Seven months ago I transitioned out of a corporate job in market research to work for myself full-time.
By the time I left my day job to become a personal finance coach, I had nine clients, $22,000 in savings to cover my living expenses and $5,000 in a business account.
This is how I did it.
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Getting Ready to Go
The road to self-employment really began six years ago when I dug myself out of $30,000 in debt and radically changed my money habits. Once I sent in that last payment on my last card, I vowed never to go back.
As I started sharing my story with friends, they started asking me (quietly) if I would help them with their finances. At this point, I was self-taught through books and my own experiences, without any formal financial training. I made sure everyone knew I wasn’t a financial adviser or anything, and I certainly didn’t give investment advice. I was just a woman who struggled and turned things around. I was happy to share, so when my sister suggested that I teach a class on the subject, I agreed. Ten women—some friends, some friends of friends—showed up to the first event.
What started as a small hobby on the side began to grow into something I absolutely loved to do. I began to teach more workshops in the evenings, and afterward people would ask me to look at their finances privately. I became known as the “money lady,” setting up budgets and helping people get organized. It started with a friend asking me how to create her budget. Another woman wanted me to sit down with her to figure out how to use her tax returns and bonus to get out of debt. Another wanted to figure out how to save $10,000 to go back to grad school. Next thing you know, I had actual clients!
After about three years of slowly building up a private coaching and consulting practice, I made the decision that I wanted to do this full-time.
Because money can be a landmine topic for some people, I knew I had to learn more skills around talking about money without judgment. I got certified in coaching at NYU, and by some miracle my classes were approved for tuition reimbursement from my corporate job. After about three years of slowly building up a private coaching and consulting practice, I made the decision that I wanted to do this full-time. I wanted flexibility in my schedule, I wanted to ditch the 45-minute commute and I wanted to help more people, putting them first instead of squeezing them into my nights and weekends.
After working in market research for nearly 10 years, I was ready for a change.
Deciding When to Make the Leap
I love security and certainty—Richard Branson, I am not. Wanting never again to fall into the financial straits I had faced in the past, I decided to build a strong financial foundation first, before leaving my corporate job.
Over the course of a year and a half, I saved up about $22,000 through tax returns, two bonuses, taking the payout from my extra vacation days, and putting money aside out of every paycheck on top of that. I got married just before I started preparing to leave my job (who can deal with wedding planning and building a business at the same time?), and saved up enough to cover my portion of the household expenses for one year. That way, there wouldn’t be tremendous pressure on my husband, who works in the insurance industry, to pick up all of the slack if my income was shaky during the first 12 months on my own.
My husband has always been extremely supportive, and we had nightly discussions about when it would be the right time to leave corporate. We decided that when I had enough on my plate in the business to fill up a full workweek, I would leave. And anyway, if it didn’t work out, I had enough experience in market research to go back.
Since paying off $30,000 six years ago, I still use credit sparingly, and I didn’t take out any loans to fund the start-up of my business. Instead, I created a separate savings account called “Investments” to use as working capital for the business. I used that money to educate myself on the basics of starting a consulting business, as well as for things like my website and programs that taught me how to launch and run a business. Overall, my strategy was to pay for a lot of the major upfront costs in cash from my day job.
So I doubled down and focused on attracting more clients, to reach my tipping point faster. But once I stopped treating my consulting like a hobby, I got nervous. I had trouble promoting my services beyond word-of-mouth referrals, and I was afraid to follow up with people, breaking into a sweat when discussing my fees. But I knew I had to conquer those fears if I wanted to work for myself, so I hired a coach of my own to help me build those skills.
To attract clients, I worked around the clock. I hustled, but it was exciting! I woke up about an hour earlier than I had to every morning, and by 7 a.m. I was at my computer with my green tea, either writing posts on my blog or content for my workshops, emailing clients, asking for speaking engagements or studying up on how to run a business. I even took 8 a.m. client calls before showering, and put in a full day of work at my corporate job! I’d teach workshops, and speak or meet with clients on nights and weekends.
After eight months of really focusing on building my practice, though, it became clear that I had to choose. I essentially had two full-time, demanding jobs, and I was burning out. Clients were reaching out, but I didn't have the time to take them on. I simply didn’t have enough energy to ride two bikes any longer. It was decision time.
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I crunched the numbers to see if I was ready. Overall, I was running a pretty lean machine. Most of my work was done remotely out of our home office, so I didn’t have to worry about permanent office space. As for health insurance, my husband and I talked about private insurance, but it made the most sense for me to be covered under his plan. I agreed to pay the difference coming out every month. I also applied for professional liability insurance, which can be paid in a lump sum annually. And I calculated how much I would need to put aside every month for retirement. Since I was cutting back, the contribution would be smaller than I contributed in the past at first but would grow over time.
The day I left corporate, I was definitely excited but sad. It was hard to leave a job that I’d called home for six years. When my coworkers asked if I was taking time off, I laughed. “Time off?” I said. “No way. I have a full schedule next week!”
It was definitely a rush to open my laptop that first self-employed Monday morning to a full schedule and no boss. I wrote my next blog posts, prepared for a radio interview later in the week, and had three client calls and a consultation with someone who wanted to hire me.
Financially, self-employment isn’t as drastic of a change as I once thought it might be. The hardest part is creating a system to manage my cash flow so that I can forecast what I’m making every month. I use Excel to plan out incoming client payments and outgoing expenses every month (including what I pay myself). That way I can see all in one place what I need to earn each month. Once I reach that number for one month, any extra carries into the next month. I still pay the same bills I was paying when I was working full time, including the phone, cable, utilities, groceries, parking and part of the mortgage.
What has changed quite a bit is my "fun money" fund, meaning my allowance for personal expenses, like getting a haircut or buying clothes. For now, it's half of what it used to be, which means I really have to watch what I’m spending more closely than before I left. But I’m at peace with making sacrifices until my income is more consistent. As long as I can get my nails done every now and again, I’m good for now while my practice grows. I expect to be profitable by April of next year.
The biggest challenge for me now that I’m self-employed is keeping my confidence up during the natural business ebbs and flows, like during the summer months when people are away on vacation and the phone never seems to ring. I’ve found that when self-doubt creeps in, it helps to reach out to other self-employed friends, or my amazing husband, and ask for a kind ear to listen.
So far, it’s been a joy, and I don’t see myself going back to corporate any time soon. The flexibility to create my day and really make a difference make the financial ups and downs completely worth it.
Jillian Beirne Davi is the creator of Abundant Finances, which offers inspirational articles and programs on how to get out of debt, amass savings and live a life full of abundance.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial adviser for advice specific to your financial situation. LearnVest Planning Services and any third-parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.