Question: Hi, I am an engineer by profession, working in a vertical construction firm. I am now 42 years old. I’ve always wanted to have my own business but I don’t know what business I should get into because I don’t have any ideas what the market likes. I have a rental property and a computer shop, but I am still struggling with my personal finance when some major financial problem arises. How can I finally have a good business idea to start up a business of my own and quit my present job?
Answer: Switching careers can be a heck of a challenge for someone who has been an employee for quite a number of years, but the prize of being an entrepreneur could be very enticing, especially if it enables you to do what you love doing every day.
Being an employee has its advantages and disadvantages that are different from those of being an entrepreneur. Allow me to enumerate some of the differences as follows:
As an employee, you receive a fixed income from working for a specific number of hours a day, as agreed with your employer. Second, your job is determined by your boss, or has been predetermined in accordance with your position’s contribution to the company’s mission. And third, you are entitled to certain fringe benefits (ex. retirement benefits), which are legally protected against any unlawful act by your employer.
Being an entrepreneur is very different from being an employee. It gives you the sense of being responsible for every plan or action you do; every action counts. Second, you do not have a fixed income; your income varies each month. Third, you are your own boss; you decide where your business should be heading. Fourth, you don’t have anybody giving you any benefits; it is up to you to create and fund your own benefits.
Now, try asking yourself, are the risks and rewards of being a businessman worth it for me? Am I ready to make the switch and accept the differences?
The depth of being an entrepreneur
At age 40 or more, most people usually think about their retirement and the need to protect, as much as possible, their financial assets from risk. At this stage you need to evaluate your current financial situation. Ask yourself, “Where am I now in my financial life?” To answer this, you may need to use the SALN (Statement of Assets, Liabilities, and Net Worth) and your annual cash flow as a tool to assess your financial position. The most important thing to know here is whether you have an emergency or backup fund to draw from that would be equivalent to six to 12 months of your income. This would allow you to go worry-free during the first six to 12 months of possibly not having an income. You should expect that the first to second year is the planting stage. If you can’t have this fund, it is highly suggested not to quit your employment yet, but start accumulating or saving to achieve this goal and at the same time the seed capital for your business.
Next is to determine what you really love to do. Ask yourself what one great thing you’d want to wake you up every morning? Think first what you can provide other people that will give you the urge to wake up every morning. In business, it is not always about making a profit. Sometimes it is thinking what service you can offer to the public for which they will be willing to pay. That way you can find your niche.
Once you have found your niche, you need to set up a realistic goal for you to achieve. This will provide you a guide or a roadmap for doing your business. Having a goal will allow you to set up plans on an annual, down to a monthly basis, and even for your daily tasks.
Then try to determine which people you would need to help you prepare and go through the transition. Try to look first from within your inner circle, such as your family and relatives, then your friends. Try to examine the network you’ve built over the years of your employment. Inform them about your new venture. By doing that you will simply be marketing yourself in a subtle way and may even find some business partners along the way.
Also try to think ahead of the possible obstacles that may come your way and the means to overcome them. Lastly, never, never, never give up.
I wish you all the best and success toward financial freedom and peace.
Serge Barcenas Bargayo is a registered financial planner of RFP Philippines. Serge is the managing director of Certa, Inc., a family estate planning and investment advisory firm from Cebu, You can reach him through firstname.lastname@example.org or email@example.com.