By Guest Blogger, Mary Schmidt Marketing Troubleshooter
NYT: Maybe It's Time For Plan C Low pay, long hours, no benefits: Plan B careers aren't always the dreams people hope for.
RONA ECONOMOU was a lawyer at a large Manhattan law firm, making a comfortable salary and enjoying nights on the town when she was laid off in 2009, another victim of the recession. At first, she cried. “Then it hit me,” said Ms. Economou, now 33. “This is my one chance” to pursue a dream.
Supposedly Oprah has a million in cash stashed somewhere - to offset her fear of one day becoming a bag lady. Of course, even with our economy doing the roller coaster hibbie-jibbies, this probably ain't gonna happen. But, we're talking emotion here, not logic. The tough economic times are also creating a lot of new entrepreneurs - some by choice, many by necessity. (It should also be noted that, while unemployment continues to be high, most of us are still employed. I also believe that we long-time self-employed are the really lucky ones...we're used to making our own luck. In any event, it's tough to start a biz in any type of economy.)
This female fear of bagdom is sometimes mentioned as a reason there aren't more women entrepreneurs. Since I'm not a sociologist or an expert on women, I can't say for sure if that's true. But, it seems right, based on my experience. Male entrepreneurs don't seem to be as concerned with paying the mortgage...until the bank account is absolutely drained dry. Oops! So, am I saying men are fearless? Nope, not at all. They just think differently about risks and opportunities. (Yes, men and women think differently, which is terrific, really.) I've worked with any number of male entrepreneurs in high panic mode and it's not pretty. Panic makes for horrible, terrible no good days...and decisions. If you're laying awake at night worried about telling your wife you're losing the house...you're not doing your best at work, and certainly not when doing hardball negotiations with investors.
But how does one avoid panic? Well, that's where the "bag lady" biz plan comes in.
My advice to biz owners, of both sexes, is to always, always, always have something set aside. A bit of fear of ending up on the street is actually a good thing. It keeps you sharp, but you shouldn't be obsessed about it. (Of course, if you've been unemployed for months, and are starting a biz to create your own job, you may have nothing to set aside...however, you should still do some planning for contingencies.)
Of course, telling people to plan and budget sounds so boring, doesn't it? Where's the marketing magic, Mary? Sorry, no mystical, magical biz success tips here. Luck is hard work, and passion is terrific but it won't pay the bills. It really does all come down to the money, eventually. Money to hire employees. Money to market your product. Money to pay the office lease. Money for computers. Health insurance. Money to pay yourself (and your mortgage.)
So, if you're thinking of moving to Plan B (becoming a cupcake queen, an artisan cheesemaker, or a software titan), do the following three (boring, non-magical, possibly deeply depressing) three things:
1. Take a cold, hard look (and sharp pencil) to your budget. Don't assume money will magically appear to pay for the incidentals. It likely won't. How much do you really spend every month? How much of it is absolutely essential? (Sorry, DirectTV is not essential. Neither is everyone in your house having a smartphone.)
2. Review your lifestyle. Can you and your family deal with living with the just the basics? Really? For years? If you feel poor, you'll act poor. Everyone has a different tolerance level so don't feel like you're competing for sainthood. This is about being honest with yourself. You don't need to tell me that life won't be worth living without your smartphone...or ESPN...or weekly mani/pedis...or...
3. Determine how much money you absolutely, positively must have to get the biz up and running. Then double that figure. Something will happen. Something won't happen. I guarantee it. It always take longer and costs more...rather it's starting a bakery or launching a software product. Do you know how you're going to get that money? From where? What happens if the first source says no? (Investors - and bankers - are people too...They may well pass on something they should love...) Don't rush out and get office space before you have a single customer. Your current computer is probably just fine. You can't afford radio advertising (trust me.) You don't need to spend a bazillion on a web site. Etc. etc. What will it take to get your product out the door...or the doors open...to get and keep the customers?
So, listen to your inner bag lady, but don't let her rule you.