Milena Thomas, MSF

Professor | Researcher | Editor | Finance SME

Archives for January 2019

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Benefits of Writing a Business Plan

One of the things I have done for clients is help them draft business plans. I find that the term “business plan” means different things to different people, so I want to define it.

A business plan is a document outlining in detail the future plans of a business in the following areas: organization, strategy, marketing, operations, and finance. 

I believe drafting a business plan is essential, but the benefits of writing the business plan may be limited. What does that mean?

Some research shows that writing a business plan does not correlate to success in business. But it does correlate to starting the business, and I would argue, correlates to starting the business in an organized and well-thought out manner. And while I believe it is very important to take research results with a grain of salt and a hefty dose of skepticism, I also think the results make sense. No plan can predict or guarantee the outcomes of your business (that is what ongoing monitoring is for, to ensure your strategy makes sense as you are implementing it, but there is power in planning, such that it will inspire you to take action.

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The “Quit My Job” Checklist

So you are thinking of quitting your job and branching out on your own.

Not so fast, buster.Lego office worker surrounded by droids. He is scared.

I can hear your objections: You dread each day, you aren’t sure how much more you can take, you have a dream idea you want to launch, and nothing would give you more satisfaction than walking in and giving two weeks’ notice tomorrow.

Don’t do it. At least, not yet. Because…have you made a plan? And I don’t mean having a vague idea or even having a potential client lined up. Yes, I know a comprehensive plan to quit doesn’t seem as fun, but I promise you will feel better when you have created it. When I planned my own exit from corporate life, I actually made a two year plan. Every six months I reduced my income (on paper) by one quarter until I was saving 100% of my pay from my “day job” so that I felt I could be truly free to leave.

So whether you plan to leave in two years or two months, here are some things you will need to consider when you think you are ready to exit your corporate job.

Check for any “golden handcuffs”

You may have been excited about your signing bonus or fantastic benefits package when you first joined your current job, but now those are the same things preventing you from leaving. These “golden handcuffs” are designed precisely to encourage employees to stick around by hitting them with penalties if they don’t.

Do you work in an industry where you are required to sign non-compete or non-disclosure agreements due to the nature of your work? If so, you’ll need to consider your options and create a solid contingency plan regarding what kind of work you will be legally allowed to do, with whom, for how long, and in what geographic location if you move on or break out on your own.

(Learn more about quitting your job and legal contracts.)

Check your benefits to ensure you won’t lose money if you quit. Some benefits such as employer matching in your 401K accrue, but aren’t fully vested for a certain time period. This mean you aren’t entitled to 100% of the funds until a certain number of years has passed. Determine if this amount is a deal-breaker that could entice you to stay on board a little bit longer (which it is precisely designed to do.)

Similarly, check your original employment contract to ensure you won’t owe the company money if you quit. If you received a bonus or other benefits such as an educational stipend or career training, you may be required to forfeit or repay the expenses, which could be a substantial cost.

Don’t Burn Bridges

Remain professional as you plan your exit, this is easy to do if you enjoy your work but are just looking for something different. However, even if you are unhappy in your current situation, I don’t recommend letting it show. Your coworkers and administrators are still going to be part of your future network, and can potentially be a fabulous source of referrals in the future if you leave on good terms.

When you officially offer your resignation, and make your exit easy for everyone else you work with. Understand that your boss as well as HR manager will likely need a formal written letter of resignation, and have it prepared ahead of time. Oddly enough, this is also a good opportunity to show that even though you are quitting, you are a professional and conscientious employee.

If you are feeling generous and it makes sense in your situation (as it did in my own corporate exit), you may want to offer to help hire and/or train your replacement. Because I was quitting my job and not looking for another, I actually did this for an extended period of time, offering my boss more than two weeks’ notice if it would make things easier, even coming in a day here or there without pay for exactly this purpose. This way I was able to demonstrate my appreciation as well as ensure I wasn’t leaving any loose ends. This option isn’t for everyone, but some employees and bosses may appreciate the option.

Have a Re-entry Plan

At the risk of sounding like a downer, even if you have a rock solid plan for what is coming up next in your life, you never know when you may need the stability of a corporate job again. Plan for your re-entry even though you may never need it.

Make sure your resume is up to date before you quit, ask for letters of recommendation from anyone you think would be willing to write them, even if you don’t plan to find a new job right away, or ever again. A recommendation letter can serve other uses besides traditional job hunts – as a testimonial to showcase on a new website, or as a letter to show potential clients.

Even after you leave, it’s a great idea to keep your resume/CV, LinkedIn, and other social media profiles updated and corporate-friendly. Just because you are leaving the world of suits and uncomfortable shoes behind doesn’t mean your new image should be too casual. A good rule of thumb is never post anything online you wouldn’t feel comfortable being splashed across the cover of the New York Times.

Make a Financial Plan

If you have never been great about keeping track of your money, then I recommend starting at least 6 months prior to quitting your job. If you don’t have a good idea of your current income and expenses, it will be impossible to know how much you’ll need to replace or reduce once you quit.

(Feel free to use my Self Employed Cash Flow Worksheet as a starting point, or if you need one-on-one help, I work with clients to help you get your finances in order and plan your corporate exit.)

And speaking of income – unless you already have substantial savings or a rock solid plan for how you will generate income – it makes sense to start your side hustle before you quit your job. Again, 6 months is fairly good lead time, but I recommend more if possible. In fact, I believe everyone should have some kind of side hustle, it just makes good financial sense to diversify your income. I highly recommend the book The $100 Startup [aff.] because it provides very realistic advice with plenty of case studies to give you ideas that are completely within the reach of every average person with some time, creativity, desire and as little as $100 in start up costs. I think you’ll find it inspiring.