I hope you’re having a great summer!
Last week I led a fun virtual workshop for a group of young architects, many who aspire to work for themselves.
My friend Michael Riscica was hosting a virtual summer event for his community after canceling his live conference due to COVID-19.
I have deep respect for Michael because I’ve watched him work really hard to build a side hustle into something that allowed him to walk away from his job at the City of Portland and build an emerging online empire.
Similar to me, Michael took a leap of faith a few years ago and replaced his job income with a business he really loves. He works as hard as anyone I know and it was fun to lead a workshop at his event and revisit a topic that I haven’t really talked much about lately… starting a business that creates the opportunity for you to leave your job.
With a deepening recession, layoffs, and a global pandemic raging on, I thought it would be a good time to talk about how I made the leap from a corporate sales executive job to being a full time coach.
Because, let’s face it, there are over 19M unemployed people in the US and only 1.4M job openings. And I’m guessing some of those job openings aren’t exactly like-for-like replacement jobs.
With industries like travel, hospitality, retail, and education getting demolished almost overnight, it’s no secret that there will be fewer jobs than the number of people who need them.
So if you’re unsure about your long-term job stability or you’ve already lost your job, starting a side hustle could be just the thing that gives you more career and financial options, now and in the future.
Becoming a Virtual (Work-from-Home) Entrepreneur
Transitioning from full-time employee to a work-from-home entrepreneur can be a pretty big step for most people to take. This is especially true if you are used to a high salary and have really good benefits. And for many, not only are you taking care of your own financial well-being but you’re also sharing it with a partner and maybe providing for children as well.
After working as a sales executive in the software industry for 14 years, thoughts about leaving became harder and harder. It seemed like I had too much to lose by walking away. Then I was laid off in 2013 after a company reorganization. I was (mostly) happily employed one day and told I wasn’t going to have a job the next.
Fortunately, I had started a simple blog and began coaching a few people on the side. This helped me create some extra money and build just enough confidence to be able to go full time with coaching when I was laid off.
Around the time I was laid off, I was beginning to lose interest with my career in corporate software sales and really leaning into the coaching business I had started. I had been in the industry for over 14 years and felt I’d done a good job and didn’t necessarily have ambitions to climb the ladder further.
One of the glaringly obvious issues with getting laid off was that I was only making $10,000 per year with my part-time coaching business and $160,000 per year with my sales job.
And that doesn’t include all of the incredible benefits my employer provided like healthcare, dental, paid vacation, expense account, 401k match, and much more.
So, I had a choice to make.
Do I try to get another cushy corporate sales job or do I pursue my coaching business full time in hopes that I’m able to pay myself $160,000 at some point in the future?
After many discussions and encouragement from my wife, I chose to step away from my software sales career. Here’s how I did it and what I’ve learned after nearly 7 years as a full-time coach.
The Steps I Took to Become a Full-Time Coach
1) I tested my business as a side hustle first.
It was important for me to know that I actually liked (nah, LOVED) my side hustle before jumping into it full-time. This was something I was going to be doing with the majority of my time going forward.
With this in mind, I tested out my business as a side hustle for almost 2 years before deciding if it was right for me. This was 2 years of ups and downs, failures and successes, and true moments of learning.
I slowly but surely figured out how to take my idea from hobby in year 1 to side hustle in year 2. Those 24 months gave me a taste of what working as a coach really felt like. It was eye-opening and harder than I thought, but at the end of the day, I still wanted more.
2) I built a support network before I needed it.
During the 2 years prior to being laid off, I was attending conferences for entrepreneurs and business builders. I would meet people at these conferences and ask if I could follow up and stay in touch with them.
Almost every Friday, I’d have a Skype or coffee meeting with another entrepreneur and ask them things like; “How did you get started?”, “How did you get your first customers?”, and “What are the biggest lessons you’ve learned along the way?” It’s amazing what people will share with you when you just ask!
After 2 years of immersing myself in books, conferences, and networking with other successful coaches, consultants, and entrepreneurs, I had a built-in network of people who were eager to cheer me on and support me as I made the leap to full-time coach.
3) I prepared financially for the leap.
Outside of my wife’s yoga business income, we wanted to make sure this solopreneur venture wasn’t going to put us at too much risk. That’s why I ended up saving over 12 months of living expenses as an emergency fund. This money in the bank gave us peace of mind knowing that if it took me a while to grow my income, we’d be okay.
I also had a severance package which padded the emergency fund even more. And you know what? We needed it ALL.
If you haven’t started an emergency fund, do it now.
Healthcare was another area we were concerned about. After researching several plans and options with a local health insurance agent, we realized we could get a plan similar to what I had through my employer. Because we were in relatively good health, we went with a high deductible plan to keep our monthly premiums lower. This ended up costing us close to $10,000 last year when my wife was treated for breast cancer but at least we had really good health insurance when we needed it most.
Whatever you do, don’t skimp on health insurance.
Last but not least, we focused on lowering our expenses in the 2 years leading up to my career change decision. We sold one car and got by just fine as a single car household. This reduced car insurance, maintenance, and repair costs. It would have eliminated even more expenses if we’d had a monthly car payment.
We also had a roommate to help pay the mortgage. We don’t have kids and we have a 4-bedroom house so this was an easier decision for us than most. Plus, the roommate was my wife’s brother.
Lessons After 7 Years as a Coach and Entrepreneur
1) Owning a business is harder than being an employee.
Now that I’m 7 years into this entrepreneur venture, I’ve realized a few things. The first one is that when I was an employee, I did not realize the amount of benefits and perks I was provided. I definitely took them for granted.
The healthcare, dental and 401k plans were incredible. Now that I’m paying for these myself, I didn’t quite understand the monetary value as well as the emotional value of never having to worry about them.
Outside of those benefits, there was also the advantage of having the following departments at work for me:
- Accounts Receivable
- Accounts Payable
- Research and Development
- Customer Support
Honestly, this list could go on and on. These are all roles that I now have to assume as an entrepreneur. If a client doesn’t pay me on time (or at all), then I’m on the hook for hunting down that money. Or if I need to onboard a new virtual team member, that process is on me too. Same with marketing and selling my services.
Below is a detailed analysis I put together on how much I would need to make as a business owner to replace the income from my job. In my case, I would need to make ~1.5X more as an entrepreneur to stay even because of all the benefits I gave up and the additional expenses required for running my own business.
As a sales executive, I made $160,000 per year and I would need to be making somewhere close to $234,500 per year as a coach to break even.
How much I needed to make as an entrepreneur to replace my day job income.
Having this level of clarity is important as you plan for your new venture. It will help you figure out how to get somewhere in the ballpark of what you were making at your job so that your lifestyle doesn’t take a huge hit. In fact, I’d guess this one step would either keep many wannabe entrepreneurs in their jobs longer or allow them to get more creative about how they are going to replace their job income.
One of the guys in my coach mastermind left his business and was making $25k-$30k per month within a year of becoming a coach. Part of this was due to his clarity on how much income he needed/wanted to make.
2) Outsourcing is important because you can’t do it all.
I knew I needed to do all of the roles I listed above (and more), but I quickly realized that I couldn’t. Unless I wanted to work 80 hours per week and risk burnout and hating my new “job”, I needed to get help.
One of the first areas I outsourced was accounting and bookkeeping. Having a sales background, I figured I could handle the numbers. But, much to my surprise, business accounting was quite different from knowing the numbers to hit my sales quota. Once this task was fully outsourced, I felt much happier knowing it was being handled correctly by professionals.
The outsourcing continued from there! I hired copywriters, digital designers, and virtual assistants to help with admin tasks. The work quickly became a lot easier, but this ate into my profits.
Now, I’m working on being more strategic with my outsourcing while creating more leverage in my coaching business. I want to be doing more of the work I’m good at while getting the rest off my plate.
3) Pivoting is crucial in times of change.
With the global pandemic and current recession, I’ve had to rethink my business plan so many times during the last 5 months. What a time to be an entrepreneur!
What worked well last year may not work at all this year. So as the economy is pivoting, I am pivoting my messaging and business model along with it.
My in-person coaching engagements have transitioned to 100% virtual. I’ve put my peer group events for Visionary Business Builders on hold since they rely on in-person events and retreats. And I’m launching a pilot program for emerging coaches since so many people are stepping into this field right now and I can help them.
Is Entrepreneurship Worth It?
You might look at the above and think, “Woah, that looks pretty risky!” And to that, you’d be right. I’ve worked very hard to learn and grow so that my coaching business continues to evolve and become more successful.
But I also didn’t really expect to be where I was with my former career salary-wise for at least 5-7 years. To my surprise, I ended up getting there much faster – in about 2 years. All of the knowledge, skills, experience, and connections seemed to pay off.
It hasn’t all been a smooth ride. There have been dips with income and wondering if I’d made a big mistake. My collective net worth has taken a hit but the peace of mind from doing work I love is completely worth it.
In truth, income is not my #1 driving factor anymore. It’s more about the lifestyle that I’m creating. One that is focused on healthy living, time for adventure, and doing work that I love.
I absolutely love every minute I get to work on my coaching business. I don’t plan to go back to being an employee any time soon.
Do I miss the benefits, perks and regular paycheck? Absolutely!
Would I trade it for this new flexible lifestyle that I’ve built? Nope.
With this rapidly changing world and economy, I hope this has provided you with some valuable insights and a glimpse into my journey from a full-time corporate employee to full-time coach.
If you’re curious about the specifics of how I built my coaching business, you can read about how I started and built a rewarding and profitable coaching business.
I’d love to hear from you. What are your biggest insights from this article?