Let me share some thoughts on #離職創業 starting a business after leaving employment, which also serves as a 2022 year-end review.
First, actually "establishing a company" isn't too difficult, but getting the company to make money and survive, having employees, having a business model, and establishing systems that can be handed over and taught, building company knowledge assets—these require perfect timing, favorable conditions, and the right people. When combined, it's genuinely one of the most difficult endeavors in life, almost the greatest test of a person.
I stabilized my entrepreneurial foundation through my past expertise in writing, social media management, combined with my network resources, upstream and downstream partners, and the company's service characteristics. Knowledge monetization and writing are among my interests. Before focusing on entrepreneurship, I worked in employment for about 6 years and freelanced for over 10 years.
On this path of entrepreneurship, I feel I've been fortunate. My luck largely comes from many entrepreneurial mentors who were willing to open their hearts and teach me generously without holding back, allowing my commercial and financial abilities to continuously improve over these two years.
If you have a full-time job and want to try entrepreneurship or starting a solo company in the future, and you're stuck on "how to survive," I hope my small experience can be shared with you.
Many people jump into entrepreneurship—finding what "feels" like a money-making business and rushing headlong into it, lacking consideration for whether they have enough professional knowledge and technical expertise in that field. Examples include franchising beverage shops, selling food, or opening cafés.
But the operational costs of a company are truly more than you imagine. For example, what we do is a service-based business with no physical storefront and fewer than five employees, yet we still need these ten basic things:
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Accounting and bookkeeping fees (monthly tax payments, yearly taxes in May, etc.)
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Hardware equipment (tools for generating income need to be amortized)
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Labor and health insurance, retirement contributions (companies with fewer than five employees don't necessarily need to establish a labor insurance unit, but we did because we participated in the Youth Flagship Program)
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Employee salaries + project bonuses
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Various software fees (Google Workspace, Slack, Google Drive, Canva, Nueip HR system, etc.)
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Water and electricity fees
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Office expenses (recently rented a small space)
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Various project development costs
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Outsourced labor costs
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Project costs, miscellaneous fees
These are roughly the fixed monthly expenses from the two years of entrepreneurship, which add up to over a million annually when spread across a year! (Shocking)
In the past, I never thought I'd need to manage finances at such a scale, until after doing business for a while, I realized I truly had to face it head-on. So last year I took the annual CEO class at Liansheng Business Consulting, and early this year I took financial accounting courses. After all this hard work pushing myself to grow, managing a million-dollar cash flow has become manageable, but reaching the tens of millions level is still a murky road ahead.
Then, how exactly do you make money and survive?
Actually, facing the reality that you don't have substantial capital, here are four approaches to consider:
- Have clients first, then consider (quitting to) start a business
Many people think entrepreneurship means burning bridges—making the decision first and figuring it out later. While such courage is admirable, the reality is: if you're not someone with assets, this approach will only starve you out and hurt those around you.
About three years ago, I had almost no savings. Although my side income was okay, it was unstable. Unstable enough that a 60-day payment term would leave me struggling. If all vendors offered 60+ days, I'd really need to borrow from family.
There was a time when I was living in absolute poverty, which damaged my family's and my partner's trust in me. Not trusting that I could repay borrowed money, they threw harsh words at me: "You need to survive on your own ability~" After that, nobody would lend me money until I created a stable business model. After that point, I could borrow anytime I needed because I could pay back.
Without substantial capital, "you should have clients first, then talk about bravely quitting your job."
First confirm that your expertise can create value for others, and that the value you create can support yourself without burdening others. Only then should you think about quitting and entrepreneurship, not rush in first. Many people ask me how to evaluate the right timing. You can compare: if your side gig or multiple income streams can consistently surpass your regular salary, even exceed it several times over, then you can start moving toward focusing on entrepreneurship.
- Plan your annual budget so that this year's you sustains next year's you, and next year (the future) you has some breathing room to increase organizational value.
Early this year our financial situation wasn't very good, which forced me to reflect deeply. Combined with some personal issues in May and June, I became more determined to achieve "letting this year's me sustain next year's me." So at year-end I actively pursued developing new business opportunities.
When accounting for annual budgets, calculate the operational costs mentioned earlier across "a whole year," and factor in potential risks to calculate the minimum amount the company must spend annually.
Next, before year-end, sign contracts for next year with the goal of "earning more than a whole year's worth of expenses." This way I can pre-solve next year's year-end concerns, and when that time comes, I can think about the year after, the year after that, without constantly chasing cash flow.
Many entrepreneurial mentors might be thinking five or ten years ahead. Since we're just starting and don't have substantial capital, we're very conservative on this point. To achieve this goal, I temporarily put aside what I really want to do.
- Prioritize making money, then pursue ideals
Ensuring the enterprise has sufficient profit is the entrepreneur's responsibility. I used to think such statements were too commercial and dismissed them, but when I faced money with this attitude, I truly received the warning: "If you don't manage your finances, your finances won't manage you."
In earlier years, I hoped to do what I loved, and didn't mind struggling. Later, when I looked further ahead, I discovered that the prerequisite for true beautiful ideals is taking full responsibility for myself and others' lives. I cannot let "ideals" impact my livelihood and relationships with those around me.
After painful struggle, in the second half of this year I decided to temporarily put aside what I truly want to do, prioritizing strengthening the business itself before moving toward ideals, then achieving the goals and demands I set for myself earlier.
- Optimize the business model to maximize value and profit
Many people worry about the instability of entrepreneurship, especially when encountering vendors with 60-day, 90-day, 180-day or even longer payment terms!
Basically, now before these invoices come due, I treat them as if I'm doing charity work—if the money comes in, I consider it a subsidy. However, this relates to my company's operational costs; mainly because my accounts payable aren't huge amounts, so I can afford to be this way.
But under these unstable conditions, how do you inject stability factors?
Beyond basic adjustments to payment terms, more importantly: adjusting the business model!
For example:
(1) Deepen collaboration: If it was originally one-off projects, negotiate from once a year to five times a year, then to signing long-term contracts at once, increasing income.
(2) Annual budget paid in installments: If you tend to spend money as soon as you get it and invest in the next product, you can negotiate a comprehensive budget with clients and have them pay monthly. If you have many such clients, enough to cover the company's monthly fixed costs, that's quite ideal. As a leader, you won't need to scramble for cash flow in the short term but can instead focus on deepening quality and adjusting organizational structure.
Although I haven't focused on entrepreneurship long, compared to the growth curve when I was an employee, it's nearly vertical. My perspective on things has changed significantly. There's still much to continuously learn on this path, but I hope these practical experiences can help those who need it :)
