Introduction
It is quite common that some people transition from employment to try business. Like many other situations in life some people succeed but some fail, for various reasons. In this article I share with you some dangers to guard against when trying business, based on my interactions with many people. I focus more on managers or executives.
Dangers to watch out for during transition
The following are some of the dangers, risks or temptations, to guard against when attempting to go into business.
Define the business
It is dangerous to venture into business without necessarily or carefully thinking of the type of business you want to try. There is a temptation to do what others are doing. Some people who are successful now may have come across many hurdles or “roadblocks” before. You will not know unless someone tells you.
Vision
Have a vision for the business. It is said that “where there is no vision people perish”. Having a vision will give direction to the business. Reality is that when you are a manager or executive in employment the vision may have been thought out by the owners of that business. It may therefore be difficult to come up with one for your own business.
Reason for venturing into business
Be clear why you want to go into business instead of remaining in employment. Is it because you see better opportunities? Is it because you are frustrated? Is it because you have lost your job? A few years ago a former fellow executive director who was in his fifties walked into my office and advised me “not to wait until when approaching retirement, not to go into business because of frustration, in the event of retrenchment not to use the payout as start – up capital for the business…”. He said he regretted not trying business when he was young.
Timelines
Business needs patience and is for the long haul. If you enter into business for immediate benefits you will quit soon. Make a plan on how to finance living costs during business start- up.
Character
Strong personality is irreplaceable in business. Business is not for the faint hearted. It goes beyond 8am to 5 pm. It needs time. It needs many skills such as people skills, being assertive, good judgement, negotiation, presentation, arguing, leadership, stress handling, implementation, etc. If you check most entrepreneurs are good implementers because they know someone could be pursuing the same opportunity. An idea comes up and they try it. Unlike executives they do not have guaranteed salaries and benefits. People who are weak in character do not survive in business. Some people say “if you do not lose sweat during training you lose blood during war” emphasizing the need for character or skills.
Education versus character
What counts in business is character and skills. The person in you. Education does not necessarily translate into character, if at all. So do not think because you hold so many degrees the market will comply and money will favour or follow you.
Risk appetite
One of my friends always jokes that when you are in employment it is like you are given the “bible” to read and comply with but when you venture into business it is like you are trained to use a “gun”. He says business is war. It’s a jungle. If you do not take reasonable or calculated risks in business you stay in the same situation or struggle.
Indecision, comfort zone
There are times when business can be unkind. Things can just go wrong or will be slow. If you are undecided it is easy to abandon the business or go back to employment. One can even try becoming a “consultant” or “part time farmer”.
Costs of setting up
There is a tendency to try and match the standards that one had when he or she was in employment. This may apply to offices, furniture, vehicles, support staff, etc. There is the risk that the start- up capital may be spend on trying to make an impression, not to clients, but to people who are not important. Preserve capital and minimise overheads.
Small versus big numbers
It may very well happen that as an executive you were used to big numbers, big orders, big invoices, etc. When you are starting a business the numbers may be small but every dollar counts. You will have to grow the numbers. There is a temptation to feel belittled and wasting time. Some people may even reject “small” orders or mandates. Cumulatively they matter.
Culture of implementing
In business the entrepreneur has to implement. Excuses will not generate revenue, stop or negotiate with overheads. As a manager there are times you may get away with murder by giving excuses such as “pending”, “ongoing”, “awaiting feedback from client”. Your salary will come but in business there are no guarantees. In business one has to “do” instead of just delegating. It may not be prudent during infancy to delegate a lot of the tasks unless you have trained your team and they really know or share your vision.
Not respected
As a past executive, at times highly educated, who used to command respect you may feel not respected by those who have been in the business longer. They will respect you if you prove yourself in business. Do not be discouraged. Keep pushing.
Contacts
It very often happens that some customers or friends promise to support you when you start business. In reality that support is not guaranteed. Customers prefer dealing with proven businesses. You will be disappointed but keep working on your brand. They will come. A business person needs people skills for purposes of networking and connecting with the market and important stakeholders. Work on your networks.
Conclusion
There are many dangers during the transition from employment to business especially for executives. Be prepared.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice. It is not targeted at anybody.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deal and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com
