is where you make more money.
Same for having a product—products sell services and are an excellent way to build trust with potential clients, which is where you make more money.
You may find it odd to sell a service if you sell products, or sell a product if you sell services, but the reality is that the strongest businesses diversify and sell both—even if there’s only a price tag on one. So think in terms of having both products and services and experiment with pricing, testing both free and paid and a variety of value levels.
Also, realize that a service kind of looks like a product when you break it down, and a product kind of looks like a service when you break it down. There’s a product/service spectrum, with each at the end caps. Most things fall somewhere along the spectrum, so you’re job is to make sure your business expands across the entire spectrum.
The vocabulary isn’t as important as the idea that you need to diversify the experiences you are offering to others to make your business stronger.
If you own a business, what else would you add to this list if you were talking to my friend?
If you are considering transitioning out of your day job, what other questions would you have? What is your response to these suggestions?
I’d love to hear your thoughts in the comments!
Check Out My New Book, Novel Writing Prep!
50,000+ words in 30 days—impossible, right?
Or if it is possible, those words must be total crap—right?
And even if there is some semblance of writing talent in the draft, writing that fast means the plot and characters must make no sense… right?
No. Nope. Wrong!
Yes, you can write 50,000 good words on your novel in as little as a month, as long as you prepare yourself.
Ready to learn how?