The Pro's & Con's of leaving Corporate America for Small Business Ownership

It’s that time of year – New Year resolutions, time to strike out and do something new or maybe you are just not enjoying the thought of having your sales target back at zero and having to climb the results mountain once more. It's hardly surprising that franchisors receive a disproportionate level of enquiries from people interested in making the leap from the corporate world to small business ownership at this time of year.

In my experience there are two primary reasons people consider this:

• they are frustrated with the corporate grind, have reached a level of financial stability/comfort and feel that its time to take control; or
• they got laid off (again !) and don’t want to jump back on the wheel.

In my case four years back it was a combo of the two – I got whacked from a senior banking role – had an offer to go back into a similar (but smaller) role at another firm, but felt like that was the easy option and life is too short. So I decided to go explore and experience franchise small business ownership. If you are interested in learning more about my journey, check out these two articles:

Part 1:

https://www.dhirubhai.net/pulse/corporate-executive-small-business-owner-advice-from-field-jeremy/

Part 2:

https://www.dhirubhai.net/pulse/corporate-transition-part-2-lessons-from-field-jeremy-bollington/ 

Its 3 + years since I made that transition, and I thought those considering such a move might benefit from my thoughts on the pro’s and con’s of making the leap to franchise small business ownership.

The Pro's

Flexibility / Life style

The franchise sales world talks a lot about the benefits business ownership brings in terms of lifestyle / flexibility. This can certainly be true… and hopefully more so over time….but as per my “con” below, in the early stages, depending on the type of business you chose, you are always on. 

For me the Flex/lifestyle piece has been a positive – in my last banking role I was traveling 100+ days a year, with multiple trips a year to Asia and Latin America and felt that I was in a permanent jet-lagged haze. I am now able to work from home/an office at one of my locations, go the gym, play golf etc. at times that I chose and work when I chose. I feel like I am working as hard as ever… if not harder, but with more control around when/where!

Learning / development / growth

This is a big one – as a small business owner you will likely touch all aspects of the business. Sure as your business grows you will be able to delegate and /or outsource… but early on, you really do need to be hands on to learn the business/system. Most people that come from the corporate world have been focused on one specific discipline (sales, ops, HR, marketing, tech, accounting etc) – as a small business owner you will wear all these hats, at least for a while. Personally, I have really enjoyed this, and in particular diving into the consumer marketing element – lots to learn for sure. Also with my finance/accounting background, I have found it to be totally different analyzing results when the bottom line is yours.

You Da Man ! (or Woman)

For anyone transitioning from the corporate world you always had someone to report to (even the CEO had the Board / Shareholders!). As a small business owner it is all you – this can be scary for some…and is definitely something you need to be comfortable with before making the leap. Obviously as a franchisee you will (hopefully!) have support from the franchisor and the intangible benefit of fellow franchisees to consult with, but ultimately it’s your business and the buck stops with you. For me, this has been one of the best parts of my transition – escaping the corporate BS, endless meetings/committees etc. I am fortunate to be in two franchise systems where many franchisees genuinely want to help / engage.

Tax Benefits

In the early stages when cash is probably flowing out rather than in, there may be a positive in terms of tax benefits. I am definitely not giving tax advice here…other than be sure you have a good / trusted CPA, but this was something that I under-estimated. If you have W2 sourced income – either your corporate career deferred compensation or a spouse/partner wages you will likely be able to get sizeable tax refunds courtesy of Section 179 write-offs.

Success feels really good !

It’s a roller coaster for sure starting your own business, even under the umbrella of a franchise, but one of the biggest positives for me is that the high points (opening first location, hitting first metric goals, first month of positive cash flow etc.) all feel really good. The same goes for seeing the team you have assembled flourish and succeed – this part is particularly pleasing.

The Cons

Oh yes… people that try to sell you on a franchise (and there are lots of those) often don’t want to dwell on these things, but if you are considering the move you really should fully think through these points.

24/7 - It really is - always on - at least initially

Initially you will be wearing multiple hats, running in multiple directions, learning tons of new stuff and working long hours… and that’s just to get the business open. Once open, if it’s a bricks and mortar business, you will likely be getting the call or text at 6am from your opening person saying their kid is ill, which means scrambling to find coverage. 

I have found that it is harder to switch off – there is always a feeling that there is more you can/should be doing, and my wife and I often find we are talking business over dinner and in to the evening.

No Paycheck every two weeks

Before you make the leap make sure you have the financial runway. You should assume that it will take you longer to get open than you plan; it will cost you more to get open than you plan; and it may take you longer to reach breakeven than you plan. During this time you will also need to cover personal living expenses. My watch word – be conservative in your financial planning… if you open/reach breakeven quicker than plan then you will feel really good about it !

Health Care Coverage

This is something many of us take for granted in the corporate world and only realize the costs when we are no longer covered by a corporate benefits package. During your start up phase if your reported income is low you may be able to benefit from Market-Place subsidies. Just be sure to investigate the costs.

Success isn’t guaranteed!

Even if you invest in a tried and tested franchise, success isn’t guaranteed – ultimately your results will depend on multiple factors – your market, your competitors, but most of all your ability to build the business and roll with the ups and downs in the first 2-3 years. I sound like an FDD warning statement – but the reality is this is true and you need to be cognizant of this risk going in and be prepared for it.

Is it all worth it ??

As I reflect on the last 3 years there are definitely times (back to that roller coaster) when it would have been easier to have gone back to a banking role – it almost certainly would have been more lucrative from a financial perspective. However, life’s not a rehearsal - you only get one go at it and for me making this move wasn’t really about the money. It was really about the experience / challenge of doing something completely different and building businesses – tough to put a value on this, but I don’t regret making the move.  

One thing is crystal clear to me - this isn’t for everyone and if you are considering making the move to business ownership, be sure to really think it through. It’s a big decision for sure, and one that you have to be committed to. If you want to compare notes, please don’t hesitate to reach out through LinkedIn.